Anti-Money Laundering/CFT Assessment
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Publication
National Assessments of Money Laundering Risks: Learning from Eight Advanced Countries’ NRAs
(World Bank, Washington, DC, 2022)The Financial Action Task Force (FATF) requires national governments to demonstrate an understanding of the money laundering risks in the country. Such an understanding is the foundation for effective control of money laundering under the risk-based approach the FATF calls for. The authors analyzed the National Risk Assessments (NRAs) published by eight systemically important countries to test whether they demonstrate that basic understanding and to draw lessons for national governments from those NRAs. The eight show very different conceptualizations, analytic approaches, and products. Each raises serious issues regarding the risk assessment methodology. For example, most relied largely on expert opinion, which they solicited in ways that are inconsistent with the well-developed methodology for making use of expert opinion. They misinterpreted data from suspicious activity reports and failed to provide risk assessments relevant for policy makers. Only one described the methodology employed. Although the challenge of conducting strong risk assessments is great, given the difficulty of estimating the extent of money laundering in any sector, the findings based on this limited sample point to ways to improve substantially on existing practices. The report concludes with a set of suggestions for (international) policy makers and those conducting NRAs for improving risk assessments. Suggestions include increased clarity about the conceptualization of risk, transparency about data and methods so that each country can learn from others, and the adoption of more formal and standardized methods of eliciting expert opinion. -
Publication
Impact of the FATF Recommendations and their Implementation on Financial Inclusion: Insights from Mutual Evaluations and National Risk Assessments
(World Bank, Washington, DC, 2021-12-02)Financial system safeguards against money laundering and terrorist financing are crucial for the integrity of the global financial system, but these safeguards need to be crafted in such a way that they do not negatively affect financial inclusion and disincentive the use of the formal financial system by ordinary individuals and businesses. This study examines the possible unintended consequences of the implementation of international standards on anti-money laundering, combating the financing of terrorism (AML-CFT) on financial inclusion objectives and proposes ways to address any such consequences. This examination focuses mainly on external AML-CFT compliance evaluations, so-called mutual evaluations, led by international organizations and the money laundering and terrorist financing (ML-TF) risk assessments undertaken by the countries themselves. The analysis is supplemented by interviews with officials and private sector representatives from three countries and by field experience and observations from experts. The Financial Action Task Force (FATF), the international standard setter for AML-CFT, has been devoting increasing attention to financial inclusion over the past decade, but this is not yet fully reflected in country mutual evaluations. The FATF’s increasing attention is evident in its guidance papers on financial inclusion and digital identification (ID), and in the recognition of the importance of financial inclusion in its 2019 mandate. However, coverage of financial inclusion in mutual evaluations is still uneven and mostly superficial and is not accompanied by concrete policy recommendations. -
Publication
Fiji: Detailed Assessment Report Anti-Money Laundering and Combating the Financing of Terrorism
(World Bank, Washington, DC, 2006-07)Fiji has committed substantial resources to bringing its Anti-Money Laundering / combating the financing of terrorism (AML/CFT) system up to international standards. With the entry into force of the Financial Transactions Reporting Act (FTR Act) in January 2006, Fiji has added a central piece to a strong AML/CFT legislative framework. The FTR Act closely reflects the international standard in creating a range of AML/CFT preventive regulatory requirements and extending them to a wide range of financial institutions and non-financial businesses and professions. The Act is recent and implementation is still at an early stage. The criminalization of money laundering is in line with international standards. Fiji also enjoys a progressive and comprehensive legislative framework for preserving and recovering the proceeds of crime. The law criminalizes a range of Terrorist Financing (TF) acts. The criminalization falls short of international requirements in some technical respects. While no TF acts have been detected, it was established that enforcing the TF provisions is operationally contingent on the passing of a comprehensive anti-terrorism law, which is still at an early stage of drafting. -
Publication
The Islamic Republic of Mauritania: Detailed Assessment Report Anti-Money Laundering and Combating the Financing of Terrorism
