Role of Designated Non-Financial Businesses and Professions (DNFBPs)

Last Updated on Feb 17, 2026, 2k Views

Role of Designated Non-Financial Businesses and Professions (DNFBPs)

Role of Designated Non-Financial Businesses and Professions (DNFBPs) in AML/CFT

Designated Non-Financial Businesses and Professions (DNFBPs) play a critical role in global Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) frameworks. While banks are often the focus of AML regulation, criminals frequently exploit non-financial sectors to launder illicit funds. This is where DNFBPs become essential gatekeepers.

The concept of DNFBPs is defined under the recommendations of the Financial Action Task Force (FATF).

What Are DNFBPs?

According to FATF standards, DNFBPs typically include:

Casinos
Real estate agents
Dealers in precious metals and stones
Lawyers, notaries, and other independent legal professionals
Accountants
Trust and company service providers (TCSPs)

These sectors are considered vulnerable because they may handle large transactions, manage client funds, or help establish corporate structures that can be misused for money laundering.

Why DNFBPs Matter in AML/CFT

1. Gatekeeper Function

DNFBPs act as gatekeepers to the financial system. For example:

Lawyers may set up shell companies.
Real estate agents may facilitate high-value property purchases.
Accountants may structure complex financial arrangements.

Criminals often use these services to disguise the origin of illicit funds.

2. Customer Due Diligence (CDD)

DNFBPs are required to:

Identify and verify clients
Identify beneficial ownership
Understand the purpose of transactions
Conduct ongoing monitoring

This aligns with FATF’s risk-based approach.

3. Suspicious Transaction Reporting (STR)

When DNFBPs detect unusual or suspicious activity, they must report it to their country’s Financial Intelligence Unit (FIU).

In India, DNFBP obligations are governed under the Prevention of Money Laundering Act (PMLA), and suspicious transactions are reported to the Financial Intelligence Unit-India.

4. Record Keeping

DNFBPs must:

Maintain transaction records
Preserve client identification documents
Retain records for prescribed periods (typically 5 years or more)

This ensures traceability during investigations.

5. Risk-Based Approach

DNFBPs are expected to:

Conduct sector-specific risk assessments
Implement internal AML policies
Appoint compliance officers
Provide AML training to staff

Key Risks Associated with DNFBPs

Sector	Common ML Risk
Real Estate	Property purchases using illicit funds
Casinos	Cash-intensive laundering schemes
Precious Metals/ Stones	High-value, portable assets
Legal Professionals	Creation of shell companies
TCSPs	Concealment of beneficial ownership

Challenges Faced by DNFBPs

Lower AML awareness compared to banks
Limited compliance infrastructure
Professional secrecy/confidentiality concerns
Informal or cash-heavy business models

Global Regulatory Expectations

Under FATF Recommendations (especially Recommendations 22 and 23), countries must ensure DNFBPs:

Apply CDD measures
Maintain records
Report suspicious transactions
Implement internal controls

Non-compliance can result in regulatory penalties and increased national risk exposure.

Conclusion

DNFBPs are essential partners in the global AML/CFT ecosystem. By performing due diligence, reporting suspicious activities, and maintaining strong internal controls, they prevent misuse of professional services for money laundering and terrorist financing.

In jurisdictions like India, strengthening DNFBP compliance under PMLA is increasingly important as regulators expand AML coverage beyond traditional banking institutions.