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Systematic Integrity Risk Assessment (SIRA)
Systematic Integrity Risk Assessment (SIRA) in Financial Sector Compliance
The Systematic Integrity Risk Assessment (SIRA) is an essential process for financial institutions, mandated by laws like the Prevention of Money Laundering and Financing of Terrorism Act (Wet ter voorkoming van witwassen en financieren van terrorisme (Wwft)). SIRA plays a pivotal role in identifying, assessing, and managing integrity risks, including money laundering, terrorist financing, and circumvention of sanction regulations.
The SIRA Methodology
SIRA encompasses a comprehensive approach to risk assessment, extending beyond the Wwft's scope. It includes analyzing various integrity risks and establishing a risk management vision and strategy. Regulators like De Nederlandsche Bank (DNB) place special emphasis on SIRA, scrutinizing several key elements such as its recency, scope, risk scenarios, and control measures.
Steps in Conducting a SIRA
Conducting a SIRA involves several critical steps:
- Preparation: Defining the organizational chart and risk profile.
- Risk Identification: Identifying various integrity risks.
- Risk Assessment: Evaluating the likelihood and impact of risks.
- Analyzing Control Measures: Assessing existing controls and their effectiveness.
- Monitoring and Follow-Up: Ensuring continuous review and improvement of risk management practices.
SIRA as a Cyclical Process
SIRA is not a one-time activity but a cyclical process requiring periodic reassessment and adjustment in line with changes in the business environment and operational dynamics.
Independent Monitoring by Compliance Functions
A key aspect of SIRA is independent monitoring by the compliance function, ensuring unbiased evaluation and reporting of integrity risks.
FAQs
SIRA is a process financial institutions use to systematically identify, assess, and manage integrity risks such as money laundering, terrorist financing, and sanctions breaches.
SIRA is crucial for ensuring financial institutions comply with laws like the Wwft and effectively manage their integrity risks.
Key steps include preparation, risk identification, risk assessment, analyzing control measures, and ongoing monitoring and follow-up.
SIRA is an ongoing, cyclical process requiring regular updates and adjustments to address evolving risks and business changes.