(World Bank, Washington, DC, 2006-03)Mauritania is a vast African country, two-thirds of whose territory is covered by desert. It borders four countries (Morocco, Algeria, Mali, and Senegal), and derives most of its revenue from the extraction of iron ore from deposits located in the northern part of the country. The discovery of sizable petroleum deposits, which began to be extracted in 2006, will probably have a significant impact on the country's future economic growth, which registered 5 percent in 2005. Mauritania also has significant gold and diamond reserves, for which several exploration permits have been issued. This report draws on information gathered in the course of discussions with representatives of the public sector and the private financial sector (banks, savings institutions, insurance) and private nonfinancial sector (notaries, lawyers and NGOs). -
Publication
AML/CFT Regulation: Implications for Financial Service Providers that Serve Low-Income People
(World Bank, Washington, DC, 2005-09)Across the world, new measures are being introduced and existing measures tightened to combat money laundering and the financing of terrorism. All financial service providers, including those working with low-income communities, are-or will-be affected by these measures. This paper summarizes the implications of the international framework for anti-money laundering (AML) and combating the financing of terrorism (CFT) for financial service providers working with low-income people. The international AML/CFT standards developed by the Financial Action Task Force (FATF), generally requires financial service providers to enhance their internal controls to cater specifically for AML/CFT risks; undertake customer due diligence procedures on all new and existing clients; introduce heightened surveillance of suspicious transactions and keep transaction records for future verification; and report suspicious transactions to national authorities. These measures could bring additional costs of compliance to financial service providers; and customer due diligence rules may restrict formal financial services from reaching lower-income people. The introduction of new or tightened AML/CFT regulations may have the unintended and undesirable consequence of reducing the access of low-income people to formal financial services. As a means to avoid this outcome, this paper argues in favor of (1) gradual implementation of new measures; (2) the adoption of a risk-based approach to regulation; and (3) the use of exemptions for low-risk categories of transactions. -
Publication
Sudan: Detailed Assessment of Observance of the AML/CFT Standard
(World Bank, Washington, DC, 2005-04)Crime statistics over past two years, and meetings with the competent authorities, reveal there is a general increase in the level of crimes involving financial gains, people and drug smuggling as well as customs duty evasion. Indicators suggest that this criminality is of an organized nature. There are also 3 to 4 cases of serious fraud per year; the value of each individual case is more than the current capitalization of several domestic banks, which poses obvious risks to the stability and soundness of the financial sector. This report provides a summary of the evaluation of the anti-money laundering and combating the financing of terrorism (AML/CFT) measures in place in Sudan as at the date of the on-site visit. It describes and analyzes those measures, and sets out Sudan's levels of compliance with the recommendations. It also provides recommendations on how certain aspects of the system could be strengthened. -
Publication
Bolivia : Report on Observance of Standards and Codes--FATF Recommendations for Anti-Money Laundering and Combating the Financing of Terrorism
(Washington, DC, 2002-10-30)This report is on the observance of standards and codes (ROSC) for the "Financial Action Task Force (FATF) 40 Recommendations for Anti-Money Laundering and 8 Special Recommendations Combating the Financing of Terrorism." Bolivia's system to prevent and suppress money laundering fulfills most of the FATF 40 recommendations and applies to the insurance, stock market, and financial sectors. However, the system does not include other activities that are susceptible to money laundering, such as currency exchange houses or money transfer agencies. This is an aspect that the authorities hope to rectify in the medium term. The institutional regulatory, supervisory, and financial intelligence responsibilities for combating money laundering are concentrated in the FIU. However, the FIU is not able to carry out on-site supervision of the financial system, and the sectoral superintendence's do not supervise compliance with anti-money laundering standards either. Moreover, there is no high-ranking authority promoting an integrated anti-money laundering policy. Instead, this is left in the hands of the FIU, which lacks the means to push for legislative reforms on its own or to strengthen the efficacy of the system to suppress money laundering. One of the initiatives that the FIU has undertaken to this end is the drafting of a law to expand the criminal classification and extend the obligation to prevent money laundering to new sectors, such as currency exchange houses. By the same token, the superintendence of Banks and financial institutions will issue a regulation making the duties of financial institutions' external auditors more exacting. Lastly, it will begin in the near future to apply the interinstitutional cooperation convention recently signed by various public entities involved in anti-money laundering efforts, with the aim of achieving better results in terms of cases brought to trial, convictions, and goods confiscated.