03 November 2025: Banking Sector Money Laundering Risk Assessment Published
Reminder: the Isle of Man Government has published its Money Laundering (ML) Risk Assessment for the banking sector. The assessment builds upon the 2020 National Risk Assessment (NRA) and forms part of the broader programme of sector-specific NRAs being released in support of the National Financial Crime Strategy 2024–2026.
The Sector, in Summary
The report highlights that the banking sector remains central to the Island’s economy, holding over £40 billion in deposits and processing almost £80 billion in annual payments (contributing 7.6% to national income).
Overall, the ML risk rating for the banking sector has increased (since the 2020 NRA) from medium to medium-high. Over half of deposits are retail, with 94% of banking customers being natural persons. The domestic ML Risk has been rated Medium, with cross-border ML Risk being rated medium-high, resulting in the overall rating of medium-high.
Money Laundering Risks
Some Key Money Laundering risks highlighted in the NRA include:
• Placement/layering of foreign criminal proceeds.
• Complex routing via non-banking channels.
• Use of mule accounts and money service businesses.
Developing Threats include:
• A rise in cyber-enabled crime, complex multi-jurisdictional structures and a range of financial products;
• Increase in Virtual Assets (VA), USDT in particular, to move funds;
• Growing risks from Asian-facing organised crime and UK-linked Organised Crime Groups (OCGs);
• Human trafficking indicators (e.g. clustering of unrelated individuals) relevant to banking and to gambling sectors; and
• Recent reports, including a 2024 study by the University of Sussex, highlight a shift in illicit financial flows from traditional high-risk centres to emerging markets—particularly noting a “Dubai-Hong Kong axis” as a growing channel for illicit funds.
Typologies
The NRA lists a series of Money Laundering typologies. The Gambling Supervision Commission (GSC) has summarised the key risk indicators/flags of those typologies which remain pertinent to the gambling sector below.
“Disguised proceeds as business revenue”
This typology highlights the following key ML risk indicators, which are also pertinent to the Gambling sector. These include:
• Unusually high volume of funds for new business;
• cross-border company structure;
• links to jurisdictions with known financial crime risk.
“Bribery and corruption”
This typology highlights the importance of considering relevant risk factors in line with the AML/CFT Code, emphasising the importance of undertaking own checks, including open-source intelligence. Key Risk indicators include:
• Individual is from a high-risk Country;
• Screening/CDD indicates negative media results or connections to historical criminal activity.
“Human Trafficking & Modern Slavery”
This typology highlights the concern of human trafficking / modern slavery. Relevant Key Risk Indicators Include:
• Clustering of unrelated individuals at a single address;
• Accompaniment of third party (terrestrial) may signal control or coercion;
• Operators should consider whether individuals could have been coerced/involved in opening gambling accounts.
Key Takeaways
Banks remain vulnerable to potential weaknesses in their ongoing monitoring systems, including failure to identify changes to client profiles and transaction patterns, and gaps in customer risk assessments. Operators should ensure ongoing monitoring systems are effective and up to date.
The domestic typologies highlighted in the NRA underscore the importance of effective enhanced due diligence (EDD) processes, including establishing the source of wealth (SOW) and undertaking further research to understand the customer background. For more information on EDD and SOW, review your relevant guidance documents on the AML/CFT Guidance page.
The GSC is working in collaboration with various government agencies to provide continued Outreach and support regarding the content and implementation of the NRAs over the coming months.
You can view all the NRAs as they are released on the Isle of Man Countering Financial Crime website.