9th June 2016
Designated Non-Financial Businesses and Professions (DNFBPs)
What You Need To Know
Designated Non-Financial Businesses and Professions (DNFBP) is a classification used by the Financial Action Task Force (FATF) denoting non-financial sector businesses that pose a money laundering and terrorism financing threat.
The term DNFBP was introduced in the late 1990s as a response to the changing methodologies of financial criminals who sought to avoid increased AML/CFT scrutiny by using non-financial businesses to launder money. FATF recommended that DNFBPs be subject to the same risk-based AML/CFT compliance regulations as banks and other financial institutions, including transaction monitoring, reporting, and record-keeping obligations.
The following businesses and professions are subject to DNFBP FATF recommendations:
- Auditors, external accountants, and tax advisors
- Casinos and other gambling service providers
- Company service providers
- Dealers in precious metals
- Dealers in precious stones
- Notaries and other independent legal professionals
- Real estate agents
FATF has set out its guidance for the regulation and supervision of DNFBPs in its 40 Recommendations (specifically Recommendation 28). The guidance requires jurisdictional authorities to take a range of supervisory steps, including:
- Implementing licensing requirements and ownership criteria for casinos.
- Introducing effective monitoring systems to ensure DNFBP compliance with AML/CFT requirements.
- Preventing criminals and their associates from owning or controlling DNFBPs.
- Implementing proportionate and dissuasive sanctions to deal with DNFBP compliance violations.
In most jurisdictions today, DNFBPs are regulated in much the same way as credit and financial institutions. Some financial authorities have tailored their AML/CFT regulations to counter the unique money laundering threats posed by different types of DNFBP.