DNFB stands for Designated Non-Financial Businesses and Professions, a category defined by the Financial Action Task Force (FATF) to describe certain sectors outside traditional financial institutions that are still vulnerable to money laundering and terrorist financing. These entities are required to comply with anti-money laundering (AML) and counter-terrorist financing (CTF) regulations due to their exposure to high-value transactions and client anonymity.
Examples of DNFBPs include law firms, real estate agents, casinos, accountants, and dealers in precious metals and stones. Despite not being banks, these sectors can facilitate money laundering through property purchases, complex transactions, or client fund handling.
Why DNFBPs Are Important in AML Regulations
DNFBPs play a critical role in preventing illicit funds from entering the legitimate economy. Criminal networks often exploit non-financial channels to disguise illegal proceeds. To address this risk, regulators require DNFBPs to implement robust customer due diligence, record-keeping, and suspicious activity reporting.
The FATF Recommendations establish global standards for these businesses, outlining how they should identify and verify clients, assess risk, and report suspicious behavior. These principles help harmonize AML efforts across financial and non-financial sectors.
Facctum’s compliance technology supports DNFBPs by integrating customer screening and transaction monitoring tools into their daily workflows, ensuring adherence to both local and international standards.
Sectors Classified as DNFBPs
Before listing the sectors, it’s important to note that the FATF classifies DNFBPs based on their risk exposure and influence over financial flows.
The main categories include:
Casinos and Gaming Establishments - Handle large cash volumes and are often exploited for placement and layering activities.
Real Estate Agents - Facilitate property transactions that can mask beneficial ownership.
Lawyers, Notaries, and Accountants - May be used to create shell companies, manage trusts, or transfer client funds.
Dealers in Precious Metals and Stones - Engage in high-value, portable transactions that can obscure fund origins.
Trust and Company Service Providers - Assist in setting up entities that may conceal ultimate beneficial owners.
Each sector has distinct AML obligations under FATF guidance and regional regulations.
How DNFBPs Manage AML Compliance
DNFBPs must apply a risk-based approach to compliance, implementing controls proportionate to their exposure level.
Common practices include:
Know Your Customer (KYC) Procedures - Verifying client identity before providing services.
Ongoing Monitoring - Using automated systems to detect unusual transactions.
Enhanced Due Diligence - Conducting deeper background checks for high-risk clients.
Record Keeping - Maintaining client and transaction data for regulatory review.
Suspicious Activity Reporting - Reporting transactions that indicate potential money laundering or terrorism financing.
Tools like watchlist management enhance these efforts by automatically screening clients and transactions against global sanctions and PEP lists.
International Standards and Oversight
The FATF, the IMF, and regional authorities such as the European Banking Authority oversee how DNFBPs implement AML measures. Their guidance ensures alignment across jurisdictions and reduces regulatory blind spots.
These organizations encourage collaboration between governments and private sectors to strengthen information sharing and transparency in non-financial industries.
