Maldives Takes a Leap in Anti-Money Laundering with Risk-Based Approach
The Maldivian government has made a significant stride in combating money laundering and terrorist financing by adopting a risk-based approach, as recommended by the Financial Action Task Force (FATF). This new approach requires countries to identify, assess, and mitigate risks associated with money laundering and terrorist financing.
What is a Risk-Based Approach?
A risk-based approach involves identifying and understanding the ML/TF risks that the country is exposed to, and applying AML/CFT measures in a manner and extent commensurate to these risks. This approach is no longer optional but a prerequisite for compliance with all other anti-money laundering and combating the financing of terrorism (AML/CFT) requirements.
Key Components of the Maldivian Risk-Based Approach
- National Money Laundering and Terrorist Financing Risk Assessment: The Maldivian authorities will develop a national risk assessment to understand the full scope of risks in the jurisdiction.
- Sharing Outcomes with State Authorities and the Private Sector: The outcomes of this assessment will be shared with state authorities and the private sector, which is expected to take into consideration the national risk assessment when applying AML/CFT measures.
Implementation and Supervision
- Targeted Approach: Supervisory authorities will focus their actions on key areas identified by the national risk assessment.
- Efficient Resource Use: This targeted approach is expected to increase the efficiency of resource use and enhance the overall effectiveness of AML/CFT measures.
Private Sector Responsibilities
The private sector is also expected to develop an understanding of the particularities of their business, clients, and products, and apply AML/CFT measures in a manner and extent commensurate to these findings. The FATF has issued guidance papers to assist countries in implementing the risk-based approach and developing their own guidelines for the private sector.
Maldives’ Commitment to Combating Money Laundering
With this new approach, Maldives joins the ranks of countries that have taken concrete steps towards combating money laundering and terrorist financing. The adoption of a risk-based approach demonstrates the government’s commitment to preventing and mitigating the risks associated with these crimes.