Risk Based Approach Guidance for Legal Professionals
Legal professionals operate within a broad spectrum of business structures that vary from country to country and even within a country. Ranging from sole practitioners to multi-national firms, they provide a vast range of services. Given the diversity in scale and activities, some legal professions may be more vulnerable to being exploited for money laundering (ML) and terrorist financing (TF) than others.
This guidance highlights the need for a sound assessment of the ML/TF risks that legal professionals face so that the policies, procedures and initial and ongoing client due diligence (CDD) measures can mitigate these risks. This risk-based approach (RBA) is central to the effective implementation of the FATF Recommendations to fight money laundering and terrorist financing.
This guidance is aimed at legal professionals, countries and their competent authorities, including supervisors of the legal profession, as well as practitioners that have legal professionals as customers.
The guidance aims to support legal professionals in the design of effective measure to manage their ML/TF risks, when establishing or maintaining business relationships. In particular, it explains the obligation for legal professionals to identify and verify beneficial ownership information and provides examples of simplified, standard and enhanced CDD measures.
The guidance contains a section for supervisors of legal professionals. It explains the RBA to supervision as well as the supervision of the RBA. The guidance highlights the importance of supervision of beneficial ownership requirements and nominee arrangements so that up to date information on legal persons and legal arrangements is maintained and available in a timely manner.
The FATF developed this non-binding guidance with significant input from the legal profession, including through a public consultation in March 2019, to ensure that it reflects their practical expertise and good practices. It replaces the version of 2008 and brings it in line with the current FATF Recommendations.
Also available in:
Spanish - Translation provided by GAFILAT with the support of Costa Rica: GAFILAT Spanish Risk-Based Approach Guidance for Legal Professionals
Russian - Translation provided by the International Training and Methodology Center: РУКОВОДСТВО ПО ПРИМЕНЕНИЮ РИСК-ОРИЕНТИРОВАННОГО ПОДХОДА