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Financial Watch

Risk-Based Approach Crucial in Combatting Money Laundering and Terrorist Financing in Grenada, Experts Say

A critical component in the fight against money laundering and terrorist financing is being highlighted by international experts as essential for Grenada to effectively tackle these financial crimes.

Understanding the Risk-Based Approach

Developed by the Financial Action Task Force (FATF), a guidance on the risk-based approach to combating money laundering and terrorist financing was published in 2007, after extensive consultation with representatives of the banking and securities sectors. Since then, the FATF has been reviewing its set of risk-based approach guidance papers, which were revised in 2012.

Key Principles

The purpose of this guidance is to provide a common understanding of what the risk-based approach involves, outline high-level principles involved in applying it, and indicate good public and private sector practice in designing and implementing an effective risk-based approach. The guidance is primarily addressed to public authorities and financial institutions, but its principles are also applicable to designated non-financial businesses and professions.

Benefits of a Risk-Based Approach

According to experts, the framework aims to set out key elements of an effective risk-based approach and identifies the types of issues that both public authorities and financial institutions may wish to consider when applying a risk-based approach. This allows for tailored measures to address individual country risks, making it crucial in combating money laundering and terrorist financing.

Implementing a Risk-Based Approach in Grenada

In Grenada, experts say that a risk-based approach is essential in combating money laundering and terrorist financing. The FATF’s guidance recognises that each country must identify its own most appropriate regime, taking into account its unique national circumstances. Therefore, Grenada will need to work in partnership with its financial institutions to develop a tailored risk-based approach that addresses the specific risks associated with money laundering and terrorist financing in the country.

Conclusion

In conclusion, a risk-based approach is crucial for Grenada to effectively combat money laundering and terrorist financing. By understanding and implementing this approach, Grenada can take a proactive stance against these financial crimes and protect its economy.