Money laundering through money remittance ... - Council of Europe

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2010 - Money Laundering through Money Remittance and Currency Exchange Providers 40 - © 2010 MONEYVAL and FATF/OECD CHAPTER IV – ISSUES FOR FURTHER CONSIDERATION 5.1 Assessing ML/TF risks and threats within the MR/CE sector 105. A non exhaustive list of issues and areas were identified by the project team as requiring additional efforts, in order to ensure that ML/TF risks are adequately addressed in the money remittance and currency exchange sector. Assessments by competent national authorities 106. As indicated in the previous section, few countries have conducted assessments of ML/TF risks or threats in the MR/CE sector, and in certain cases, the analysis that has occurred has not taken been at a such a level that would help to identify related money flows and trends. It therefore seems logical that countries should be encouraged to carry out studies of their respective MR/CE sectors – using a strategic approach that integrates information and experience from a variety of sources – so as to better understand MR/CE activity and its potential vulnerabilities to misuse for ML and TF. 107. Furthermore, countries should also use their sector-specific threat/risk assessments to help identify gaps in the existing AML/CFT regulatory framework. When conducted on an inter-agency basis, national level assessments may derive the maximum benefit of the knowledge from different authorities, and the results can then be used as another input in the development of an overall national AML/CFT strategy. A sectoral risk assessment should not be just a one-off initiatives but rather on a continuing basis. Countries may want to consider the following factors, as noted in FATF Risk-Based Approach: Guidance for Money Service Businesses (FATF (2009)), when conducting a risk assessment: Political and legal environments. Country‟s economic structure. Cultural factors and the nature of civil society. Sources, locations, and concentrations of criminal activity. Size of the financial services industry. Ownership structure of MR/CE service provider. The scale of and type of business done by unregistered or unlicensed MSBs. Corporate government arrangements at MSBs and in the wider economy. The nature of the payment systems and the prevalence of cash-based transactions. Geographical spread of financial industry‟s operations and customers. Types of products and services offered by the financial services industry.
Types of customers serviced by the industry. Types of predicate offenses. Amounts of illicit money generated domestically. Money Laundering through Money Remittance and Currency Exchange Providers - 2010 Main channels or instruments for laundering or financing terrorism. Sectors of the legal economy affected. Underground areas in the economy. Assessments by the MR/CE sector itself and measures at service provider level 108. It is also essential that MR/CE service providers assist in identifying, assessing and managing ML/TF risks associated with their products, services, customer groups, and geographical location. ML and TF risks should be assessed on a regular basis at a company level to ensure that the AML/CFT measures applied are up-to-date and appropriate. AML/CFT procedures to manage and mitigate these risks also need to be constantly under review and implemented. 109. It makes sense that MR/CE service providers should implement a risk-based approach that takes into account the particular ML/TF risks that their sector faces also in terms of the different players (for example, concerning MR/CE agents) and that they implement appropriate controls for higher-risk situations. On this issue, the FATF guidance on the risk-based approach lays out some of key factors and issues that should be considered by both the public authorities and the MR/CE service providers when implementing. For example, the guidance states that these businesses should pay particular attention to categories of customers that may indicate a higher risk, including: Customers conducting business or transactions in unusual circumstances; Customers who are politically exposed persons; Non face-to-face customers; Customers who structure their transactions; Customers who wire money to online gambling sites or high-risk jurisdictions; Customers who use agents or associates to hide beneficial ownership; Customers who know little about or are reluctant to disclose details about the payee; Customers or parties with no apparent ties to the destination country; Suspicion that the customer is acting on behalf of a third party but not disclosing that information; Transactions involving charities and other non profit organisations which are not subject to monitoring or supervision, like cross-border charities; Customers who have been subject of a law enforcement enquiry known by the MBS; Customers who use false identification; © 2011 MONEYVAL and FATF/OECD - 41
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Money laundering through money remittance ... - Council of Europe

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