Right, let’s get ready for a quick test of AML TLA [three-letter acronym]: what do the RBA, BRA, RAS and NRA all have in common? Bravo for shouting out “the letter R” – standing, of course, for Risk. As in: risk-based approach, business risk assessment, risk appetite statement and – the grand-daddy of them all – national risk assessment. Those of you who are avid subscribers to Money Laundering Bulletin will already have spotted my take on the subject of the NRA a couple of months ago. In short, the NRA is a government’s take on its own jurisdiction’s vulnerabilities to money laundering and terrorist financing, and on the effectiveness of the measures that have been put in place to guard against those vulnerabilities.
Interestingly, although many jurisdictions put into their AML legislation something along the lines of “businesses must put in place AML/CFT policies, procedures and controls that are appropriate and proportionate, taking into account the national risk assessment”, it is often the NRA that is the last thing to be completed. Although we have had a risk-based approach to AML since the Third Money Laundering Directive (that’s 2005,when Charles married Camilla and Hurricane Katrina hit the US), NRAs have been very tardy: the first one in the UK appeared in 2015, Guernsey’s first one hit the news-stands in January 2020, and Jersey’s arrived on 30 September 2020 (and that was only the money laundering bit of it – the terrorist financing half is due next year). The poor old FATF has been doing everything possible to prod governments into action: they issued an initial helpful strategy document in 2008, then new guidance in 2013, then an encouraging “here’s the benefits of an NRA” document in 2016, and have now published a webpage of links to NRAs, pour encourager les autres.
Despite this embarrassment of NRA guidance riches, the end products are remarkably dissimilar. I know size shouldn’t matter, but why – when a jurisdiction the size and complexity of the UK can explain its money laundering and terrorist financing NRA in 91 pages, and Guernsey can manage with 111 – does it take Jersey 242 pages to cover just its money laundering concerns? I’ll be blunt here: having done my best to read it, I think the Jersey NRA is designed not so much to enlighten as to beat into submission. If the purpose is to provide the MLRO with a clear and digestible picture of the situation in his jurisdiction, then some NRAs are much more effective than others.
Meanwhile, we wait with bated breath for the latest UK NRA: we had one in October 2015 and then October 2017, but October 2019 came and went with no comment, then someone suggested it might put in an appearance in July 2020. The latest buzz is from HMT, which said in August 2020 in its “AML/CFT: Supervision report 2018-19” that “the 2020 NRA, to be published later this year, will serve as a stocktake of our understanding of these risks, including how they have changed since the 2017 NRA”. I’m hopeful; it’s not as if Treasury staff have much else to occupy them in the dying months of 2020.