Financial Sectors Beyond FinTech Need to Stay Vigilant Against Money Laundering
The Designated Non-Financial Businesses and Professions (DNFBPs) are subjects of Anti-Money Laundering (AML) regulations developed by the Financial Action Task Force (FATF) in 2012. These regulations are designed to combat money laundering and terrorist financing activities in sectors outside the traditional financial system.
The DNFBP list includes a variety of industries and professions, such as casinos, real estate agents, dealers in precious metals and stones, legal professionals like lawyers, notaries, and independent legal advisers, accountants, trust and company service providers, and providers of company formation and administration.
These businesses and professions are chosen because they handle significant assets or financial transactions and may be vulnerable to money laundering and terrorist financing risks. The classification and corresponding AML obligations for DNFBPs have been reinforced and clarified in recent FATF documents and country reports.
In the gaming business, there is a potential window for money laundering through fund prizes during championships. Similarly, in e-commerce, there are many opportunities for crime due to unverified merchants who could be scammers.
The penalties for non-compliance with AML regulations can be steep. For breaches involving credit or financial institutions, the penalties are even steeper: legal persons will receive a maximum fine of at least €5 million or 10% of total annual turnover. In case of data breaches, organizations may face a maximum fine of at least twice the amount of the benefit derived from the breach or at least €1 million.
Senior management of these businesses must monitor the implementation of AML regulations to avoid fines from regulatory watchdogs. The DNFBP list is constantly being updated and includes money circulating businesses such as e-commerce, gaming, and venture funds.
Recent FATF guidance also highlights the expanding focus on virtual asset service providers and e-commerce platforms as emerging DNFBPs under AML frameworks. However, the original 2012 FATF definitions primarily cover the above professions and businesses.
The creation of the DNFBP list is related to the new types of fraud attacks that emerged in the late 1990s, when some fraudsters switched from the financial services market to DNFBPs due to advanced AML measures imposed by monetary institutions.
In summary, under FATF AML frameworks since 2012, DNFBPs mainly include:
| DNFBP Category | Examples | |-----------------------------------|------------------------------------| | Casinos | Legal gambling establishments | | Real estate agents | Brokers and agents in property sales| | Dealers in precious metals/stones| Jewelers, gold/silver dealers | | Legal professionals | Lawyers, notaries, independent legal advisers | | Accountants | Auditors and accountants | | Trust and company service providers| Providers of company formation and administration |
These entities must implement customer due diligence, record keeping, and reporting obligations to counter money laundering and terrorist financing risks.
- The expansion of Anti-Money Laundering (AML) focus, as outlined by recent FATF guidance, now includes virtual asset service providers and e-commerce platforms, hence these emerging businesses, such as e-commerce and gaming, are also designated Non-Financial Businesses and Professions (DNFBPs).
- The original designation of DNFBPs by the Financial Action Task Force (FATF) in 2012 primarily encompassed industries and professions like legal gambling establishments (casinos), real estate agents, dealers in precious metals and stones, legal professionals, accountants, trust and company service providers, and providers of company formation and administration.
