FATF Guidance on the RBA for Money Services Businesses
The purpose of this Guidance is to:
However, it should be noted that applying a risk-based approach is not mandatory. A properly applied risk-based approach does not necessarily mean a reduced burden, although it should result in a more cost effective use of resources. For some countries, applying a rules-based system might be more appropriate. Countries will need to make their own determinations on whether to apply a risk-based approach.
The Guidance is primarily addressed to public authorities and Money Services Businesses (MSBs). MSBs generally provide a subset of the financial services provided by financial institutions. This Guidance focuses on the transfer of money or value and money and currency changing operated by MSBs.
Money/value transfer companies provide an essential financial service, often in underdeveloped regions with limited or no banking services. Money/value transfer companies operate in a variety of ways, but typically a sending agent accepts payment of the money transfer (including a fee), collects the required identification information, and enters the transaction and sender‟s applicable identification information and the destined receiver systematically at the point of origination. In the case of international locations and multiple currencies, foreign exchange rates are applied and converted systematically. The money transfer is made available to the ultimate recipient, in the appropriate currency, at a receiving agent location in the paying jurisdiction. Payout methods vary by jurisdiction, but may include cash, cheque, money order, payout cards, bank deposit or a combination.
Money/currency exchange dealers engage in the business of accepting the currency or other monetary instruments denominated in the currency of one country, in exchange for the currency or other monetary instruments denominated in the currency of one or more other countries.
The MSB sector is made up of a very diverse group of organisations. A MSB may be a small organisation with outlet locations such as grocery stores, drugstores, pharmacies or convenience stores. It may also include a regional network of post offices or banks or other MSBs, which can be branches or agents. In considering how to implement a risk-based approach in the MSB sector, public authorities may wish to consider providing a simplified version of this guidance for small and less-complex MSBs.