Newsflash: AML defense network is only as strong as its weakest link – geographical risks
The global AML watchdog, FATF, has assessed 120 countries so far on the effectiveness of their national AML/CFT frameworks.
Effectiveness is assessed on eleven criteria called immediate outcomes (IOs). These IOs broadly address the national AML/CFT risk framework, supervision of FIs and DNFBPs, transparency, enforcement and international cooperation.
There are 4 possible levels of effectiveness for each IO:
- High (HE) – minor improvements needed
- Substantial (SE) – moderate improvements needed
- Moderate (ME) – major improvements needed
- Low (LE) – fundamental improvements needed.
The message is clear – the global network of AML defenses is far below what is needed to properly tackle financial crimes.
The chart shows the results of the FATF effectiveness assessments as a global composite. A staggering 80% of IO ratings are substantially below standard, requiring either major or fundamental improvements.
For the year 2021 the UAE alone, reported asset confiscations of over Dh2.3Bn,
of which a sizeable chunk represented proceeds of foreign crimes.
What does this mean for UAE financial Institutions and DNFBPs?
With a geographical location as an important risk factor in AML, and the UAE as a major international trading hub, FIs and DNFBPs must be extremely vigilant about potential geographical risks these global weaknesses may pose for their businesses.
Understanding the jurisdiction risk of client and counterparty activities is vital to a sound AML risk mitigation programme. At its core is an appreciation of the real AML risks posed by each country and the mitigation measures that have been implemented to address these in a constantly shifting landscape.
How can we help?
Rethink has a wide range of international experience in AML risk identification, management and mitigation. Among its pool of expertise are former national AML mutual evaluation assessors, regulators and financial crimes experts, risk management and accredited auditors.
Rethink is also distinguishing itself in AML advisory services for the crypto industry.
Whatever your AML risk management needs are, we can help you design the optimal risk sensitive response to protect your business from criminal threats.
Who we are?
Re/think is a boutique accounting, audit, advisory, regulatory compliance, and tax advisory firm with offices in Dubai and Abu Dhabi (ADGM) focused on providing businesses of varying sizes with timely, proactive, and customized business solutions from start-up and early development to the latest stages of a business lifecycle.
Authors
Gail Johnson-Goring
Partner & Director of Regulatory and Compliance Services
Rowena Bethel
Associate Director of Compliance
