World Bank Report: Critiques FATFs Work on National Risk Assessments

The Compliance Lady | Sep 9, 2022

𝗪𝗢𝗥𝗟𝗗 𝗕𝗔𝗡𝗞 𝘃. 𝗙𝗔𝗧𝗙: It is always interesting to come across a study that critiques FATF’s work. In a recent report the World Bank takes a closer look at National Risk Assessments (NRAs). For those not familiar with NRAs, the Financial Action Task Force (FATF) requires nations to demonstrate an understanding of the money laundering risks they face in the country by conducting National Risk Assessments.

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• World Bank researchers examined eight of the most advanced nations’ (Canada, Italy, Japan, the Netherlands, Singapore, Switzerland, the UK, and the US) NRAs in order to test their knowledge of those fundamental concepts and to draw lessons from them for national governments.
• A deeply flawed methodology is what they found. The eight NRAs show very different conceptualizations, analytic approaches, and products. Each raises serious issues regarding the risk assessment methodology.
  • For example, most relied largely on expert opinion, which they solicited in ways that are inconsistent with the well-developed methodology for making use of expert opinion.
  • They misinterpreted data from suspicious activity reports and failed to provide risk assessments relevant for policy makers.
  • The report concludes with a set of recommendations for policymakers and NRAs regarding improving risk assessments.

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