Guidance on Proliferation Financing Risk Assessment and Mitigation
The FATF recently revised its Standards (R.1 and INR.1) to require countries, financial institutions, designated non-financial businesses and professions (DNFBPs) and virtual asset service providers (VASPs) to identify, assess, understand and mitigate their proliferation financing risks.
The FATF Guidance on Proliferation Financing Risk Assessment and Mitigation will help countries, financial institutions, DNFBPs and VASPs effectively implement these new FATF requirements, introduced in October 2020.
The Guidance, which builds on earlier engagement with stakeholders since 2018 and reflects the input from a public consultation in March 2021, explains how both public and private sectors should conduct risk assessments in the context of proliferation financing, and how they can mitigate the risks they identify. It provides an updated list of indicators of the potential breach, non-implementation or evasion of proliferation financing targeted financial sanctions.
This Guidance includes advice to supervisors and self-regulatory bodies responsible for ensuring that proliferation financing risks are being properly assessed and mitigated. The Guidance emphasises the need for supervisors, financial institutions, and other relevant entities to apply the new obligations in a manner that is proportionate to the risks identified, in order to avoid contributing to de-risking or financial exclusion.
Assessment and mitigation of proliferation financing risks requires co-operation between public and private sectors. Ongoing public-private engagement, including during the different stages of risk assessment, will enhance the analysis, and facilitate the development of appropriate mitigation tools. To this end, the FATF will continue its efforts to promote understanding of the new FATF requirements on counter proliferation financing and this Guidance through the Private Sector Consultative Forum, with webinars on this subject planned for later in 2021.
FATF Guidance on Counter Proliferation Financing - The Implementation of Financial Provisions of United Nations Security Council Resolutions to Counter the Proliferation of Weapons of Mass Destruction - February 2018