Enterprise-wide AML/CTF Risk Assessment Solutions for dealers in high-value goods

The risk-based approach (RBA) is a key concept in the prevention of money laundering and terrorism financing (ML/TF). It is a principle that financial institutions, gaming and wagering businesses, gatekeeper professions and other regulated entities use to identify and assess, mitigate and manage the ML/TF risks associated with their customers, products, services, channels, business, transactions and geographic footprint.

The risk-based approach involves identifying and assessing the level of risk associated with a particular customer or transaction and then applying appropriate measures to mitigate that risk. This means that financial institutions must take a proportionate and risk-based approach to their anti-money laundering (AML) and counter-terrorist financing (CTF) measures.

For example, a high-risk customer or transaction may require more extensive due diligence and monitoring than a low-risk customer or transaction. This approach helps to ensure that AML/CTF measures are focused on the areas where the risk of money laundering or terrorist financing is highest, rather than applying a one-size-fits-all approach.

The risk-based approach is now a widely accepted standard in AML/CTF regulations and is recommended by international organisations such as the Financial Action Task Force (FATF) and the Wolfsberg Group, an association of global banks which develops frameworks and guidance for the management of financial crime risks. 

The risk-based approach presents challenges to many regulated businesses who lack the internal capacity or capability to design, build and implement enterprise-wide money laundering and terrorism financing risk assessments, which is at the heart of the problem that Arctic Intelligence is solving.

High-value goods can be used to "clean" dirty money by purchasing them with illicit funds and then reselling them for clean money. This process allows criminals to move money across borders, evade taxes, and avoid detection by law enforcement agencies.

Additionally, high-value goods dealers are often unregulated and goods can be easily moved and sold without leaving a paper trail, which makes them an attractive option for organised criminal networks looking to launder money or engage in other illegal activities.

To combat this, many countries have implemented laws and regulations requiring dealers in high-value goods to report suspicious transactions and maintain records of transactions. These laws help to prevent the use of high-value goods for money laundering and other financial crimes, and increase transparency and accountability in the marketplace.

Antique and Fine Art Dealers are at risk of becoming involved in money laundering since these sectors are attractive to criminals because of the high value of transactions, general lack of transparency resulting from the art market being largely unregulated.

One common method of money laundering in the art market is through the use of shell companies and offshore accounts. These entities can be used to disguise the true ownership of antiques and artwork and obscure the trail of funds used to acquire these assets, making it difficult for authorities to track the movement of illicit funds.

Art and antiquity dealers may also be used as intermediaries by money launderers to purchase artwork on their behalf. This can be done to avoid scrutiny or to conceal the identity of the true purchaser.

To mitigate money laundering risks, Antique and Fine Art Dealers are (in some countries) required to implement anti-money laundering and counter-terrorism financing (AML/CTF) programs. 

These programs must include conducting enterprise-wide money laundering risk assessments (EWRA) to identify and assess the risks and vulnerabilities associated with customers, channels, products and services, business, environmental and geographic risks.  

AML/CTF programs must also contain procedures for identifying and verifying the identity of customers,  ensuring that the sources of funds of investors and counterparties is legitimate, monitoring customer transactions, and reporting suspicious activity to regulatory authorities.

Arctic Intelligence’s AML Accelerate Platform has been purposely tailored for Antique and Fine Art Dealers, if you would like to learn more contact us or book a demo.

Auctioneers and brokers can be at risk of money laundering due to the nature of their businesses because they are typically involved in transactions where large sums of money are exchanged, and these transactions can be complex and involve multiple parties. This complexity can make it difficult to identify and track illegal activities.

Auctioneers and brokers may be at risk of being involved in money laundering if they do not have adequate procedures in place to identify suspicious activity, for example, if they are asked to sell an item for a much higher price than its actual value, which could be an attempt to launder illegal funds. They may also be asked to handle large cash transactions, which can be a red flag for money laundering.

To mitigate money laundering risks, Auctioneers and Brokers are (in some countries) required to implement anti-money laundering and counter-terrorism financing (AML/CTF) programs. 

These programs must include conducting enterprise-wide money laundering risk assessments (EWRA) to identify and assess the risks and vulnerabilities associated with customers, channels, products and services, business, environmental and geographic risks.  

AML/CTF programs must also contain procedures for identifying and verifying the identity of customers,  ensuring that the sources of funds of investors and counterparties is legitimate, monitoring customer transactions, and reporting suspicious activity to regulatory authorities.

