US agencies seek feedback on structured finance guidelines
Five US federal agencies have issued a statement describing internal controls and risk management procedures designed to help financial institutions identify and address risks associated with complex structured finance activities.
The guidelines seek to help institutions avoid the reputational and legal risks that can arise when banks and dealers enter into certain types of transaction with the purpose of allowing clients to effect regulatory, tax or accounting arbitrage, or improper or illegal behaviour.
The statement says financial institutions engaged in complex structured finance activities should have effective policies and procedures in place to: identify complex transactions that may involve heightened reputational and legal risk; ensure such transactions receive enhanced scrutiny by the institution; and safeguard against participation in illegal or inappropriate transactions.
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