Financial Sectors Beyond FinTech Should Prioritize Anti-Money Laundering Compliance
In a bid to combat money laundering and counter-terrorism financing, the Financial Action Task Force (FATF) has expanded the list of Designated Non-Financial Businesses and Professions (DNFBPs) around 2021. These sectors, which now encompass a broad range of industries, are subject to Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulations.
The updated DNFBP list includes:
- 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 (TCSPs)
- Casinos, online gaming, and gambling establishments
- Insurance firms, agents, and brokers (where relevant)
- Sports and betting operations
- Virtual asset service providers (including crypto-fiat exchanges and custodian wallet services)
This list reflects the global FATF compliance standards and applies in various jurisdictions, including Australia and the UAE.
The inclusion of virtual asset service providers underscores the alignment with digital assets regulation trends under FATF’s 2021 framework. Traditional industries like real estate businesses and e-commerce have also been added to the list, highlighting the need for AML regulations in sectors outside the financial sector.
The senior management of these DNFBPs is responsible for monitoring AML regulations implementation to avoid potential fines. For instance, in the gaming business, money laundering could occur through fund prizes during championships. In e-commerce, unverified merchants could turn out to be scammers.
The shift of fraudsters from the financial services market to DNFBPs was likely due to the advanced AML measures imposed by monetary institutions. This move has led to increased vigilance in DNFBPs, with data breaches resulting in substantial fines. For DNFBPs, fines can amount to at least twice the benefit derived or €1 million. For credit or financial institutions, breaches can result in a maximum fine of at least €5 million or 10% of total annual turnover.
In conclusion, the DNFBP list represents a crucial step in the global fight against money laundering and terrorism financing. As the list is constantly being updated, it underscores the importance of staying informed and compliant with AML regulations for all businesses and professions included in the list.
[1] FATF (2021) Recommendations on Money or Value Transfer Services. Available at: https://www.fatf-gafi.org/publications/fatfrecommendations/documents/recommendation-16-money-or-value-transfer-services.html
[2] FATF (2021) Recommendation 17: Virtual Assets. Available at: https://www.fatf-gafi.org/publications/fatfrecommendations/documents/recommendation-17-virtual-assets.html
[3] FATF (2021) Recommendation 24: Designated Non-Financial Businesses and Professions. Available at: https://www.fatf-gafi.org/publications/fatfrecommendations/documents/recommendation-24-designated-non-financial-businesses-and-professions.html
[5] FATF (2021) Guidance for a Risk-Based Approach to Virtual Assets. Available at: https://www.fatf-gafi.org/publications/fatfrecommendations/documents/guidance-for-a-risk-based-approach-to-virtual-assets.html
The global expansion of DNFBPs includes sectors such as technology with virtual asset service providers being added to the list. In the realm of business, industries like e-commerce have also been included on the DNFBP list, emphasizing the need for Anti-Money Laundering (AML) regulations in tech-driven and non-financial sectors.
