National Risk Assessment
National Risk Assessment of Money Laundering and Combating the Financing of Terrorism and the Financial Crime Strategy
Recommendation 1 of the Financial Action Task Force (FATF), which is the body responsible for setting international standards for anti-money laundering and combating the financing of terrorism (AML/CFT), requires countries to conduct assessments of their Money Laundering / Terrorist Financing (ML/TF) risks and to introduce measures to address these risks. These assessments are referred to as National Risk Assessments (NRA).
The Isle of Man was one of the first countries to undertake and publish the results of an NRA under this new Recommendation. The NRA was conducted in 2014/15 using the World Bank NRA Self-Assessment Tool, which is a recognised model that has since been widely used by other countries. The results of the NRA were formally published in 2016 although the outcomes were shared with industry the previous year.
The NRA process involved all of the relevant authorities, including the police, financial intelligence, customs, the courts, prosecutors and the regulators. The process also involved industry; representatives from professional bodies and associations of the relevant sectors participated in the process of developing the NRA working alongside Government. The feedback from industry was positive with views expressed that the public-private sector dialogue had been constructive and had helped to enhance cooperation. In March 2016 the Council of Ministers approved the publication of the Isle of Man National Risk Assessment 2015.
The 2015 NRA identified that the highest non-domestic money laundering risk relates to laundering the proceeds of foreign predicate crime, or use of the island as part of an international process in disguising the origin of foreign predicate crime. Domestic money laundering risk presented a much lower risk. Terrorist financing risk was assessed as being a medium/low risk for the Isle of Man. The NRA identified where the response of the authorities needed to be strengthened at national level, notably in respect of financial intelligence and law enforcement.
In addition to the national picture the NRA set out a detailed analysis of each financial and non-financial sector in the island, the size and significance of that sector to the economy, the relevant money laundering and terrorist financing threats and vulnerabilities for each sector and the nature of the controls in place to frustrate this happening.
Further to the production of the NRA the Council of Ministers adopted an AML/CFT National Strategy 2016-2018 which aimed to address deficiencies identified by the NRA process. Following the publication of the Mutual Evaluation Report (MER) of the Isle of Man by MONEYVAL in December 2016, a new national strategy was adopted by the Council of Ministers, the Financial Crime Strategy 2017 – 2020. The Financial Crime Strategy identified actions arising out of the recommendations from the MER and a number of outstanding matters from the NRA. The priority objectives within that Strategy are:
- Understanding the money laundering and financing terrorism threat, risks and harm facing the Isle of Man
- Ensuring that the Isle of Man is a hostile jurisdiction for money laundering and the financing of terrorism
- Pro-actively identifying and pursuing offenders
- Taking the benefit out of crime
The majority of actions in the Financial Crime Strategy have now been delivered and that Strategy comes to a close in 2020. In the meantime a revised and updated NRA is being drafted and is expected to be finalised before the end of 2019.