Strategic Responses of Risk Mitigation
Risk mitigation in Georgian law unfolds through the risk-based proportionality of the law on the prevention of money laundering and terrorism financing: enhancement for high risk, simplification for low risk, exemption in strictly limited cases, and operational suspension in an emergency — a set of distinct strategic responses. At the same time, the treatment categories of international voluntary frameworks are non-Georgian guidance concepts; the page is carried by the Georgian statutory proportionality regime.
Responding to High Risk — Enhanced Measures
According to the identified risks, toward a client assigned to an increased risk level the accountable person, in addition to the baseline preventive measures, applies additional measures: obtains additional information on the client's or beneficial owner's property and activity, increases the frequency of updating identification data, requests additional information on the purposes and grounds of prepared, concluded, performed and anticipated transactions, obtains the leadership's permission to establish or continue the relationship, takes reasonable measures to establish the origin of the client's property, funds and convertible virtual asset, and conducts enhanced monitoring — increasing the number or frequency of risk-management measures and detecting combinations of transactions requiring further study. Where necessary, other effective measures are added.
Allocating Resources — Simplified Measures
Toward a client assigned to a lower risk level the accountable person may apply simplified preventive measures: verification of the client or beneficial owner after establishing the relationship, reduced frequency of updating identification data, reduced frequency and volume of transaction review within a reasonable threshold, and — proceeding from the type of relationship or transactions — determination of the relationship's purpose and intended character. At the same time, the reasonableness of simplification must be substantiated with sufficient information, and simplified measures are impermissible where characteristics of increased risk of money laundering or terrorism financing exist — this prohibition is the condition of a healthy strategy cycle.
Avoidance — Low-Risk Services
The law also provides the exemption institution: by a subordinate act of the head of the service, in strictly limited cases, an accountable person may be exempted from individual requirements when providing services that carry low risks. The exception must be duly substantiated, define an exhaustive list of circumstances and extend to a specific group of accountable persons or activity. For example, a financial institution may be exempted from individual requirements when providing payments with an e-money instrument, if the instrument is used only for paying for goods and services, no electronic money exceeding 500 lari is stored on it at any time, monthly transfer amounts do not exceed 500 lari, anonymous top-up is prohibited and the issuer monitors the relationship to detect suspicious transactions; for an instrument usable only in Georgia the storage threshold may rise to 1 500 lari, while the ability to withdraw or return more than 150 lari in cash negates the exception.