Assessing Risk

Products, Services, Delivery Channels and Geographic Locations

The following checklist is intended to provide an example of how to assess risk for your products, services, delivery channels and geographic locations. This is only a starting point and you should customize the checklist for your business. Your risk assessment tool has to be appropriate for your specific business needs which means that it may have to be more detailed than this checklist for larger reporting entities, or entities who conduct large volumes of business. If you already use another risk assessment tool, you can continue to use it or enhance it as necessary.

If you answer yes to any of the questions below, you should consider it as higher risk for money laundering or terrorist financing. Where appropriate, risk-mitigation steps should be taken. You can also refer the Financial Action Task Force’s Web site (http://www.fatf-gafi.org) for further guidance on risk-based approach.

For all sectors
Identify whether you provide any of the following products, services or delivery channels	Yes	No	N/A
Do you offer services that make it difficult to fully identify clients?
Do you offer electronic funds payment services? Do you offer any of the following: Electronic cash (for example stored value and payroll cards)? Funds transfers (domestic and international)? Automated banking machines (ABMs)?
For financial entities
Do you offer any of the following: International correspondent banking services involving transactions such as commercial payments for non-clients (for example, acting as an intermediary bank) and use of carriers or couriers for international transport of cash, monetary instruments or other documents (pouch activities)? Services involving banknote and precious metal trading and delivery? Electronic banking? Private banking (domestic and international)? Foreign correspondent accounts? Trade finance activities (letters of credit)? Lending activities, particularly loans secured by cash collateral and marketable securities? Non-deposit account services (for example, non-deposit investment products and insurance)? Accounts through which you can extend cheque or bank draft writing privileges to the clients of other institutions, often foreign banks (pass through or payable through type accounts)? Services involving an immigrant investor program? Non face-to-face transactions, such as Internet services, by mail or by telephone?

Identify whether you deal with clients or provide products or services in the following geographic locations:

Yes

N/A

For all sectors

Is the client located in a known high crime rate area?

Do you or your clients operate or undertake activities in the following countries:

Any country subject to sanctions, embargoes or similar measures issued by, for example, the United Nations (UN)? In some circumstances, this will include sanctions or measures similar to those issued by bodies such as the UN, but which may not be universally recognized.
Any country identified as a financial secrecy haven or jurisdiction?
Any country identified by the Financial Action Task Force (FATF) as non-cooperative in the fight against money laundering or terrorist financing or subject to a FATF statement? You can consult the current non-cooperative countries and territories listed on the FATF Web site at http://www.fatf-gafi.org (select the “Current NCCT list” tab).
Any country identified by credible sources:
- as lacking appropriate money laundering or terrorist financing laws and regulations?
- as providing funding or support for terrorist activities?
- as having significant levels of corruption, or other criminal activity?

Credible sources means information that is produced by well-known bodies that generally are regarded as reputable and that make such information publicly and widely available. Such sources may include, but are not limited to, supra-national or international bodies such as the World Bank, the International Monetary Fund, the Organization for Economic Co-operation and Development, and Transparency International as well as relevant national government bodies and non-governmental organizations.