Money Laundering & Terrorist Financing Risk Assessment Strategies

ML and TF Risk Assessment Strategies

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Understanding the sources and methods of money laundering and terrorist financing in a jurisdiction is essential for competent authorities to develop and implement an effective anti-money laundering/counter-terrorist financing (AML/CFT) programme. A national money laundering/terrorist financing (ML/TF) risk assessment should be considered the foundation for setting AML/CFT policy priorities and resource allocation.

The purpose of this report is to provide information on developing a national ML/TF risk assessment. There are obvious similarities and differences between money laundering and terrorist financing, but the risks of both are often assessed and managed using the same information flows between public and private sector institutions.

 Although depth of coverage may differ, a national ML/TF risk assessment is a process that typically presents information on:

  • The nature and scale of ML/TF and related predicate crimes (i.e. the threat).
  • Weaknesses in AML/CFT systems and controls and other features of a jurisdiction that make it attractive to money launderers and terrorist financiers (i.e. the vulnerability).5

The purpose of a national ML/TF risk assessment is to identify money laundering and terrorist financing methods across a jurisdiction and to determine how often those methods are used, how effective they are in moving illicit funds, and whether there are gaps in the AML/CFT systems and controls.