On 3/4/21, the Financial Action Task Force (FATF) released guidance titled “Guidance on Risk-Based Supervision” to help financial industry supervisors address the full spectrum of risks and focus resources where the risks are highest. In their release, FATF explains that a risk-based approach will make supervisors efforts to detect and prevent the financial flows that fuel crime and terrorism more effective. This is crucial, they explain, because it is better to detect and prevent money laundering and terrorist financing than to prosecute it after a crime has occurred.
In their release, FATF explains that the guidance is composed of three parts:
Part 1 – The high-level guidance on risk-based supervision, which explains how supervisors should assess the risks their supervised sectors face and prioritise their activities, in line with the FATF Standards’ risk-based approach.
Part 2 – Strategies to address common challenges in risk-based supervision & jurisdictional examples, including examples of strategies for supervising non-financial businesses and professions and virtual asset service providers.
Part 3 – Country examples from across the global network, of supervision of the financial sector, virtual asset service providers and other private sector entities.
While this guidance is designed for financial institution supervisors, this information could be a valuable resource for any BSA/AML professional to understand the ever-changing regulator landscape.
The FATF guidance can be found here.