Financial Exclusion Looms as Businesses Fail to Conduct Proper Risk Assessments

Introduction

A lack of proper risk assessments and mitigation measures by Money Services Businesses (MSBs) could lead to a significant increase in financial exclusion, warns industry experts.

The Consequences of Failure

According to the Financial Action Task Force (FATF), MSBs that fail to conduct thorough risk assessments may divert customers towards riskier services and channels that are not properly regulated. This could push businesses underground, taking them outside the scope of regulatory oversight. The consequences of failure to conduct proper risk assessments are severe:

• Reputational damage and financial loss
• Criminal liability for directors, members, managers, or other senior officers of an MSB

Regulatory Requirements in Dominica

In Dominica, MSBs are required to be licensed by the Financial Services Unit (FSU) after satisfying the requirements of the Money Services Business Act. These businesses must also perform their duty of vigilance by:

• Determining the true identity of customers
• Recognizing and reporting suspicious transactions
• Keeping records for a prescribed period
• Establishing internal controls to prevent money laundering and terrorist financing
• Training key staff

Expert Warning

“It is crucial that MSBs take a proactive approach to risk assessment and mitigation,” said [Name], industry expert. “Failure to do so could lead to financial exclusion, as customers may be forced to seek out unregulated services that are more likely to facilitate illicit activities.”

Government Emphasis on Vigilance

The government has emphasized the importance of vigilance in preventing money laundering and terrorist financing. MSBs must take a proactive approach to risk assessment and mitigation to ensure compliance with regulatory requirements and avoid the consequences of failure.

Conclusion

In conclusion, the restriction of business relationships without proper risk assessments and mitigation measures could have severe consequences for financial exclusion. It is essential that MSBs take a proactive approach to risk assessment and mitigation to ensure compliance with regulatory requirements and protect against financial exclusion.

Key Points

• Failure to conduct proper risk assessments by MSBs can lead to financial exclusion
• Consequences of failure include reputational damage, financial loss, and criminal liability
• Regulatory requirements in Dominica require MSBs to determine customer identity, report suspicious transactions, and establish internal controls
• Proactive approach to risk assessment and mitigation is crucial to prevent money laundering and terrorist financing