The Financial Action Task Force (FATF) has published two sets of draft guidance for public consultation:
The Draft Risk-based approach Guidance for the Life Insurance Sector is aimed at insurers and intermediaries providing life insurance and other investment-related insurance products, as well as countries and their supervisory authorities. The risk-based approach is pivotal to the implementation of the FATF International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation (2012). The guidance provides a means of:
- Outlining the key elements involved in applying a risk-based approach to anti-money laundering (AML) / counter terrorist financing of terrorism (CTF) associated with life insurance;
- Assisting countries, authorities, insurers and intermediaries in the design and implementation of a risk-based approach to AML / CTF by providing guidelines and examples of current practice. This is approached separately for both private sector actors, and supervisory bodies;
- Supporting the effective implantation and supervision of national AML / CTF measures – with a focus on risks and associated mitigation measures; and
- Supporting the development of a common understanding of what a risk-based approach to AML / CTF entails.
The Draft Risk-Based Approach Guidance for the Securities Sector is aimed at practitioners in the securities sector, e.g. securities providers and intermediaries, and countries and their competent authorities. The varying securities regulations between states and the high liquidity of some securities products are outlined as increasing their propensity to be exploited for money laundering and / or financing terrorism. Consequently, the guidance seeks to fulfil the same means as the Life Insurance guidance, as applied to the securities sector. Also to note within the draft is that:
- The risk-based approach to AML / CTF means that countries, competent authorities and financial institutions are expected to identify, assess and understand the money laundering and terrorist financing risks to which they are exposed and take appropriate measures to mitigate such risks;
- The application of a risk-based approach is not optional, but a prerequisite for the effective implementation of the FATF Standards;
- Securities providers which distribute their services through intermediaries should include these in any AML / CTF risk assessment processes;
- Requirements are included for how a securities provider’s internal compliance framework should operate; and
- The guidance should be read in conjunction with the FATF Report on Money Laundering and Terrorist Financing in the Securities Sector (October 2009).
Comments for both sets of draft guidance are invited to be submitted before 17 August 2018. The FATF intends to adopt the final guidance at its October 2018 Plenary meeting.