Money Laundering National Risk Assessment Guidance

Understanding risk is a fundamental building block to the risk-based approach. Developing a granular, accurate and up-to-date risk understanding is an ongoing, dynamic process for a country. It is a process that necessitates responding to changing environmental factors, constantly assessing new information and scanning the horizon for risks that may be emerging or materialising. Given the complexity of understanding risk, it is important that a country takes a structured and coherent approach to developing an up-to-date risk understanding.

Once common approach for a country to take in developing a risk understanding is through the conduct of a National Risk Assessment (NRA). An NRA is a process that enables a country to systematically evaluate and address potential money laundering threats and vulnerabilities affecting the country. This structured, evidence-based approach can guide policymakers in tailoring national AML strategies to appropriately mitigate ML risk. Tailoring AML strategies to risk means that areas of higher risk should be subject to enhanced risk mitigation measures, and, importantly, that lower risk areas should also be subjected to simplified or lesser measures.

This guidance document supports countries in conducting an NRA focused on the assessment of money laundering risks, drawing on insights from over 90 countries within the FATF Global Network and over 500 respondents to public consultation. Key sections include:

1.      NRA Preparation and Setup: This section identifies the prerequisites to a successful NRA. It covers such key foundational parts of the NRA such as political commitment, an inclusive NRA mechanism, objective setting, and the acquisition of information and data.

2.      Assessing and Understanding Money Laundering Risks: Offers a flexible yet structured methodology for analysing threats, vulnerabilities, and risks, allowing countries to implement a coherent methodology that is adapted to their capacity and unique risk and context.

3.      Post-NRA Actions: Recommends follow-up actions, including aligning mitigation measures with identified risks, communicating findings, and refining the NRA process.

This guidance serves as a practical resource for countries aiming to strengthen their AML/CFT systems and align them with proven practices across the FATF network.

Money laundering and terrorist financing risks