Financial Crime World

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Risk Assessment Methodology for Money Laundering, Terrorism Financing, and Proliferation Financing

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The following methodology is based on the Financial Action Task Force (FATF) risk assessment framework for money laundering (ML), terrorism financing (TF), and proliferation financing (PF). It involves three stages: identification, analysis, and evaluation.

Identification Stage

Comprehensive Review of Inherent Risks and Risk Factors

  • A comprehensive review of inherent risks and risk factors derived from multiple sources.
  • Qualitative and quantitative data collection is applied to identify threats and vulnerabilities against the country.
  • The focus is on changes in existing risks, level of control, inherent risk, residual risk, and new/undetected risks.

Threats Analysis

Predicate Offenses and Non-Predicate Offenses Relevant to Domestic and Transnational Crime

  • The risk assessment for ML involves analyzing predicate offenses (e.g., drug trafficking) and non-predicate offenses relevant to domestic and transnational crime.
  • Factors considered include methods, size/value, and payment methods used in placement, layering, and integration of ML.

Vulnerability Analysis

Nature, Sources, Likelihood, and Consequences of Risk Factors

  • This analysis stage involves considering the nature, sources, likelihood, and consequences of risk factors using a likelihood and consequence index.
  • The likelihood index consists of four indicators:
    • Number of detectable cases
    • Amount of seizure
    • Frequency of crime
    • Level of control
  • The consequence index consists of seven indicators:
    • International impacts
    • Impacts on the financial system and institutions
    • Impacts on Thai society

Quantitative Analysis

Detection Capacity Model and Big Data Analytics

  • The study uses a Detection Capacity Model to estimate the size and value of ML by calculating criminal income from detectable crimes and comparing it with detection capacity data.
  • Big data analytics is used to consider potential risks of unfair trade and price manipulation in the Thai Stock Exchange Market.

FATF Guidance

Three-Stage Approach for National Money Laundering and Terrorism Financing Risk Assessment

  • The FATF guidance on national money laundering and terrorism financing risk assessment consists of three stages: identification, analysis, and evaluation.
  • Each stage has a different scope of analysis for ML/TF/PF offenses.