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Identifying and managing low money laundering risk : perspectives on FATF's risk-based guidance

De Koker, Louis 2009, Identifying and managing low money laundering risk : perspectives on FATF's risk-based guidance, Journal of financial crime, vol. 16, no. 4, pp. 334-352.

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Title Identifying and managing low money laundering risk : perspectives on FATF's risk-based guidance
Author(s) De Koker, Louis
Journal name Journal of financial crime
Volume number 16
Issue number 4
Start page 334
End page 352
Total pages 19
Publisher Emerald Goup Publishing Ltd
Place of publication [London, England]
Publication date 2009
ISSN 1359-0790
1758-7239
Keyword(s) financing
foney laundering
risk assessment
terrorism
Summary Purpose – The purpose of this paper is to investigate Financial Action Task Force (FATF)'s risk-based guidance to combat money laundering and terrorist financing to determine its approach to the identification and management of low-risk providers, products and transactions.

Design/methodology/approach – The paper analyses the relevant FATF recommendations and its guidance notes and reflects on key questions for regulators and financial institutions.

Findings –
FATF has not defined “risk” for purposes of the risk-based approach. The absence of a clear definition complicates the identification of low-risk products. FATF do provide an example of a risk matrix that can be used to identify low-risk banks, but the example is based on assumptions and generalisations that are not sustainable. In addition, it identifies certain low-value transactions as “low risk” transactions. The paper reflects on the role of value as an indicator of risk and concludes with a number of suggestions to clarify the conceptual framework.

Originality/value –
Low-risk products and transactions are often overlooked because the risk-based approach focuses attention on high-risk matters. Low-risk products are however crucial to the efforts to increase financial inclusion. The paper identifies gaps in the current conceptual framework and indicates ways in which they can be addressed.
Language eng
Field of Research 189999 Law and Legal Studies not elsewhere classified
Socio Economic Objective 940402 Crime Prevention
HERDC Research category C1 Refereed article in a scholarly journal
HERDC collection year 2009
Copyright notice ©2009, Emerald Group Publishing Limited
Persistent URL http://hdl.handle.net/10536/DRO/DU:30020721

Document type: Journal Article
Collections: Faculty of Business and Law
School of Law
Open Access Collection
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Every reasonable effort has been made to ensure that permission has been obtained for items included in DRO. If you believe that your rights have been infringed by this repository, please contact drosupport@deakin.edu.au.