The geographical reach of a business will impact on the level of detail in a risk assessment.     Geographical components of a risk assessment should incorporate the business activity of customers, including where the customer receives funds from or makes payments to.

Some customers may be domiciled in countries or conduct business with countries where higher risk of money laundering and terrorism financing exists.  Though there is no definitive classification of territories and countries with high risk propensities, there are various sources of publicly available information which have been distributed by reputable government bodies.

The Act requires businesses to consider whether a non-resident customer is from a country that has insufficient anti-money laundering and countering financing of terrorism systems or measures in place, or whether transactions are originating from, or being sent to such countries.   

Guidance on which countries have insufficient systems or measures in place can be obtained from the Financial Action Task Force website - www.fatf-gafi.org.

Additional matters that a business may consider when assessing geography risk include –

• General reputation of the country

• Political stability

• High levels of public or private sector corruption

• Drug production region

• Drug transit region

• Secrecy jurisdictions / tax havens

• Countries known to support terrorism or sponsor terrorist organisations