FATF begins consultation on risk-based approaches to AML and CTF for life insurance and securities sectors

The Financial Action Task Force has published two sets of draft guidance for public consultation: the Draft Risk-Based Approach Guidance for the Life Insurance Sector and the Draft Risk-Based Approach Guidance for the Securities Sector. The Financial Action Task Force invites interested parties to submit comments for both sets of draft guidance before 17 August 2018. The final guidance is intended to be adopted in October 2018.

Guidance for the Life Insurance Sector

The Draft Risk-Based Approach Guidance for the Life Insurance Sector provides a means of:

 

  • Outlining the key elements involved in applying a risk-based approach to AML / CTF associated with life insurance;

  • Assisting countries, authorities, insurers and intermediaries in the design and implementation of a risk-based approach to AML / CTF by providing guidelines and examples of current practice;

  • Supporting the effective implantation and supervision of national AML / CTF measures – with a focus on risks and associated mitigation measures; and

  • Supporting the development of a common understanding of what a risk-based approach to AML / CTF entails.

 

Guidance for the Securities Sector

The Draft Risk-Based Approach Guidance for the Securities Sector seeks to fulfill similar means as the Draft Risk-Based Approach Guidance for the Life Insurance Sector, as applied to the securities sector. the draft guidance also notes that:

 

  • The risk-based approach to AML / CTF means that countries, competent authorities and financial institutions are expected to identify, assess and understand the money laundering and terrorist financing risks to which they are exposed and take appropriate measures to mitigate such risks;

  • The application of a risk-based approach is not optional, but a prerequisite for the effective implementation of the FATF Standards;

  • Requirements are included for how a securities provider’s internal compliance framework should operate. 

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