FATF-GAFI GUIDANCE – A Risk-Based Approach for Money or Value Transfer Services

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The timing could not have been better. FATF just published – February 2016, a report that all Compliance Officers of this industry must read, entitled Guidance for a Risk-Based Approach for Money or Value Transfer Services (SummaryFull Report (69 pages). I want to highlight three statements in the presentation of the report:

  • The risk-based approach, the cornerstone of the FATF Standards, requires that measures to combat ML/TF are commensurate with the risks. Such measures should not necessarily result into the categorization of all MVTS providers as inherently high-risk.
  • The overall risks and threats are influenced by the extent and quality of regulatory and supervisory framework, as well as the implementation of risk-based controls and mitigating measures by each MVTS provider.
  • While this Guidance is applicable to the entire MTVS sector (both banking and non-banking institutions offering MVTS); it is primarily intended for non-banking MVTS providers.

Emily Rose Adeleke, who works in the Financial Market Integrity (FMI) Unit at the World Bank Group’s Finance and Markets Global Practice, published a note entitled “Remittances and integrity: how to exist in harmony” in which she discusses the FATF Guidance and starts with the question: “How do countries ensure that remittance service providers – who are often serving the world’s poorest people – mitigate their risk for abuse by money launderers and terrorist organizations?”. It is a question the industry works hard to answer and spends significant resources confronting.

Ms. Adeleke also mentions the inclusion in the FATF Guidance of the section “Access of MVTS to Banking Services” acknowledging the industry’s efforts to denounce the global bank access problem that we face. As Ms. Adeleke states: “This is a timely and helpful addition to the ongoing global conversation about remittance service providers’ access to bank accounts.”

The report it gives ample assurance to banks that a proper RBA (Risk-Based Approach) will certainly give the bank information to see each MTVS client as a Financial Institution and that “one of the elements which could act as a risk mitigant is the fact that MVTS providers are regulated financial institutions that are subject to the full range of AML/CFT obligations, supervision and monitoring”.

A De-Risking and Bank Discontinuance session at the coming IMTC USA 2016 Conference in Las Vegas on March 14-16, 2016, See Agenda, will analyze the latest reports (a G-20 Report, the Revised Directive on Payment Services (PSD2), the US House Bill ending Op. Choke Point and the FATF Guidance) with guest panelists John ReVeal from Bryan Cave, Karen Schirmer from Chartwell Compliance and Andrew Ittleman from Fuerst Ittleman David & Joseph. Your comments and questions are appreciated.