Designated Non-Financial Businesses & Professions (DNFBPs)
Definition & Overview
Designated Non-Financial Businesses and Professions (DNFBPs) refers to a broad set of businesses and professional service providers that, although not part of the traditional financial sector, are vulnerable to exploitation for money laundering (ML) and terrorist financing (TF).
These entities are designated because their business activities can involve large volumes of value, transactions in cash or assets, and complex structures, all features that can be misused to move or conceal illicit funds.
The concept originates from the global standards set by the Financial Action Task Force (FATF) and is embedded in AML/CFT (Anti-Money Laundering / Countering the Financing of Terrorism) frameworks.
DNFBPs include, for example, casinos; real-estate agents; dealers in precious metals and stones; lawyers, notaries, other independent legal professionals, and accountants; and trust and company service providers (TCSPs).
Their inclusion in regulatory regimes reflects recognition that the ‘non-financial’ sector can act as a gatekeeper into the financial system or be misused to move illicit value.
Detailed Explanation & Key Components
Scope and definition
The FATF identifies the DNFBP category to capture entities beyond banks, insurers, and other regulated financial institutions.
The typical list of DNFBPs includes:
- Casinos (including online or ship-based)
- Real estate agents/brokers
- Dealers in precious metals and precious stones
- Lawyers, notaries, and other independent legal professionals and accountants
- Trust and Company Service Providers (which may form or act for companies, trusts or similar legal arrangements)
While the list above is standard, jurisdictions may extend obligations to additional non-financial sectors based on national risk assessments.
Why DNFBPs matter in AML/CFT
These entities may handle significant flows of value, operate in high-asset sectors, offer advice or structuring of transactions, and sometimes enjoy professional secrecy or client confidentiality.
For example, real estate transactions can be used to integrate illicit funds by purchasing high-value property.
Lawyers or accountants may form shell companies, manage trusts, or advise on transaction structures that facilitate the layering of illicit funds. Because of these structural factors, DNFBPs are important in AML/CFT regimes.
Key regulatory components
To manage the ML/TF risks associated with DNFBPs, jurisdictions typically impose preventive measures and supervision that mirror many of those applied to financial institutions, albeit adapted to the nature of the business.
These measures include customer due diligence (CDD) and beneficial-ownership verification; record-keeping; suspicious transaction reporting (STR); transaction monitoring; and application of a risk-based approach.
Jurisdictions also need to implement supervisory frameworks, licensing or registration of DNFBPs where required, and ensure effective enforcement of obligations.
Risk-based approach
Because DNFBPs vary widely in size, business model, and geography, a risk-based approach is essential: obligations and controls should reflect the inherent risks associated with the entity, services offered, customer base, jurisdictions of operation, and transaction typologies.
For higher-risk DNFBPs or high-risk clients/transactions, enhanced due diligence (EDD) measures apply.
Regulatory & Compliance Relevance
Within an AML/CFT framework, DNFBPs play a critical preventive role.
They serve as an additional line of defence beyond banks and financial institutions, offering opportunities for early detection of unusual or suspicious value movements.
From a compliance perspective:
Onboarding and client acceptance
DNFBPs must perform CDD on clients and beneficial owners, verify identity, assess risk, and decline or terminate business relationships where necessary. This helps prevent misuse of services for money-laundering or terrorist-financing purposes.
Transaction monitoring and reporting
DNFBPs need systems to detect red flags or warning signs of ML/TF typologies relevant to their sector (for example, unusual property purchases, complex trust structures, frequent transfers of high-value assets).
They must file STRs with the designated Financial Intelligence Unit (FIU) or equivalent when suspicious activity is identified.
Record-keeping and transparency
Many jurisdictions require DNFBPs to maintain records of client identity, beneficial ownership, transaction details, and retained due diligence information for a specified number of years (often 5-10 years).
This supports audit trails and investigation of illicit funds after the fact.
Supervision and enforcement
Regimes need to supervise DNFBPs, ensure registration or licensing where applicable, monitor compliance, and impose penalties for non-compliance.
Weak supervision of DNFBPs has been identified as a global AML/CFT vulnerability.
Global cooperation and standardisation
Because DNFBPs often engage across borders or serve clients with international exposure, aligning to international standards ensures effective cross-border information exchange, mutual legal assistance, and reduces regulatory arbitrage in jurisdictions where DNFBP obligations are weak.
Real-world Examples / Applications
Example: Real estate sector
A real estate agent in a jurisdiction engages with a buyer who pays in cash significantly over market value for a luxury property.
The agent, as a DNFBP, has AML/CFT obligations to perform enhanced due diligence and assess whether the transaction may involve the proceeds of crime. If concerns arise, the agent may be required to report a suspicious transaction and refuse to proceed with the sale.
