Risk-based Approach Guidance for the Securities Sector

26 October 2018

Some of the characteristics of securities sectors, such as a high level of interaction, high volumes, speed and anonymity may create opportunities for criminals to launder the proceeds of crime. Each of the activities and services offered by the securities sector participants presents different money laundering and terrorist financing (ML/TF) risks. This guidance highlights some of these risks depending on the securities products and services involved and the measures to be put in place to mitigate such vulnerabilities.

The risk-based approach (RBA) is central to the effective implementation of the FATF Recommendations to fight money laundering and terrorist financing. The RBA means that supervisors, financial institutions and intermediaries identify, assess and understand the ML/TF risks to which they are exposed so that they can focus their resources where the risks are highest.

The guidance aims to support the design and implementation of the risk-based approach for securities products and services, by providing specific guidance and examples for securities providers and their supervisors. It highlights that the ML/TF risk assessment should reflect the nature, size and complexity of the business. It also stresses the important role of the senior management in fostering and promoting a culture of compliance with anti-money laundering and counter-terrorist financing measures.

This non-binding guidance was developed in partnership with the private sector, including through a public consultation in July 2018.