Risk-Based Approach to Combating Money Laundering and Terrorist Financing Implemented in Réunion
The French overseas department of Réunion has adopted a new risk-based approach to combating money laundering and terrorist financing, as guided by the Financial Action Task Force (FATF).
Background
The FATF’s Guidance on Risk-Based Approach was developed in close consultation with international banking and securities sectors, and published in June 2007. Since then, the FATF has been reviewing its guidance papers, resulting in the adoption of a new risk-based approach for the banking sector in October 2014.
Key Principles
The guidance aims to support the development of a common understanding of what the risk-based approach entails, outline high-level principles involved in applying it, and indicate good public and private sector practice in designing and implementing an effective approach. The document is primarily addressed to public authorities and financial institutions, although its principles are also applicable to designated non-financial businesses and professions.
Key Elements
The guidance sets out key elements of an effective risk-based approach, including:
- Identifying high-risk areas and individuals
- Assessing the risks associated with money laundering and terrorist financing
- Implementing measures to mitigate these risks
- Monitoring and reviewing the effectiveness of the approach
Implementation in Réunion
In Réunion, the new approach is expected to enhance the effectiveness of anti-money laundering and combating the financing of terrorism (AML/CFT) measures by focusing resources on higher-risk areas and individuals. The implementation of the risk-based approach will require collaboration between public authorities, financial institutions, and other stakeholders to identify and mitigate risks associated with money laundering and terrorist financing.
Benefits
The new approach is expected to bring several benefits, including:
- Enhanced effectiveness in combating money laundering and terrorist financing
- Improved efficiency in resource allocation
- Increased cooperation and coordination among public authorities and private sector entities
Conclusion
The implementation of a risk-based approach to combating money laundering and terrorist financing in Réunion marks an important step forward in the fight against these serious crimes. By focusing resources on higher-risk areas and individuals, the new approach is expected to enhance the effectiveness of AML/CFT measures and contribute to a safer financial system for all stakeholders.