National Risk Assessment

In October 2015, HM Treasury and the home Office published the UK’s first money laundering and terrorist financing national risk assessment (NRA). This is an obligation under the obligations of the Financial Action Task Force (FATF), to which the UK is committed.

The report is a fairly long read, running to a hundred plus pages, but it does give us an indication of how the authorities are looking at the risks and the sector.

A full text can be downloaded from the gov.uk website. (Link below)

Text

A tempting headline to make is that where Banks are assessed as an overall risk level of High, Money Service Businesses are assessed as Medium. Perhaps MSBs should consider whether they want to continue to work with banks.

The report does acknowledge the impact of bank Derisking and the potential vulnerability created by increasing breadth and scope of agency agreements.

The report contains a detailed assessment by sector. I have lifted the section below from the sector related to MSBs.

6.104 The threats and vulnerabilities in the MSB sector are:

  • the transfer of criminal funds overseas
  • the use of currency exchange services to convert criminal cash into high denomination foreign notes
  • the control of MSBs by organised crime groups;
  • The use of complicit employees within MSBs by criminal groups
  • third party payments
  • the transfer of cash into other payment methods such as digital currency and electronic money
  • levels of compliance with the regulations and POCA

It would be sensible to bear this assessment in mind when completing risk assessments within the business.

How exposed is your business to these risks, what is your policy and procedure for mitigating such risks?