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.
Emergency Response — Suspension of the Transaction
The emergency instrument is also defined by law: upon the emergence of a substantiated suspicion of money laundering, terrorism financing or another crime, the head of the service may — regardless of the amount of the transaction — give the accountable person a written instruction to suspend for no more than 72 hours the preparation, conclusion or performance of the corresponding transaction, and also of other transactions connected with it and/or with its participant. The information in the service's possession is transmitted immediately to the Prosecutor General's Office of Georgia, the Ministry of Internal Affairs and/or the State Security Service.
In urgent necessity the instruction may be given orally or by electronic communication; a written protocol of the fact is drawn up, and the written instruction is transmitted to the accountable person within the following 24 hours — if it is not received, the accountable person regains the right to resume the transaction after the period expires. The accountable person must confirm receipt of the instruction and immediately carry out the measures necessary for its performance. The 72-hour period is counted from the moment of receipt, without rest days and holidays, and the instruction may be cancelled early — where the suspicion is not confirmed, or on the written request of the Prosecutor General's Office, the Ministry of Internal Affairs or the State Security Service in the interests of the investigation; the decision on early cancellation is taken by the head of the service or an authorized person and is communicated to the accountable person in due time. Upon a request of a financial intelligence service of another jurisdiction a similar instruction may likewise be given. The strategic picture is this: proportionality in peacetime, severity in times of threat.
Frequently Asked Questions
Below we summarise the questions that arise most often in practice on this topic.
What do enhanced measures consist of?
Additional information on property and activity, increased update frequency, leadership permission, establishment of origin, and enhanced monitoring.
When is simplification allowed?
Toward a client assigned a lower risk level, substantiated with sufficient information; in the presence of increased-risk signs simplification is prohibited.
What is the low-risk service exemption?
An exemption from individual requirements allowed in strictly limited cases by an act of the head of the service — for example, for e-money instruments.
For how long can a transaction be suspended?
For no more than 72 hours — without rest days and holidays; an urgent oral instruction is put in written form within 24 hours.
Does the amount of the transaction matter?
No — the instruction is given regardless of the amount and extends to connected transactions as well.
How We Help on Legal.ge
Our team will help you build the risk-level matrix, write procedures for enhanced and simplified measures, assess exemption grounds and prepare responses to suspension instructions. Contact us on Legal.ge — we will build a proportionate and lawful risk mitigation strategy.