Financial Sectors Beyond FinTech Need to Prioritize Anti-Money Laundering Measures
In a move to combat money laundering and terrorist financing, the Financial Action Task Force (FATF) updated its Designated Non-Financial Businesses and Professions (DNFBP) list in 2012. This list now includes several non-financial sectors that are vulnerable to money laundering risks and therefore subject to Anti-Money Laundering (AML) obligations.
The FATF's expanded AML regulations now cover a wide range of industries and professions. Typically included are:
- Lawyers, notaries, conveyancers, and other independent legal professionals
- Accountants, auditors, and tax advisers
- Real estate agents, developers, and brokers
- Dealers in precious metals, jewellery, gemstones, and other high-value goods (such as vehicles and art)
- Trust and company service providers
- Casinos, online gaming, and gambling operators
- Insurance firms, agents, and brokers (where relevant)
- Sports and betting operations
- Virtual asset service providers (e.g., cryptocurrency exchanges, custodian wallet services)
These DNFBPs are expected to comply with AML/Counter-Terrorist Financing (CTF) regulations similar to financial institutions because their activities may be exploited for laundering money or financing terrorism.
The creation of the DNFBP list is related to the new types of fraud attacks that emerged in the late 1990s, when some fraudsters switched from the financial services market to DNFBPs due to advanced AML measures imposed by monetary institutions.
Non-compliant organizations may face fines from regulatory watchdogs. For instance, for data breaches, the maximum fine is at least twice the amount of the benefit derived from the breach or €1 million. For breaches involving credit or financial institutions, the maximum fine is at least €5 million or 10% of total annual turnover.
High-risk corporates are potential subjects of money laundering and must monitor AML regulations. Additionally, local authorities may have their own list of DNFBPs depending on the country. However, in general, the following types of businesses are considered DNFBPs: [Not provided, as the text did not specify the types of businesses.]
The FATF's 2012 recommendations have been interpreted and applied internationally, including countries like Australia, Gibraltar, Bahamas, and others, aligning with FATF standards for effective risk mitigation. The DNFBP list includes money circulating businesses like e-commerce, gaming, and venture funds.
In summary, DNFBPs primarily comprise various professions and businesses that handle or facilitate significant financial transactions or assets, making them vulnerable to misuse for money laundering or terrorist financing activities. Their regulation ensures a comprehensive AML framework covering both financial and non-financial sectors.
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