The purpose of this paper is to draw attention to the difficulties that non‐bank reporting entities have in establishing a best practice risk‐based approach to their anti money laundering and counter terrorism financing (AML/CTF) controls.
The paper draws on the experience of the author in working with non‐bank reporting entities in Australia on their implementation of AML/CTF risk‐based programs to meet the requirements of new laws.
Non bank reporting entities struggle to find data to use in their risk assessments and thus cannot easily formulate a risk‐based approach that will effectively reduce the risk of money laundering and terrorism financing (ML/TF) using their products and services.
Financial intelligence units and AML/CTF regulators need to make more information available in a timely fashion to assist regulated entities to improve their risk‐based approach through a better understanding of the ML/TF risks their business face.
The paper draws on the current experience of new regulated entities not previously exposed to AML/CTF requirements. Regulators implementing risk‐based regimes should consider the issues raised when measuring the likely success of these regimes.
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