Jurisdiction Risk

Glossary

Banking

Jurisdiction Risk

Jurisdiction risk is the risk companies are naturally exposed to when they operate outside of their domestic borders, be that through a physical presence, business relationship or, in the case of banks, lending relationships. Jurisdiction risk is a broad one that covers a multitude of scenarios, such as the imposition of capital controls banning the export or repatriation of capital, government and regulatory changes, currency devaluations, lack of regard for the rule of law, differences in insolvency regimes and court procedures. The Financial Action Task Force (FATF), the inter-governmental money-laundering and terrorist financing standard setter and policy-making body, identifies and monitors jurisdictions with weak measures specifically in the area of combatting money laundering and terrorist financing.

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