What is Designated Non-Financial Businesses and Professions (DNFBP)?

Designated Non-Financial Business and Professions (DNFBPs) are what we’ll be talking about in this blog post. Casinos, real estate agents, accountants, dealers of precious metals, and trust service providers can be given as examples. These are not banks but since they deal with money and valuables, they still have the risk of money laundering and terroist financing. Fraudsters can use these entities to move their illicit funds with high amount transactions.

DNFBPs are tasked with keeping customer due diligence, saving records, and reporting when suspicious activity occurs since the FATF asks them to do so.

What Are Designated Non-Financial Businesses and Professions?

The term DNFBP, “designated non-financial businesses and professions” first appeared in the FATF 40 Recommendations in October 2003.  There are many professions and sectors that count as DNFBPs. The first example is legal professionals; these people are in this category since they handle contracts and transactions. Another example that we can give is accountants and auditors. They manage financial records and ensure that consumers reach tax compliance; these make them count as DNFBPs. 

One other category is Trust and Company Service Providers (TCSPs). These officials or companies are tasked with helping customers manage legal entities or arrangements like trusts and shell companies. Since they are in a sector where high amount transactions occur, they are at higher risk of money laundering and more. Another category consists of real estate agents. These people are on this list since they deal with high value property sales. One other example we’ll give is Dealers in Precious Metals and Stones (DPMS). These dealers trade gold, silver, and diamonds. These transactions are done mainly with cash, so they are of higher risk.

Finally, casinos are in this category since they enable layering. Layering is done with the purpose of disguising the illicit funds’ origin by moving it in places like casinos by gambling and using chips. To enhance the country's efforts to raise the level of compliance in the business sector and non-financial professions Ministry of Economy & Tourism levied fines of AED 3.2 million on six DNFBP companies in 2022.  This shows how risky these companies can be if they go unchecked.

Why Are DNFBPs Considered High-Risk for Money Laundering?

DNFBPs are considered high risk since because of the nature of their work, they allow anonymity. Clients can bypass KYC while using their services, and this shouldn’t occur. Another reason is that because of shell structures and offshore entities, the true owner details can be concealed.

One other reason we can give is legal layering. Lawyers may be used for money laundering because of their ability to create structures that may disguise illicit funds. Finally, the volume and the value of these transactions may cause higher risk. For example, real estate involves large transactions, making it risky in turn. The Financial Intelligence Centre (FIC) has called out real estate agents for impeding South Africa’s exit from the grey list. These businesses form part of the non-financial businesses and professions (DNFBPs) under the FIC’s purview, which have been flagged as big risks for money laundering and terrorism financing.  This fact shows that DNFBPs play a bigger role than our readers might have previously thought.

AML and CFT Obligations for DNFBPs

We’ve talked about how risky these sectors and professions can be. To make sure these entities are reaching compliance, several regulatory bodies have implemented requirements for firms to comply with. Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) is the first obligation; they will help you in the process of identifying clients and Ultimate Beneficial Owners (UBOs). Another regulation to follow is record keeping. You need to keep customer ID and transaction records for at least 5 years. These will help in the case of an investigation. 

Reporting suspicious transactions to Financial Intelligence Units (FIUs) in the form of Suspicious Transaction Reports (STRs) is also beneficial to your company. Using a risk based approach (RBA) is also highly recommended by AML and CFT regulatory bodies. This approach helps you categorise customers by different characteristics they possess. Finally, ongoing monitoring is needed to make sure you miss nothing during your work process and are tracking client risks accordingly.

FATF Recommendations for DNFBPs

Recommendation 22-23 asks for CDD, internal controls, audit & compliance officers. Recommendation 24-25 demands you ensure transparency of beneficial ownership. Finally, recommendation 28 recommends  your company require DNFBPs to register, license, and undergo regulatory oversight. These recommendations are the building blocks of compliance. 

What Are the Sector-Specific Risks?

Now that we know more DNFBPs, let’s talk more about what risks you may face in your specific sector. In the legal sector, lawyers can be used to create offshore structures that hide the UBO. Real estate is another sector that is vulnerable to risks, using the technique of shell buyers can cause fraudsters to launder billions annually.  Since DPMS are completing their transactions mostly with cash, it’s harder to track their transactions, which makes it easier for fraudsters to abuse this loophole. Finally, casinos are places where high amounts of cash is used. Casinos also give the opportunity of layering, which helps fraudsters hide the origin of their funds.

What Are the Compliance Challenges Faced by DNFBPs?

The first challenge of DNFBPs is caused because of their low awareness and limited staff training; these weaken DNFBPs’ ability to find and report suspicious activity. Another trouble is because of complex ownership structures and layered transactions. These would normally be fine but they make figuring out UBOs difficult when handled by fraudsters.

Since these businesses and professions are regulated by different regulatory bodies across different jurisdictions for their various transactions, oversight is fragmented and reaching compliance is made more difficult. Since DNFBPs aren’t as equipped when it comes to compliance, keeping client confidentiality and the duty of filing STRs at the same time is harder for them.

Finally, EDD might give out false positives, which isn’t the greatest result for DNFBPs who are looking to reach compliance. These challenges increase operational costs and might break the trust between the company and the customer.

Key AML Trends for DNFBPs in 2025 

The first trend we’ll mention is the stronger push for required Know Your Business (KYB) and Ultimate Beneficial Owner (UBO) verification, this trend aims to ensure transparency. Companies are also looking to use AI powered monitoring tools since they help find suspicious activities easier and in a more efficient way. Also, real time adverse media screening is increasing in demand; the screening aids DNFBPs in their quest of figuring out who among their customers might be conducting suspicious business.

How Sanction Scanner Supports DNFBPs in AML Compliance

We at Sanction Scanner provide our customers with real time name and sanction screening to help in the process of identifying customers. PEP and adverse media monitoring is also offered by our Sanction Scanner team to ensure you are not doing business with shady companies. Risk based scoring is used to make your compliance process faster and more efficient. Our offering of high value transaction monitoring will ensure that you don’t miss any transaction while looking to reach compliance.

Finally, our end-to-end case management feature will assist you during every step of ensuring AML compliance and many more. Fill the form to try our demo screen free.