Arctic Intelligence’s AML Accelerate Platform has been purposely tailored for Auctioneers and Brokers, if you would like to learn more contact us or book a demo.

Buying and selling high-value assets such as bullion, jewellery, precious metals and stones is attractive for criminals because such transactions can avoid interaction with the financial sector.

Assets of this type may be easily hidden and can be transferred to third parties with limited documentation.

Bullion dealers, jewellers, and precious metal and stone dealers are also at risk of being used as a front for money laundering activities due to the high value and portability of the products they deal in. These types of businesses may be used to convert cash obtained from criminal activities, such as drug trafficking, into high-value items that can be easily moved across borders and sold without arousing suspicion.

The money laundering and terrorism financing (ML/TF) risks associated with Bullion Dealers, Jewellers and Precious Metal and Stone Dealers includes (but is not limited to):

• Bullion dealers, jewellers, and precious metal and stone dealers often deal in cash, which makes it easier for criminals to launder money without detection.  Criminals can make cash purchases and give the asset to other parties in lieu of cash
• Large cash transactions, especially those conducted in foreign currency or in multiple transactions below the reporting threshold, are a red flag for money laundering
• These businesses often operate in an opaque market with limited oversight, which makes it easier for criminals to conduct illegal activities without detection
• Precious metals and stones are highly valuable and portable, which makes them attractive to criminals seeking to launder money. Criminals can easily transport these items across borders or sell them on the black market without raising suspicion
• Bullion dealers, jewellers, and precious metal and stone dealers may fail to conduct sufficient due diligence on their customers, including verifying their identity and the source of their funds. This lack of due diligence makes it easier for criminals to use these businesses to launder money.

Bullion dealers may also have become more attractive to criminals over the past few years as the financial sector has implemented comprehensive AML/CTF measures.

To mitigate money laundering risks, Bullion Dealers, Jewellers and Precious Metal and Stone Dealers are (in some countries) required to implement anti-money laundering and counter-terrorism financing (AML/CTF) programs. 

These programs must include conducting enterprise-wide money laundering risk assessments (EWRA) to identify and assess the risks and vulnerabilities associated with customers, channels, products and services, business, environmental and geographic risks.  

AML/CTF programs must also contain procedures for identifying and verifying the identity of customers,  ensuring that the sources of funds of investors and counterparties is legitimate, monitoring customer transactions, and reporting suspicious activity to regulatory authorities.

Arctic Intelligence’s AML Accelerate Platform has been purposely tailored for  Bullion Dealers, Jewellers and Precious Metal and Stone Dealers, if you would like to learn more contact us or book a demo.

Motorised vehicle dealerships like cars, motorbikes, trucks, boats, aircraft are vulnerable to money laundering risks due to their involvement in high-value transactions, which can make it easier for criminals to conceal the origin of funds to acquire these assets.  The risk is even higher in countries or regions where there are lax regulatory requirements, weak enforcement or non-existent anti-money laundering (AML) laws.

High-value assets like cars, motorbikes and boats are often acquired as a show of wealth by criminals and may be purchased in part or whole in-cash and are easily sellable to realise cash once these have been enjoyed.

The money laundering and terrorism financing (ML/TF) risks associated with Motorised Vehicle Dealers includes (but is not limited to):

• Motorised vehicle dealerships often deal with large sums of cash, which can be difficult to trace and can make it easier for criminals to launder their money. Dealerships should have policies and procedures in place to ensure that cash transactions are properly documented and reported
• Motor vehicles are expensive items, and large transactions can attract criminals looking to launder money. Dealerships should be vigilant when dealing with high-value transactions and conduct proper due diligence on customers
• Criminals can break down large sums of cash into smaller amounts to avoid detection and depositing them into bank accounts
• Criminals can use motor vehicles to facilitate fraudulent transactions, such as buying and selling vehicles using false identities or fake documentation
• Motor vehicles can be owned by multiple parties, and this can create complex ownership structures that can be used to conceal the true ownership of assets
• Many motor vehicle dealerships operate internationally, which can expose them to a higher risk of money laundering
• Criminals can use motorised vehicle dealerships as part of a trade-based money laundering scheme, where they use legitimate trade transactions to move money across borders.

To mitigate money laundering risks, Motorised Vehicle Dealers are (in some countries) are required to implement anti-money laundering and counter-terrorism financing (AML/CTF) programs. 

These programs must include conducting enterprise-wide money laundering risk assessments (EWRA) to identify and assess the risks and vulnerabilities associated with customers, channels, products and services, business, environmental and geographic risks.  

