4.1.5 Product-, Service-, Transaction-Related Risk

Effective from 13/7/2023

When assessing the inherent ML/FT risks associated with product, service, and transaction types, an FI should take stock of its lines of business, products and services that are more vulnerable to ML/FT abuse. FIs should assess the inherent ML/FT risks of abuse of the products and services by their customers taking into account a number of factors such as their ease for holding and transferring value or their complexity and transparency. Some of the risk factors that FIs should consider, among others, are:

•	Typology. FIs should consider whether the product, service, or transaction type is associated with any established ML/FT typologies (see Section 3.10, ML/FT Typologies).
•	Complexity. Products, services, or transaction types that favour complexity, especially when that complexity is excessive or unnecessary, can often be exploited for the purpose of money laundering and/or the financing of terrorism or illegal organisations. FIs should consider the conceptual, operational, legal, technological and other complexities of the product, service, or transaction type. Those with higher complexity or greater dependencies on the interactions between multiple systems and/or market participants may expose FIs to different types and levels of ML/FT risk than those with lower complexity or with fewer dependencies on multiple systems and/or market participants.
•	Transparency and transferability. Situations that favour anonymity can often be exploited for the purpose of ML/FT. FIs should consider the level of transparency and transferability of ownership or control of products, services, or transaction types, particularly in respect of the ability to monitor the identities and the roles/responsibilities of all parties involved at each stage. Special attention should be given to products, services, or transaction types in which funds can be pooled or co-mingled, or in which multiple or anonymous parties can have authority over the disposition of funds, or for which the transferability of Beneficial Ownership or control can be accomplished with relative ease and/or with limited disclosure of information.
•	Size/value. Products, services, or transaction types with different size or value parameters or limits may pose different levels of ML/FT risk.