Supervisors appropriately supervise, monitor and regulate financial institutions, Designated Non-Financial Businesses and Professions (DNFBPs) and Virtual Asset Service Providers (VASPs) for compliance with AML/CFT requirements commensurate with their risks.

Characteristics of an effective system:

Supervision and monitoring address and mitigate the money laundering and terrorist financing risks in the financial and other relevant sectors by:

• Preventing criminals and their associates from holding, or being the beneficial owner of, a significant or controlling interest or a management function in financial institutions, DNFBPs or VASPs; and
• Promptly identifying, remedying, and sanctioning, where appropriate, violations of AML/CFT requirements or failings in money laundering and terrorist financing risk management.

Supervisors provide financial institutions, DNFBPs and VASPs with adequate feedback and guidance on compliance with AML/CFT requirements. Over time, supervision and monitoring improve the level of AML/CFT compliance and discourage attempts by criminals to abuse the financial, DNFBP and VASP sectors, particularly in the sectors most exposed to money laundering and terrorist financing risks.