AML/CTF programs must also contain procedures for identifying and verifying the identity of customers,  ensuring that the sources of funds of investors and counterparties is legitimate, monitoring customer transactions, and reporting suspicious activity to regulatory authorities.

Arctic Intelligence’s AML Accelerate Platform has been purposely tailored for Motor and Boat Dealers, if you would like to learn more contact us or book a demo.

The luxury goods market, such as, clothes, handbags, watches is attractive to money launderers because it offers access to high-value items that are easy to transport and sell, and that can hold their value over time. 

Criminals may use a variety of techniques to launder money through luxury goods, including over-invoicing, under-invoicing, and using shell companies to hide the true ownership of assets.

Money launderers may use luxury goods to convert illicit funds into seemingly legitimate assets, which can then be sold or transferred without attracting suspicion.

The money laundering and terrorism financing (ML/TF) risks associated with Luxury Goods Dealers includes (but is not limited to):

• Criminals can buy luxury goods to hide the origin of illegally obtained funds, making it difficult for law enforcement agencies to trace the money back to its source
• Criminals may purchase a high-value item in one country and then transport it to another country where it is sold for cash
• Luxury goods dealers operate internationally, which can expose them to a higher risk of money laundering
• Criminals can use luxury goods dealers as part of a trade-based money laundering scheme, where they use legitimate trade transactions to move money across borders.

To mitigate money laundering risks, Luxury Goods Dealers are (in some countries) are required to implement anti-money laundering and counter-terrorism financing (AML/CTF) programs. 

These programs must include conducting enterprise-wide money laundering risk assessments (EWRA) to identify and assess the risks and vulnerabilities associated with customers, channels, products and services, business, environmental and geographic risks.  

AML/CTF programs must also contain procedures for identifying and verifying the identity of customers,  ensuring that the sources of funds of investors and counterparties is legitimate, monitoring customer transactions, and reporting suspicious activity to regulatory authorities.

Arctic Intelligence’s AML Accelerate Platform has been purposely tailored for Luxury Goods Dealers, if you would like to learn more contact us or book a demo.

Pawnbrokers and secondhand dealers can be exposed to money laundering risks due to the nature of their business, since they deal with the exchange of valuable goods (i.e., electronics, collectible memorabilia) for cash, which can be a way for criminals to launder money obtained through illegal activities such as drug trafficking, fraud, and the illicit trafficking of arms, wildlife or people.

Money laundering is the process of concealing the origin, ownership, or destination of illegally obtained funds to make them appear legitimate. Criminals often use cash-intensive businesses like pawnbrokers and secondhand dealers to easily convert illicit funds into either cash or legitimate-looking assets.

Pawnbrokers and Secondhand dealers may also be vulnerable to money laundering because they often deal with anonymous customers who may not provide proper identification or may use false identification. This can make it difficult for dealers to verify the legitimacy of their customers and the source of the goods they are purchasing.

In addition, secondhand dealers may be susceptible to purchasing stolen goods, which can be a means for criminals to launder money. Criminals may steal goods and then sell them to secondhand dealers for cash, which can then be used to launder money.

To mitigate money laundering risks, Pawnbrokers and Secondhand Dealers are (in some countries) are required to implement anti-money laundering and counter-terrorism financing (AML/CTF) programs. 

These programs must include conducting enterprise-wide money laundering risk assessments (EWRA) to identify and assess the risks and vulnerabilities associated with customers, channels, products and services, business, environmental and geographic risks.  

AML/CTF programs must also contain procedures for identifying and verifying the identity of customers,  ensuring that the sources of funds of investors and counterparties is legitimate, monitoring customer transactions, and reporting suspicious activity to regulatory authorities.

Arctic Intelligence’s AML Accelerate Platform has been purposely tailored for Pawnbrokers and Secondhand Dealers, if you would like to learn more contact us or book a demo.

Arctic Intelligence (www.arctic-intelligence.com) is a multi-award winning, RegTech firm that specialises in audit, risk and compliance software related to financial crime compliance and risk management.

Arctic Intelligence has developed our AML Accelerate Solution which has been tailored specifically for dealers in high-value goods to enable them to identify and assess their risks and vulnerabilities to financial crime and then design, implement and maintain appropriate and proportionate controls to mitigate and manage these risks.

Arctic has developed three leading cloud-based software solutions that leverage the latest regulatory technology (RegTech) to re-engineer the way in which dealers in high-value goods manage their financial crime risks.

If you would like to learn more please contact us or request a demo with our team click here.