Jurisdiction Risk

AAA

DEFINITION of 'Jurisdiction Risk'

The risk that arises when operating in a foreign jurisdiction. In recent times, jurisdiction risk has focused on banks and financial institutions who are exposed to the risk that some of the countries where they operate may be high-risk areas for money laundering and terrorism financing.
Jurisdiction risk can also refer to when laws unexpectedly change in a jurisdiction an investor has exposure to.

INVESTOPEDIA EXPLAINS 'Jurisdiction Risk'

Jurisdiction risk is generally believed to be higher in countries that have either been designated as non-cooperative by the Financial Action Task Force, or have been identified by the U.S. Treasury as requiring special measures due to concerns about money laundering or corruption. Because of the punitive fines and penalties that can be levied against a financial institution that is involved (even inadvertently) in money laundering or financing terrorism, most organizations have specific processes to assess and mitigate jurisdiction risk.

RELATED TERMS
  1. Blacklist

    A list of persons, organizations or nations suspected or convicted ...
  2. Delivery Risk

    The risk that a counterparty in a transaction may not be able ...
  3. Admiralty Liability

    A risk, event or conduct that would run afoul of admiralty (maritime) ...
  4. Country Risk

    A collection of risks associated with investing in a foreign ...
  5. Money Laundering

    The process of creating the appearance that large amounts of ...
  6. Anti Money Laundering - AML

    A set of procedures, laws or regulations designed to stop the ...
Related Articles
  1. Spotting A Forex Scam
    Options & Futures

    Spotting A Forex Scam

  2. The Ghouls And Monsters On Wall Street
    Retirement

    The Ghouls And Monsters On Wall Street

  3. Uncovering A Career In Forensic Accounting
    Options & Futures

    Uncovering A Career In Forensic Accounting

  4. What was
    Options & Futures

    What was "Operation Wooden Nickel"?

comments powered by Disqus
Hot Definitions
  1. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  2. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  3. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  4. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
Trading Center