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Tokelau Embodies Risk-Based Approach to Combat Money Laundering and Terrorist Financing

The Financial Action Task Force (FATF) has developed a comprehensive Guidance on the Risk-Based Approach to combat Money Laundering and Terrorist Financing. This guidance aims to support the development of a common understanding of what the risk-based approach entails, 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.

Background

The Guidance was published in June 2007 after close consultation with international banking and securities sectors representatives. It is primarily addressed to public authorities and financial institutions, but its high-level principles are equally applicable to designated non-financial businesses and professions.

Key Elements of the Guidance

• Identifying High-Level Principles: The guidance sets out key elements of the risk-based approach, providing a basis for interpreting subsequent sections on guidance for public authorities and financial institutions.
• Indicating Good Practice: It indicates good public and private sector practice in designing and implementing an effective risk-based approach.
• Providing Guidance: The guidance provides direction for both public authorities and financial institutions on key issues to consider when applying a risk-based approach.

Global Adoption and Review

The FATF is currently reviewing its set of RBA guidance papers following the adoption of revised Recommendations in 2012. Since October 2014, the FATF has adopted a Risk-Based Approach for the Banking Sector, and a separate guidance will be developed for the Securities Sector.

Benefits and Goals

The Guidance aims to promote consistency and cooperation among countries in addressing money laundering and terrorist financing risks, while also recognizing the need for national authorities and financial institutions to tailor their approaches to individual country-specific needs. The overall goal is to facilitate effective implementation of anti-money laundering and terrorist financing measures by providing countries with a common understanding of what constitutes an effective risk-based approach.

Tokelau’s Implementation

In Tokelau, which is currently implementing anti-money laundering and combating the financing of terrorism (AML/CFT) reforms under international obligations, this Guidance can serve as a valuable resource in ensuring that its risk-based approach is effective and aligned with international standards.