Financial institutions also have some regulations to combat Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) and these institutions must comply with the regulations. The prevention of money laundering activities not only applies to financial institutions such as banks but also issued some guidelines on FATF Designated Non-Financial Businesses and Professions (DNFBP).
What Is The Designated Non-Financial Businesses and Professions?
Apart from the financial sectors, some services have ML / TF risks, and precautions should be taken to prevent abuse of their services because it is a crime to try to hide revenues from money laundering, regardless of the sector. The Financial Action Task Force (FATF) has conducted various studies and research on the possibility of misuse of non-financial businesses and occupational risks in ML / TF operations through the Working Group on Typologies (WGTYP). There is a FATF list on this subject. FATF believes that these risks should also apply to these non-financial jobs and professions, with regard to the prevention of money laundering and the fight against terrorism financing (AML / CFT). The FATF has therefore issued recommendations on preventive measures that some non-financial businesses and professions, supervisory authorities, and other relevant authorities should adopt to combat money laundering. In other words, DNFBPs are proposed to be subject to AML / CTF regulations to prevent criminal activities.
Which Industries Are DNFBPs?
- lawyers, notaries
- independent legal professionals
- real estate agents
- dealers in vehicles
- online gaming and gambling establishments
- tax advisors
- insurance firms
- virtual currency custodian wallet services
- crypto-fiat exchanges
- dealers in precious metals, jewels
- trusts and company service providers
Designated Categories of Offences for DNFBPs
While determining FATF Designated Non-Financial Businesses and Professions (DNFBPs), there are also crime categories for these institutions, which can be found below. Each of the categories listed below is considered a definitive crime, each country can decide, according to its own domestic law, how to identify these crimes and the nature of certain elements of these crimes.
- illicit trafficking in narcotic drugs
- murder, grievous bodily injury
- illicit arms trafficking
- tax crimes
- participation in an organized criminal group
- trafficking in human beings
- illicit trafficking in stolen
- corruption and bribery
- insider trading
- environmental crime
- counterfeiting currency
FATF Requirements to DNFBPs
FATF recommendations to DNFBPs to help countries implement necessary controls over these businesses. Published four Recommendations, 12, 16, 24, and 25, which are as follows in FATF recommend 40:
In the specified situations, these institutions are required to apply customer due diligence and record-keeping requirements. For example, casinos also have to make Customer Due Diligence when customers take higher financial transactions than the specified threshold when realtors participate in their clients' transactions related to real estate trading.
Lawyers, notaries, other independent lawyers, and accountants are required to report suspicious transactions on behalf of or on behalf of a client when they perform risky activities. In addition, sellers in precious stones are required to report suspicious transactions when they make a higher cash transaction than a threshold set with a customer.
Casinos have to subject to comprehensive regulation. There should be audit regimes that ensure that they effectively implement the necessary AML / CFT measures. This regime should be done by a government authority or an appropriate self-regulatory body, provided that an organization can ensure that its members fulfill their obligations to the AML / CFT.
Competent authorities should establish guidelines and provide feedback to the AML / CFT to assist DNFBPs in implementing regulations and particularly in detecting and reporting suspicious transactions.
Learn more about Sanction compliance in non-financial entities