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 >>
  2. How does the role of Medicare/Medicaid affect the drugs sector in the U.S.?

    Medicare and Medicaid have enormous influence on the pharmaceutical, or drugs, sector in the United States. For instance, ... Read Full Answer >>
  3. What are the ethical arguments against government subsidies to companies like Tesla?

    The ethical argument behind government subsidies is that they should be put into place to help industries that will, in turn, ... Read Full Answer >>
  4. What do I do if I think an accountant is in violation of the Generally Accepted Accounting ...

    The Financial Accounting Standards Board (FASB) promulgates generally accepted accounting principles (GAAP) in the United ... Read Full Answer >>
  5. How autonomous are special administrative regions?

    When most people think of special administrative regions, or SARs, they are referring to Hong Kong and its relationship with ... Read Full Answer >>
  6. Can a special administrative region declare autonomy?

    Special administrative regions, or SARs, namely Hong Kong and Macau, do not declare autonomy so much as they are granted ... 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. Economics

    What Is a Quota?

    In business, quota usually refers to the sales target for a salesperson or a sales team.
  5. Economics

    What Does Infrastructure Mean?

    Examples of infrastructure include mass transit, communication, sewage, water and electric systems, plus roads, bridges and tunnels.
  6. Economics

    What's a Centrally Planned Economy?

    A centrally planned economy is one where the government controls the country’s supply and demand of goods and services.
  7. Investing

    Can You Be Sued for Negative Comments Online?

    It's important to understand the basics of libel law so you can avoid posting statements that might result in a lawsuit.
  8. Economics

    How Iran Impacts The Price and Supply of Oil

    If Congress approves the deal, Iranian oil will be widely available for the first time in years. When Iranian oil begins to flood the market, it will influence the world oil supply and oil prices ...
  9. Investing News

    How China's Lenovo Makes Money

    Lenovo has emerged as one of China's most renowned multinational corporations. We examine the strategy and business model underlying its success.
  10. Investing Basics

    Is Lenovo A True Disruptor Of The Laptop Industry?

    Lenovo has cut costs, taken market share from top competitors and caters to both consumers and institutions, but is it a disruptor?

You May Also Like

Hot Definitions
  1. Topless Meeting

    A meeting in which participants are not allowed to use laptops. A topless meeting organizer can also ban the use of smartphones, ...
  2. Hedging Transaction

    A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging ...
  3. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  4. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  5. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  6. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!