Learning from Eight Advanced Countries' National Assessments of Money Laundering Risks: [NRAs]
The Financial Action Task Force (FATF) requires national governments to demonstrate an understanding of the money laundering risks in the country.
Such an understanding is the foundation for effectively controlling money laundering under the FATF's risk-based approach.
The authors analysed the National Risk Assessments (NRAs) published by eight systemically important countries to test whether they demonstrate that basic understanding and to draw lessons for national governments from those NRAs.
The study looks at eight advanced countries— Canada, Italy, Japan, the Netherlands, Singapore, Switzerland, the United Kingdom (UK), and the United States (US).
The eight-show country tests very different conceptualizations, analytic approaches, and products, and each raised serious issues regarding the risk assessment methodology.
For example, most relied mainly on expert opinion, which they solicited in ways inconsistent with the well-developed methodology for using expert opinion.
They misinterpreted data from suspicious activity reports and failed to provide risk assessments relevant to policymakers. Only one described the methodology employed.
The report concludes with suggestions for (international) policymakers and those conducting NRAs for improving risk assessments.
Suggestions include increased clarity about the conceptualization of risk, transparency about data and methods so that each country can learn from others, and adopting more formal and standardized methods of eliciting expert opinion.