Financial Crime World

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Bhutan’s Compliance Risk Assessment Tools Under Scrutiny: A Critical Review of the FATF Recommendations

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As Bhutan continues to navigate its way in the global financial landscape, the country’s ability to effectively implement the technical requirements of the Financial Action Task Force (FATF) Recommendations has been a subject of great interest.

Progress and Areas for Improvement

According to the 2018 Follow-Up Report, Bhutan has made significant strides in:

  • Assessing risk and applying a risk-based approach (Recommendation R.1)
  • National cooperation and coordination (Recommendation R.2)

However, there are areas where Bhutan needs to improve, including:

Anti-Money Laundering and Combating the Financing of Terrorism

  • Prevention of laundering proceeds from money laundering offence (Recommendation R.3) - partially compliant
  • Prevention of laundering terrorist financing offence (Recommendation R.5) - partially compliant
  • Handling targeted financial sanctions related to terrorism and terrorist financing (Recommendation R.6) - partially compliant
  • Handling targeted financial sanctions related to proliferation (Recommendation R.7) - partially compliant

Customer Due Diligence

  • Efforts have been deemed largely compliant, but there is room for improvement in:
    • Prevention of money or value transfer services (Recommendation R.14)
    • Reliance on third parties (Recommendation R.17)

Regulation and Supervision of Financial Institutions

  • Classification as partially compliant for regulation and supervision of financial institutions (Recommendation R.26) and DNFBPs (Recommendation R.28)

Cash Couriers, Statistics, and Guidance

  • Bhutan has shown significant progress in implementing measures to prevent cash couriers (Recommendation R.32), statistics (Recommendation R.33), and guidance and feedback (Recommendation R.34).

Conclusion

While Bhutan has made significant progress in implementing FATF Recommendations, there are still areas where the country needs to improve. A critical review of the 2018 Follow-Up Report highlights the importance of continued efforts towards compliance risk assessment tools to prevent financial crimes.

It is essential that Bhutan prioritizes areas of improvement and works closely with international partners to ensure effective implementation.