Interview: Applying a Risk-Based Approach to Prudential Supervision

Number of replies: 2

This module has focused on the prudential dimension of supervision. It has shown the importance of protecting the integrity of the financial system, while avoiding financial exclusion, especially in emerging and developing markets and economies. It has also highlighted AML/CFT and emerging business models, such as virtual assets and AI, as major issues in prudential supervision. 

In the following interview, Kuntay Celik, a Senior Financial Specialist at the World Bank, reflects on how applying a risk-based approach to prudential supervision can help achieve the balance needed between financial integrity and financial exclusion risks, while mitigating the risks involved with AML/CFT and emerging technologies.   

 

 

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In reply to First post

Re: Interview: Applying a Risk-Based Approach to Prudential Supervision

by Elsabet Getachew Mulugeta - Group 2
The interview focused on soft tools for risk-based supervision, focus on engagements and guidance. Well noted as our ambition is to develop the market rather than lay a penalty on recently licensed entities in a new market.
In reply to First post

Re: Interview: Applying a Risk-Based Approach to Prudential Supervision

by Elsabet Assefa - Group 2
It summerizes the module. A risk-based approach helps supervisors support financial inclusion while still preventing money laundering and fraud. Supervisors should give clear guidance on low-risk customers and transactions, use flexible AML/CFT rules, and work closely with providers instead of relying only on inspections and penalties. Technology such as digital ID, eKYC, AI, and digital onboarding can lower costs, improve security, and make financial services more accessible to low-income and vulnerable groups.