The Asian Bankers Association (ABA) and Fintelekt Advisory Services Ltd. jointly organised a virtual workshop on 15th May 2025 on Addressing AML Risks in DNFBPs: Insights for Banks and Financial Institutions.
The resource person for the workshop was Ravi Lahoti, a chartered accountant and company secretary by qualification, and a seasoned banker with vast experience leading AML and audit teams at large Indian private sector banks. Arpita Bedekar, Chief Operating Officer, Fintelekt hosted the workshop.
The session was well attended, with participants from 10 countries and 15 institutions, including banks, non-banking financial institutions, insurance companies and money changers. The two-hour workshop focused on enhancing awareness and building practical understanding of AML/CFT risks posed by Designated Non-Financial Businesses and Professions (DNFBPs).
SUMMARY
Understanding DNFPBs and their vulnerabilities:
Ravi set the context by explaining the various sectors that fall under the umbrella of DNFBPs, including real estate agents, jewellers, casinos, lawyers, and accountants. He explained why these sectors are inherently vulnerable and may often be conduits for money laundering and terrorist financing due to relatively lower regulation, limited scrutiny and low awareness of ML/TF risks.
FATF Recommendations and Scrutiny:
Ravi then discussed the Financial Action Task Force (FATF) recommendations that apply to DNFBPs and explained their obligations under these recommendations. He threw light on a recent FATF report that found that more than half of the 120 jurisdictions reviewed failed to implement obligations for DNFBPs, highlighting significant global compliance gaps.
Obligations and Best Practices for FIs and Banks:
Ravi moved on to discuss the obligations and best practices for banks and financial institutions (FIs) while dealing with DNFPBs. He suggested that banks and FIs must treat DNFBPs as a distinct risk category and conduct enhanced due diligence (EDD) for this category of clients. He also emphasised the importance of tagging DNFBPs distinctly in core and AML systems, helping the system to pick up the right alerts and red flags for enhanced monitoring and risk categorisation.
Some of the key questions explored during the workshop were:
- Can a bank or financial institution treat DNFBPs like any other high-risk customer?
- What specific policies and parameters should institutions apply when onboarding DNFBPs?
- How do professional enablers exploit client accounts or disguise illicit transactions?
- Why must customer due diligence for DNFBPs include enhanced questions at onboarding and during periodic reviews?
- What is the link between DNFBP-related risks and broader socio-economic factors?
The key takeaway was that a generic tick-box approach is no longer enough. Banks and financial institutions need targeted onboarding frameworks, enhanced due diligence, and tailored risk assessments when dealing with DNFBPs.
All participants received a Fintelekt-ABA Certificate of Completion for attending the virtual workshop.
