Money laundering corrodes financial-system integrity, eroding investor confidence and impeding sustainable economic growth.
Illicit funds entering legitimate economies can finance terrorism and organized crime, skew resource allocation, and stifle development.

An AML supervisory authority is responsible for overseeing compliance with AML/CFT obligations and has the legal power to conduct inspections, issue findings, impose sanctions, and recommend or enforce license withdrawal.
Supervisory authorities assess whether institutions comply with national AML laws and regulatory standards. When major deficiencies are identified, they may issue a preliminary findings report outlining violations and potential enforcement actions, including license revocation.
Self-regulatory bodies lack the authority to withdraw banking licenses. Law enforcement agencies investigate criminal activity but do not supervise institutions or issue compliance findings reports.
FATF is an international standard-setting body and does not conduct institution-level enforcement or issue sanctions.
Therefore, only an AML supervisory authority could issue such a report.

A core requirement of applying a risk-based approach (RBA) in customer due diligence for legal entity clients is the identification and verification of beneficial ownership. FATF standards require financial institutions to take reasonable measures to identify and verify the identity of the natural persons who ultimately own or control a legal entity.
Understanding beneficial ownership is critical because complex corporate structures can be misused to conceal illicit ownership, launder money, or evade sanctions. The depth of verification required depends on the assessed risk level of the customer, with higher-risk entities requiring enhanced due diligence.
Information such as market competition or profitability is not relevant to AML/CFT risk assessment. While open-source information may support due diligence, relying solely on internet or social media sources is insufficient and inconsistent with regulatory expectations.
Therefore, verifying beneficial ownership is the most essential and regulator-mandated CDD measure under a risk-based approach.

Trade-Based Money Laundering (TBML) is a recognized method used to move and disguise illicit funds through trade transactions. Regulatory guidance from FATF highlights several red flags that may indicate TBML risks.
Irregular or inconsistent trade volume and frequency that deviates from a counterparty's historical activity can suggest artificial or manipulated transactions. This behavior may indicate over- or under-invoicing or fictitious trade.
Structuring transactions below reporting thresholds, such as repeated cash deposits just under regulatory limits, is a classic money laundering technique used to avoid detection and reporting obligations.
Engaging in unusual shipping routes, methods, or counterparties that do not align with normal business practices is another key TBML indicator. Criminals often use complex or illogical logistics to obscure the true nature of transactions.
Conversely, detailed trade documentation and transparent pricing with proactive explanations are indicators of legitimate trade activity and reduce AML risk rather than increase it.