Guidelines for Effectively Auditing for Tax Evasion Controls

Author: Shibu Abraham, CAMS-Audit

Globally, over the past two decades, there has been increasing sensitivity around tax evasion and facilitation thereof by financial institutions (FIs). This eventually led to the categorization of tax evasion as a money laundering predicate offense by the Financial Action Task Force (FATF) in 2012.

This white paper first traces the development of regulations governing FIs in respect to countering tax evasion. It then studies the model validation methodology that can be used by internal audit to review the AML controls framework.

This white paper discusses the various elements involved in model validation, the primary objective of which is to provide assurance that the model risk management framework is able to address the risk of errors in model construction and incorrect or inappropriate use of a model.

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