Risk-Based Approach – Guidance for Money Service Businesses

Risk-Based Approach – Guidance for Money Service Businesses - July 2009Customer wires money to high-risk jurisdictions.Customer who uses agents or associates where the nature of the relationship or transaction(s)make it difficult to identify the beneficial owner of the funds.Customer knows little or is reluctant to disclose details about the payee (address/contact info,etc).Customer or party involved in the transaction have no apparent ties to the destination country.Suspicion that the customer is acting on behalf of a third party but not disclosing thatinformation.Transaction involving certain charities and other not-for-profit organizations which are notsubject to monitoring or supervision (especially those operating on a “cross-border” basis).Customer who has been the subject of a law enforcement inquiry known by the MSB.Customer who offers false identification, whether evident from the document alone, from thedocument‟s lack of connection to the customer, or from the document‟s context with otherdocuments (e.g., use of identification cards issued by different countries).Customer who offers different identifications or different identifiers (such as phone or address)on different occasions.Customer who receives transactions in a pattern consistent with criminal proceeds, e.g. fromelderly people in a wide geographic area, in amounts consistent with a lottery scam.Customer who receives transfers in seasonal patterns consistent with criminal proceeds; e.g.marijuana growing season, illegal immigration.Product / Transaction / Service Risk112. An overall risk assessment should also include determining the potential risks presented byproducts and services offered by a MSB. A MSB should be mindful of the risks associated with new orinnovative products or services not specifically offered by the MSB, but that make use of the MSB‟ssystems to deliver the product or service. Determining the risks of products and services should include aconsideration of such factors as:Products or services that may inherently favour a degree of anonymity or can readily crossinternational borders, such as online money transfers, stored value cards, money orders andmoney transfers by mobile phone.Products or services that have a very high or no transaction limit.The global reach of the product or service offered.Products or services that permit the exchange of cash for a negotiable instrument, such as a storedvalue card or a money order.30 - © 2009 FATF/OECD