Integrating External Information for a Holistic EWRA Approach

Integrating external information on anti-money laundering / combating the financing of terrorism (AML/CFT) measures from authoritative external sources is essential to developing a holistic AML/CFT Enterprise-Wide Risk Assessment (EWRA). This ensures effective management of money laundering (ML), terrorism financing (TF) and proliferation financing (PF) risks. In this infographic, the list of external sources and information to be referred to while conducting the EWRA process is discussed. This list is discussed as under:

1. ML/TF/PF National Risk Assessment (NRA)

NRA is an assessment of ML, TF or PF risks done at the national level by the government authorities. In the UAE, NRA is released by the National Anti-Money Laundering and Combatting Financing of Terrorism and Financing of Illegal Organizations Committee (NAMLCFTC). The NRA of UAE helps in gaining a thorough and comprehensive understanding of the ML and TF risks faced by the UAE. While conducting their EWRA, entities should take the NRA into account and incorporate its findings, suggestions and best practices.

2. Sectoral Risk Assessments

Entities should take into account the specific risks related to ML, TF or PF that are relevant and unique to the sector in which they operate. These risks are often assessed by the sector’s AML/CFT regulator. For example, the Central Bank of the UAE releases its Sectoral Report on ML and TF Risk Assessment for the financial sector. Financial institutions must refer to it while conducting their EWRA exercise.

3. NRA of other jurisdictions in which the Regulated Entity operates or the customers are based

If the entities operate in multiple countries or have customers from different nations, the NRAs of these countries should be taken into account while conducting their EWRA process. Understanding the ML, TF, and PF risk assessments and regulatory frameworks of these countries helps identify cross-border risks and take a risk-based approach.

For example, if an entity operating in the UAE has clients from Singapore, it should consider the NRA of Singapore to ensure that EWRA is comprehensive.

4. Guidelines issued by the relevant Supervisory Authorities

Supervisory Authorities release AML/CFT guidelines to help the entities supervised by them effectively comply with their AML/CFT obligations. For example,

The Central Bank of UAE has issued Guidance for Licensed Financial Institutions on risks relating to payments, risks related to politically exposed persons, etc.
The Ministry of Economy of the UAE has released guidelines for Designated Non-Financial Businesses and Professions (DNFBPs) on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations.
The Ministry of Economy of the UAE has released
- supplemental guidance for dealers in precious metals and stones
- supplemental guidance for auditors
- supplemental guidance for the real estate sector
- supplemental guidance for trust and company service providers.
The Anti-Money Laundering and Combating Terrorism Financing Department of the Ministry of Justice has issued Lawyers’ Guide on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organizations
The Financial Services Regulatory Authority (FSRA) has released Anti-Money Laundering and Sanctions Rules and Guidance for entities operating in the Abu Dhabi Global Market (ADGM)
Virtual Asset Regulatory Authority (VARA) has issued Compliance and Risk Management Rulebook for Virtual Asset Service Providers (VASPs) operating in the Emirate of Dubai.
Dubai Financial Services Authority (DFSA) has released DFSA Rulebook on AML, CFT and Sanctions for entities operating in Dubai International Financial Centre (DIFC).

For more information on the various guidelines issued by AML/CFT authorities in the UAE, visit our downloads section here.

5. Information from Industry Bodies or Representatives 

Industry bodies and representatives provide insights into emerging typologies, risks, and best practices regarding AML/CFT measures and compliance.

Incorporating this information enables more accurate risk assessments while conducting the EWRA.

For example, the London Bullion Market Association (LBMA) published best practices and code of business conduct for dealers in precious metals.

6. Information from international standard-setting bodies and international organisations

International AML/CFT trend-setting bodies often release guidance, reports and recommendations to address the ML, TF and PF threats faced by the global financial system. For example,

The Financial Action Task Force (FATF), a global money laundering and terrorism financing watchdog, evaluates the AML/CFT measures at country levels and releases publications on emerging ML, TF and PF risks, such as Guidance on Beneficial Ownership and Transparency of Legal Arrangements, Risk-based Approach Guidance for the Real Estate Sector, etc.
The Egmont Group connects financial intelligence units (FIUs) all around the world. FIUs are responsible for AML/CFT measures in the countries in which they are established. Egmont group enables them to share information and intelligence regarding ML, TF and PF risks.
The Wolfsberg Group is a group of twelve international banks with the aim to develop frameworks and guidance to mitigate financial crimes.
The Basel AML Index is an independent ranking of MT and TF risks globally. It is conducted by the Basel Institute on Governance.
Organisation for Economic Co-operation and Development (OECD) works towards building policies for global standards setting, including those related to AML/CFT measures.

7. Mutual Evaluation Reports of other jurisdictions and Typologies Reports

Mutual Evaluation Reports are conducted by the FATF to assess how effectively jurisdictions implement AML/CFT measures, such as for UAE, India, Singapore, etc. Reviewing these reports from other countries can offer insights into potential risks and effective mitigation strategies to be integrated into the EWRA.

EWRA should also be integrated with information from ML, TF, or PF methods and typologies reports to ensure that the emerging threats of these crimes are combated.

For example, the Financial Intelligence Unit-UAE issued a strategic analysis report on real estate money laundering typologies and patterns.

8. Information published by reputable non-governmental organisations

Reputable non-governmental organisations and other institutions often publish research and reports on ML, TF and PF risks and measures. Integrating their findings into the EWRA will result in gaining a more comprehensive understanding of the risks and challenges related to ML, TF and PF.

For example, Transparency International conducts research and investigative work on anti-money laundering measures all over the world. International Consortium of Investigative Journalists works towards exposing financial crimes all around the world.

To know more about organisations working to fight money laundering, check out our article here.

9. Any other credible and reliable sources 

Other credible and reliable sources include peer-reviewed academic research, AML/CFT expert opinions, books on AML/CFT measures, etc. Reference guides, Frequently Asked Questions (FAQs), notices, etc, available on the websites of AML/CFT supervisors should also be referred. For example, FIU-UAE has released FAQs on its goAML portal, and ADGM has released quick guides on AML/CFT governance framework for DNFBPs, Customer Risk Assessments, etc.

Conclusion

By systematically integrating external information from the above-discussed sources, an entity’s EWRA will be holistic, robust and aligned with both national and international standards, enhancing its effectiveness.