National Risk Assessment of Money Laundering and Terrorist Financing 2020

By Kyte Ekstrom | AML, Compliance, Financial Industries, FinTech, News | 0 Comments

If you’ve only just got up to speed with the implementation of the provisions of the 5th AML directive in 2020, and the UK’s Sanctions and AML Act in 2018 (which came into force at the end of the UK’s Brexit transition period) then news that HM Treasury and the Home Office have recently jointly published a third National Risk Assessment (NRA) is hardly going to be music to your ears!

The NRA document, published in December 2020, follows on from the previous UK NRA report published in 2017 and is key for all firms that operate in the UK who are subject to Money Laundering Regulations (MLR’s). The report reiterates the need for more to be done regarding anti-money laundering (AML) and counter terrorist financing (CTF) in the UK, including: the application of a risk based approach to supervision, deficiencies in the UK suspicious activity reporting (SAR) regime, and accuracy of industry data held on Companies House.

The following sectors have retained a ‘high’ risk score in the 2020 NRA:

  • financial services (‘High’ for both money laundering and terrorist financing)
  • accountancy services (‘High’ for money laundering)
  • legal services (‘High’ for money laundering)
  • companies and partnerships (‘High’ for money laundering)
  • cash (‘High’ for both money laundering and terrorist financing)
  • money services businesses (‘High’ for both money laundering and terrorist financing)

Other sectors which have been assigned a higher risk score in the 2020 NRA, include:

  • Cryptoassets (increased from ‘Low’ for both money laundering and terrorist financing in 2017 to ‘Medium’ in 2020).
  • The property sector (increased from ‘Medium’ for money laundering from 2017 to ‘High’ in 2020

What does this mean for regulated firms subject to MLR’s?

The risks identified in the NRA need to properly understood by a firms senior management and the Money Laundering Reporting Officer (MLRO), paying particular attention to the threats posed to the firms relevant area of business. Regulated firms must conduct their own firm-wide risk assessments, taking into consideration a number of risk factors including the NRA. Firms should be reviewing their firm-wide risk assessment at least on an annual basis and making necessary changes to their internal controls.

National Risk Assessment of Money Laundering and Terrorist Financing 2020

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