4.1.4 Geographic Risk
Effective from 13/7/2023FIs should consider geographic ML/FT risk factors both from domestically and cross-border sources. These risks arise from: (i) the locations where the FI has offices, branches and subsidiaries and (ii) locations in which the customers reside or conduct their activities. Examples of some of these factors include:
| • | Regulatory/supervisory framework. Countries with stronger AML/CFT controls present a different level of risk than countries with weaker regulatory and supervisory frameworks, for instance countries identified by the FATF as jurisdictions with weak AML/CFT measures. |
| • | International Sanctions. FIs should consider whether the countries or jurisdictions they deal with are the subject of international sanctions, such as targeted financial sanctions (TFS), UAE, OFAC, UN and EU restrictive measures, that could impact their ML/FT risk exposure and mitigation requirements. |
| • | Reputation. FIs should consider whether the countries or jurisdictions they deal with are associated with higher or lower levels of ML/FT, corruption, and (lack of) transparency (particularly as regards financial and fiscal reporting, criminal and legal matters, and Beneficial Ownership, but also including such factors as freedom of information and the press). |
| • | Combination with customers’ inherent risk factors. FIs should consider the countries risk in combination with customers risks, including principal residential or operating locations of customers. |