FATF ¦ Money Laundering National Risk Assessment Guidance (November 2024)

Enhancing National Anti-Money Laundering Efforts: Key Insights from the FATF 2024 Guidance on Money Laundering National Risk Assessment

Money laundering (ML) poses a critical threat to financial systems worldwide, undermining economic stability and national security. The Financial Action Task Force (FATF), a global inter-governmental body, emphasizes that an in-depth understanding of ML risks is fundamental to building effective national Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) frameworks. To this end, FATF’s Recommendation 1 requires countries to identify, assess, and understand their ML risks continuously and tailor their AML measures accordingly. A National Risk Assessment (NRA) serves as a comprehensive, evidence-based process by which countries evaluate their exposure to ML risks. The ultimate goal of the NRA is to guide policymakers, financial institutions, and other stakeholders in applying a risk-based approach (RBA) — focusing enhanced measures on higher-risk areas while simplifying controls where risks are lower. The FATF’s 2024 updated guidance consolidates a decade of experiences from over 90 countries, providing practical advice to develop robust ML NRAs aligned with national contexts.

Preparing for an Effective NRA: Political Commitment and Inclusive Coordination

Before the analytical work of an NRA begins, certain foundational prerequisites must be firmly established. High-level political commitment is paramount; it signals the prioritization of AML efforts across government agencies, ensures resource allocation, and empowers NRA coordinators to lead the process effectively. Strong political support also facilitates inter-agency coordination and helps maintain momentum and continuity despite personnel changes.

Equally important is establishing an inclusive national mechanism to coordinate risk assessment activities. Whether through a permanent body or a temporary working group, this mechanism must involve a broad range of competent authorities — including law enforcement, financial intelligence units (FIUs), supervisory bodies, regulators, and relevant ministries — as well as non-governmental stakeholders such as financial institutions (FIs), designated non-financial businesses and professions (DNFBPs), virtual asset service providers (VASPs), civil society, and academia. Early and ongoing engagement with these stakeholders encourages trust, enriches risk understanding with diverse perspectives, and enhances the quality of data collected.

Conducting the Risk Assessment: Analytical Process and Key Concepts

The actual assessment process begins with an environmental scan that contextualizes the country’s unique circumstances — political, economic, social, technological, legal, and geographic factors — that influence its ML risk profile. Countries then identify and analyze threats (primarily criminal activities generating illicit proceeds) and vulnerabilities (features of sectors, products, or systemic weaknesses that facilitate money laundering). This analysis includes both domestic and cross-border factors, recognizing the increasingly transnational nature of ML schemes.

Countries evaluate threats and vulnerabilities by considering their likelihood, extent, and potential consequences, often employing risk matrices or heat maps to assign relative ratings. The FATF guidance highlights the importance of separating assessments of inherent risk (before mitigation) from residual risk (after accounting for existing controls), enabling a thorough understanding of areas where further measures are needed.

Continuous horizon scanning for emerging threats and vulnerabilities is also critical to ensure risk assessments remain current and responsive to evolving ML tactics, including those involving new technologies or shifts in criminal behavior.

Bastian Schwind-Wagner_Follow "The FATF’s 2024 guidance on National Risk Assessments underscores the critical importance of a thorough, ongoing evaluation of money laundering risks tailored to each country’s unique context. By fostering strong political commitment, inclusive coordination, and robust data analysis, countries can develop effective, risk-based AML strategies that prioritize resources where they are most needed, enhance stakeholder engagement, and adapt proactively to emerging threats. This approach strengthens both national and global efforts to combat financial crime."

Post-Assessment Actions: Aligning Strategy, Outreach, and Continuous Improvement

A key objective of the NRA process is to translate risk understanding into tailored AML strategies and policies. Countries should develop actionable plans that prioritize mitigation based on identified risks, allocate resources efficiently, and adjust legislation or regulatory frameworks as necessary. This includes applying enhanced measures in high-risk sectors and simplified due diligence in lower-risk areas to optimize both effectiveness and inclusivity.

Effective communication of NRA findings is essential. Countries are encouraged to adopt a differentiated communication strategy — balancing transparency with confidentiality — to engage all stakeholders appropriately. This may involve public reports, sector-specific briefings, workshops, and ongoing dialogue through public-private partnerships.

Finally, countries should institutionalize mechanisms for feedback and continuous improvement of their NRA processes. Evaluating the impact of mitigation measures and soliciting stakeholder input help refine methodologies and address data gaps over time. Performance indicators can track progress on implementation and operational outcomes such as increased quality suspicious transaction reporting (STRs), investigations, prosecutions, and supervisory activities.

Complementary Risk Assessments: Sectoral, Thematic, Supranational, and Subnational Insights

In addition to NRAs, countries benefit from conducting sectoral and thematic risk assessments that provide detailed analyses of specific industries or emerging risk areas without undertaking a full NRA update. These targeted assessments help address particular vulnerabilities or threats more efficiently.

Supranational risk assessments conducted by regional bodies or international organizations complement national efforts by identifying cross-border risks affecting multiple countries. Similarly, subnational assessments provide granular insights into localized risks within federated states or large territories.

Together with NRAs, these complementary assessments contribute to a holistic understanding of ML risks at all relevant levels.

Engaging Stakeholders: The Private Sector, Civil Society, and Academia

The private sector plays an instrumental role in AML efforts. FATF guidance stresses the value of their early involvement in NRA development through surveys, workshops, and consultations to provide ground-level insights on industry practices and emerging trends. Civil society and academic institutions also contribute through research and analysis that can highlight overlooked risks or propose innovative solutions.

Continuous engagement with these groups enhances the relevance and utility of NRAs and supports a shared commitment to mitigating ML risks.

Conclusion

The FATF’s 2024 Money Laundering National Risk Assessment Guidance represents a significant resource for countries aiming to strengthen their AML frameworks through structured risk understanding. By emphasizing political commitment, inclusive coordination, rigorous analytical processes, strategic communication, and continuous improvement, countries can better identify their unique ML risks and tailor their responses effectively. This dynamic approach not only enhances national financial integrity but also contributes to global efforts against money laundering and associated crimes.

Dive deeper

• FATF ¦ Money Laundering National Risk Assessment Guidance ¦ Link