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CMVM participates in the 2019 National Risk Assessment on Money Laundering and Terrorism Financing



26 June 2020
 
The CMVM was part of the Working Group that carried out the second 2019 National Risk Assessment (ANR 2019) on money laundering and terrorism financing  wherein the scope was broadened compared to the first assessment, to the risks of financing the proliferation of weapons of mass destruction.
 
The 2019 assessment concluded that the risk of money laundering in Portugal is medium-low, the risk of financing terrorism is medium-low and the risk of financing the proliferation of weapons of mass destruction is low. The main conclusions of the 2019 ANR can be found in the summary.
 
The first risk assessment of money laundering and terrorism financing (MLTF) was carried out by Portugal in 2015. In this assessment, an update to said exercise was expected to be carried out every three to five years. The Financial Action Task Force (FATF) also identified the need to update this exercise, within the scope of the fourth assessment of the effectiveness of national systems for preventing and combating money laundering and financing of terrorism, in which it gave Portugal the highest classification.
 
The second nationwide exercise covering all activity sectors subject to the compliance of MLFT prevention duties, was promoted by the Coordinating Committee for Preventing and Combating Money Laundering and Financing of Terrorism and was led by a Working Group created for the purpose. 
 
The CMVM participated in the 2019 ANR as part of the aforementioned Working Group and contributed to identifying and assessing the risks of money laundering and financing of terrorism and carried out a sectoral assessment of these risks in the sectors wherein the entities it supervises carry out their activities. The sectorial assessment carried out by the CMVM thus encompasses both the financial sector - activities in financial intermediation, management of collective investment undertakings and other assets -, as well as the non-financial sector - audit services - as well as the activity carried out by the managing entities of crowdfunding platforms - loan and equity based.
 
The work carried out by the CMVM on sectoral assessment of MLTF risks, bearing in mind the sectors it supervises, and following the methodology defined by the Working Group, is included in the report prepared by the Working Group and approved by the Coordinating Committee for Preventing and Combating Money Laundering and Financing of Terrorism, covering:

(i) Assessment of the quality of sectoral controls (both from the supervisory authority and the supervised entities viewpoint);
(ii) Assessment of the degree of occurrence probability and the impact of the identified intrinsic vulnerabilities;
(iii) Identification of mitigating measures and improvement actions.
In global terms, as far as the financial sector is concerned, residual vulnerability and the risk of money laundering is medium-low, both with regard to entities providing investment services and with respect to management entities of collective investment undertakings and other assets. In the non-financial sector, the residual vulnerability and the risk of money laundering of audit services is low. In terms of residual vulnerability and money laundering risk of entities managing crowdfunding platforms (loan and equity based), the assessment is medium-low.
 
It should be noted that the conclusions of the assessment carried out were preceded by two consultations with a group of supervised entities and associations representing the sectors supervised by the CMVM, promoted in conjunction with the other supervisory and inspection authorities, resulting overall, in agreement with the assessment made by the CMVM.
 
It is worth recalling that the national MLFT risk assessment makes it possible to understand the risks of this nature that currently exist in Portugal. The need to identify, assess and understand the risks of money laundering and terrorism financing arises from the FATF Recommendations (Recommendation 1), as well as national and international legal imperatives. At the level of the sectors supervised by the CMVM, this exercise is a relevant instrument for understanding and monitoring the main vulnerabilities identified with regard to the sectors wherein the entities supervised by the CMVM carry out their activity, and as an important instrument to consider when conducting the risk-based supervision developed by the CMVM.