Financial Action Task Force (FATF) Recommendations 22 (DNFBPs: Customer due diligence), 23 (DNFBPs: Other measures) and 28 (Regulation and supervision of DNFBPs) specifically relate to DNFBPs, while Recommendations 1 (Assessing Risks and Applying a Risk-Based Approach), 24 (Transparency and beneficial ownership of legal persons), 25 (Transparency and beneficial ownership of legal persons), 31 (Powers of law enforcement and investigative authorities), 35 (Sanctions) and 37 (Mutual legal assistance) mention them. In addition, a number of other recommendations, including interpretive notes, apply to DNFBPs just as they would apply to financial institutions.
As is required for financial institutions, countries should ensure, either by law or enforceable means that Designated Non-Financial Businesses & Professions (DNFPBs) are required to:
- Identify, assess, monitor, manage and take effective action to mitigate ML/TF risks using a risk based approach that requires enhanced measures when risks are higher.
- Carry out Customer Due Diligence (CDD) with respect to the customer, beneficial ownership and business relationship either themselves and/or with reliance on third parties that fulfill specific criteria.
- Take additional measures and precautions for politically exposed persons (PEPs).
- Maintain records on CDD information and transactions.
- Identify, assess, manage and mitigate ML/ TF risks that arise when developing new products, business practices or delivery channels or when using or developing new technologies.
- Implement policies, procedures and internal controls against ML/TF risks.
- Implement targeted financial sanctions (TFS) & freeze assets or take action against persons and entities designated by UNSCR 1267 or 1373 or on other designated watch lists and communicate the same to competent authorities.
- Apply enhanced due diligence (EDD) when dealing with customers or entities from high risk and sanctioned countries.
- Report, in good faith, suspicious activities & transactions to the financial intelligence unit (FIU). DNFBPs should be protected by law from criminal and civil liability for the breach of any confidentiality clause made in this regard. Note that lawyers, notaries, other independent professionals & accountants are not required to report suspicious activities if the information was obtained in circumstances where they are subject to professional secrecy or legal professional privilege.
- Not tip off clients when an STR is filed with the FIU. Tipping off should be prohibited by law.
- Have access to and share information on beneficial ownership and control of legal persons & arrangements.
- Provide records and information to competent authorities to aid in ML/TF investigations carried out by them, or as a consequence of mutual legal assistance (MLA) requests.