Risk-Based Approach â Guidance for Money Service Businesses

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Risk-Based Approach – Guidance for Money Service Businesses - July 2009Training and Awareness ....................................................................................................................... 38Agent Due Diligence / Know Your Agent ........................................................................................... 38Agent Monitoring ................................................................................................................................. 40Training and Awareness ....................................................................................................................... 41Chapter Three: Internal Controls ...................................................................................................... 42REFERENCES ................................................................................................................................. 44ANNEX 1 SOURCES OF FURTHER INFORMATION .......................................................................... 45A. Financial Action Task Force Documents ...................................................................................... 45B. Legislation/Guidance on the Risk-Based Approach ..................................................................... 45C. Other Sources of Information to help assist national and financial institutionrisk assessment of countries and cross border activities .............................................................. 46ANNEX 2 GLOSSARY OF TERMINOLOGY ......................................................................................... 49ANNEX 3 MEMBERSHIP OF THE ELECTRONIC ADVISORY GROUP ........................................... 534 - © 2009 FATF/OECD
Risk-Based Approach – Guidance for Money Service Businesses - July 2009 SECTION ONE:USING THE GUIDANCE & PURPOSE OF THE RISK-BASED APPROACHChapter One:Background and Context1. In June 2007, the FATF adopted Guidance on the Risk-Based Approach to Combating MoneyLaundering and Terrorist Financing: High Level Principles and Procedures, which includes guidance forpublic authorities and financial institutions. This was the culmination of extensive consultation betweenprivate and public sector members of an Electronic Advisory Group (EAG) established by the FATF.2. In 2008, the FATF adopted Guidance on the Risk-Based Approach to Combating MoneyLaundering and Terrorist Financing: High Level Principles and Procedures for the Accountants, Casinos,Dealers in Precious Metals and Dealers in Precious Stones, Legal Professionals, Real Estate Agents, andTrust and Company Service Providers.3. A meeting was held in September 2008 and was attended by organisations representing moneyservices businesses (MSB). An Electronic Advisory Group (EAG) was established for this process and waschaired by Mr. Ezra Levine (The Money Services Round Table, United States). Membership of the Grouphas consisted of FATF members and observers, as well as representatives from the MSB sectors thatvolunteered to work on the issue of the risk-based approach to combating money laundering and terroristfinancing. A list of members is attached at Annex 3.4. After further international consultation with both public and private sectors, the FATF adoptedRBA Guidance for the money services businesses at its June 2009 Plenary.Purpose of the Guidance:5. The purpose of this Guidance is to:Support the development of a common understanding of what the risk-based approach involves.Outline the high-level principles involved in applying the risk-based approach.Indicate good public and private sector practice in the design and implementation of an effectiverisk-based approach.6. However, it should be noted that applying a risk-based approach is not mandatory. A properlyapplied risk-based approach does not necessarily mean a reduced burden, although it should result in amore cost effective use of resources. For some countries, applying a rules-based system might be moreappropriate. Countries will need to make their own determinations on whether to apply a risk-basedapproach.© 2009 FATF/OECD - 5
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Risk-Based Approach â Guidance for Money Service Businesses