Example: Lawyers and trust service providers
An independent legal professional acts as a trustee for a complex offshore trust that acquires shares in multiple companies.
Under the DNFBP framework, the lawyer must verify the beneficial owners, assess whether the structures are being used to conceal illicit funds, monitor for unusual activity, and report suspicions.
Example: Dealers in precious metals and stones
A jewellery dealer sells high-value diamonds and regularly accepts large cash payments.
The dealer must carry out due diligence, check for beneficial ownership, monitor transactions, and be aware of red flags such as obscure origin of funds or rapid resale.
Example: Casinos
A casino operator offering both physical and online gaming services must integrate AML/CFT controls akin to financial institutions: identify customers, verify identity, monitor large cash wagers, detect layering of gambling transactions, and report suspicious behaviour.
These examples underscore how DNFBPs offer services that, if unmonitored, can be exploited for the movement, concealment, or integration of illicit funds and, therefore, must be embedded in AML/CFT frameworks.
Challenges & Considerations
Lack of regulatory coverage or supervision
In many jurisdictions, DNFBPs remain under-regulated or subject to weak supervision.
Studies have shown that some jurisdictions do not apply full AML/CFT obligations to DNFBPs, making them potential loopholes in financial crime defences.
Sectoral diversity and complexity
DNFBPs cover a wide range of professions and businesses, each with unique risk profiles, services, and transaction types.
Tailoring AML/CFT programmes for such diversity is challenging.
Smaller firms, solo practitioners, or professionals may struggle with resource constraints, awareness, or compliance infrastructure.
Professional secrecy and confidentiality
Some DNFBP sectors (e.g., lawyers, notaries, accountants) operate under strong confidentiality or privilege regimes, which may hinder transparency, reporting, or verification of beneficial ownership.
Balancing professional privilege with AML obligations is a regulatory challenge.
Cross-border transactions and structures
DNFBPs frequently advise or service clients across jurisdictions, engage in complex company formations, trusts, and fiduciary arrangements.
This raises beneficial-ownership, transparency, and supervision issues, particularly where legal frameworks differ.
Risk awareness and culture
Many DNFBPs have historically viewed themselves as outside the scope of AML/CFT regulation and may lack awareness of ML/TF typologies, red flags, or needed controls.
Developing a robust compliance culture, training programmes, and professional standards is critical.
Best Practices and Implementation Insights
Conduct a sector-specific risk assessment
DNFBPs should map their business lines, services, customers, geographies, and transaction types to identify inherent ML/TF risks, then apply controls accordingly.
Embed AML/CFT obligations into client-onboarding processes
Ensure CDD, beneficial-ownership verification, risk rating, and acceptance criteria are integrated into client acceptance practices across all applicable business units.
Apply continuous monitoring and enhanced due diligence
For higher-risk clients, transactions, or jurisdictions, adopt enhanced scrutiny, monitor for red flags (e.g., rapid asset transfers, mismatched documentation, use of shell companies), and review relationships periodically.
Train professionals and staff in sector-specific typologies
Awareness of how ML/TF can manifest in real estate deals, company formation services, jewellery and precious-metal trades, or trust services is vital.
Frequent training ensures staff recognise warning signs and know when to escalate.
Ensure oversight, record-keeping, and reporting mechanisms are robust
Establish documented policies, audit trails, secure records retention, and ensure mechanisms for filing suspicious transaction reports where required.
Coordinate with regulatory and supervisory bodies
Active cooperation with regulators, participation in industry associations, and engagement with supervisory tools help improve compliance standards across the DNFBP sector.
Leverage technology and screening tools
Use entity-screening, transaction-monitoring, and beneficial-owner verification tools adapted for non-financial sectors to identify high-risk relationships or transactants.
Integrate across enterprise compliance functions
Align DNFBP compliance with enterprise-wide AML/CFT risk frameworks, sanctions screening, beneficial-owner transparency initiatives and global monitoring.
Related Terms
- Customer Due Diligence (CDD)
- Enhanced Due Diligence (EDD)
- Beneficial Ownership
- Risk-Based Approach (RBA)
- Trust and Company Service Provider (TCSP)
- Anti-Money Laundering / Countering the Financing of Terrorism (AML/CFT)
- Suspicious Transaction Reporting (STR)
References
- CFATF Secretariat Research Desk, “What are DNFBPs?” (December 2020)
- AML-CFT Library, “Designated non-financial Businesses and Professions (DNFBPs)”
- Financial Intelligence Authority Uganda, “AML/CFT Customer Due Diligence Guidelines for DNFBPs”
- Basel Institute on Governance, “Money laundering risks: are we paying enough attention to lawyers, accountants and others beyond the financial sector?”
- FATF, “The Application of Group-Wide Programmes by Non-Financial Businesses and Professions (Explanatory Materials R18 / R23)”
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