Global Financial Institutions Face Mounting Risks of Money Laundering and Terrorist Financing
A recent report has brought to light the alarming risks faced by global financial institutions, highlighting a staggering array of threats from money laundering (ML) and terrorist financing (TF).
Vulnerable Sectors
The report identifies various sectors that are vulnerable to ML and TF, including:
- Wallet providers
- Exchanges
- Initial coin offerings
- Over-the-counter services
- Peer-to-peer lending
- Insurance companies
In the realm of gambling services, the following areas have been identified as high-risk:
- Remote betting
- Land-based casinos
- Betting
- Bingo
- Lotteries
- Poker
- Gaming machines
Additionally, certain professions are also vulnerable to ML and TF, including:
- Real estate agents
- Developers
- Construction industry professionals
- Designated non-financial businesses and professions (DNFBPs)
- Legal practitioners
- Auditors
- Insolvency practitioners
- Accountants
- Tax advisors
Jurisdictional Risk
The report also flags concerns over the jurisdictional terrorist financing risk, noting that some countries may be more susceptible to these types of risks than others.
Risk Scoring System
The combined threat and vulnerability score for each ML and TF provides an overall risk score on a scale of 0-8. The total risk score is then calculated by adding the ML and TF scores, with results ranging from “Low Risk” to “High Risk”.
Risk Scores
- Low Risk: < 5
- Medium Low Risk: 5-9
- Medium High Risk: 10-13
- High Risk: > 13
Threat and Vulnerability Scoring
The scoring system is as follows:
- Score 0: Not Applicable
- Score 1: Lowly Significant
- Score 2: Moderately Significant
- Score 3: Significant
- Score 4: Very Significant
Conclusion
According to the report, some financial institutions face a high risk of ML and TF, while others may be at a lower risk. However, it is essential that all financial institutions take proactive steps to mitigate these risks.
The report’s findings underscore the need for increased vigilance and cooperation among global financial institutions, regulatory bodies, and law enforcement agencies to combat money laundering and terrorist financing.