How do non-financial businesses fall under AML compliance obligations?

Non-financial businesses fall under AML compliance obligations primarily based on their transactions and services. This is important to understand because the scope of AML regulations extends beyond traditional financial institutions, reflecting the diverse nature of money laundering risks that can occur in various sectors.

Certain non-financial businesses, such as real estate agencies, auction houses, gaming establishments, and certain types of professionals (e.g., lawyers and accountants), may engage in activities that can be exploited for money laundering. This necessitates compliance measures tailored to the specific risks associated with their transactions.

For instance, if a real estate agency facilitates high-value property transactions, it may need to conduct customer due diligence and monitor transactions for suspicious activity, much like a financial institution. The degree of compliance required can vary based on factors such as the nature of the business, the types of services offered, and the volume and size of transactions. Consequently, proper adherence to AML regulations is determined by the characteristics and risks inherent in each non-financial business's operations.