Dominica Takes Step towards Strengthening Anti-Money Laundering and Counter-Terrorism Financing Efforts
Risk-Based Approach to Combat Money Laundering and Terrorist Financing
In a significant move to enhance its anti-money laundering (AML) and counter-terrorism financing (CFT) regime, the government of Dominica has announced its commitment to adopting a risk-based approach in addressing these threats. This development comes as part of the country’s efforts to comply with international standards set by the Financial Action Task Force (FATF).
What is the Risk-Based Approach?
Under this approach, Dominica will:
- Identify and assess the risks posed by money laundering and terrorist financing within the country
- Designate a mechanism or authority to coordinate actions aimed at mitigating these risks effectively
- Allocate resources accordingly to ensure that measures taken are commensurate with the identified risks
Importance of Risk-Based Approach
The risk-based approach is seen as an essential foundation for:
- Efficient allocation of resources across the AML/CFT regime
- Implementation of risk-based measures throughout the FATF Recommendations
Countries identifying higher risks, such as Dominica, will need to ensure that their AML/CFT regime adequately addresses these threats. On the other hand, countries identifying lower risks may opt for simplified measures for some of the FATF Recommendations under certain conditions.
Emphasis on Financial Institutions and DNFBPs
The government has also emphasized the importance of requiring financial institutions and designated non-financial businesses and professions (DNFBPs) to:
- Identify, assess, and take effective action to mitigate their own money laundering and terrorist financing risks
- Ensure that these entities are equipped with the necessary tools to prevent or detect suspicious transactions
A Major Step Forward in Combating Money Laundering and Terrorist Financing
The adoption of a risk-based approach is seen as a major step forward in Dominica’s efforts to combat money laundering and terrorist financing. The country’s commitment to implementing this approach demonstrates its willingness to strengthen its AML/CFT regime and align itself with international best practices.
This development is expected to have a positive impact on the country’s ability to prevent and detect financial crimes, ultimately contributing to a safer and more secure financial system.