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. Anti Money Laundering - AML

    A set of procedures, laws or regulations designed to stop the ...
  5. Money Laundering

    The process of creating the appearance that large amounts of ...
  6. Country Risk

    A collection of risks associated with investing in a foreign ...
RELATED FAQS
  1. What was "Operation Wooden Nickel"?

    On November 19, 2003, the Commodity Futures Trading Commission (CFTC) and the FBI announced the completion of an 18-month ... Read Full Answer >>
Related Articles
  1. Options & Futures

    Spotting A Forex Scam

    Forex scams are more common than you think. We tell you how to spot them.
  2. Retirement

    The Ghouls And Monsters On Wall Street

    Learn about some of the creepiest cases of fraud and the characters behind them.
  3. Options & Futures

    Uncovering A Career In Forensic Accounting

    Does a job as a financial sleuth sound interesting to you? Dig in to learn more.
  4. Chart Advisor

    Is Now the Time to Invest in North America?

    Bullish chart patterns across the North American markets suggest that now might actually be a wise time to allocate closer to home.
  5. Investing

    How To Trade Foreign Stocks

    We weigh the major ways to trade foreign stocks for investors.
  6. Economics

    Asian LNG Prices: Not Likely To Rise Anytime Soon

    Asian LNG prices could stay low for an extended period of time, due to low oil prices, less demand and new LNG-producing projects on various continents.
  7. Investing Basics

    Here's How To Tap International Markets

    Access to foreign markets has grown a lot in recent years, allowing US market players to trade these bourses in real-time.
  8. Stock Analysis

    3 Things I Learned From lululemon Athletica's 10-K

    Lululemon athletica has emerged not only as one of the nation's fastest-growing retailers, but also as one of the market's favorite growth stocks.
  9. Taxes

    Is It Smart To Get Dual Citizenship?

    Does it ever make sense to be a citizen of the U.S. and somewhere else? Yes, so you can work minus a visa – not so much, if you get drafted into the army.
  10. Economics

    Venezuela Teeters On Edge As Oil Revenues Shrink

    Low oil prices have drastically revised the economic status quo -- dealing a destabilizing blow to oil-exporters like Venezuela due to falling oil revenue.

You May Also Like

Hot Definitions
  1. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  2. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  3. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  4. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  5. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  6. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
Trading Center