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Do you know what the National Risk Assessment is?

By: Karla Valdés

 

On this week’s Compliance blog we are going to cover the National Risk Assessment (NRA), an issue that is an integral part of institutional Risk Based Approach programs and Money Laundering Prevention (PLD) programs. 

What is the NRA?

  • The NRA is a self-assessment exercise that allows countries to redefine their Anti-Money Laundering (AML) and terrorist financing policies, in addition to assessing the risks that exist in the government institutions that implement them.
  • The NRA seeks to comply with the provisions of the Financial Action Task Force (FATF) Recommendation 1, called the Risk Based Approach, which establishes that countries and financial institutions must identify, evaluate, and understand their own Money Laundering and Terrorist Financing risks. They should apply measures and resources aimed at ensuring that risks are effectively mitigated, and these measures must be proportional to the risks identified.
  • It is a lengthy process: the first evaluation was completed in 2016 and the second one was recently published in 2020.

Who participates in the evaluation?

Several institutions participate in this evaluation and some of the most important are the SHCP, the Bank of Mexico, the Attorney General’s Office, INEGI, the National Banking and Securities Commission, and the ministries of Economy, Security, and Foreign Relations. 

What risks are assessed?

  • Anti-Money Laundering.
  • Financing of terrorism.
  • Risks associated with the AML regime.
  • Sector-specific risks.

 

How is money laundering evaluated in the NRA?

We will focus on the risk of Money Laundering, which is one of the most relevant for Mexico. The strong presence of organized crime that generates large amounts of illicit resources in the country, combined with high levels of corruption, results in a constant threat of money laundering.

The money laundering threat is exacerbated by systemic vulnerabilities in Mexico, including legal ambiguities, impunity, regulatory ineffectiveness, the informal economy, and the large volumes of people and goods that move through international ports of entry and exit, among others.

We have seen increasing coverage of Mexico’s corruption and impunity issues not only in the media, but in evaluations like the NRA, academic studies, and reports by international organizations such as Transparency International, which ranks Mexico 124th out of 180 countries in corruption issues.

Why is the NRA analysis important?

The NRA analysis is extremely important for financial institutions, which are required by regulators to take the NRA analysis into account when preparing Money Laundering Prevention and Risk Based Approach programs.

We hope this post has been useful, and if you need support implementing your Risk Assessment Matrix or developing parameters for your monitoring system, Miranda Compliance is happy to assist you.

C O N T A C T 

Miranda – Compliance

Karla Valdés Posada

Partner

karla.valdes@miranda-partners.com

Ernesto Gómez Gallardo

Partner

ernesto.gomez@miranda-partners.com  

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