1. Preventing money laundering or terrorist financing (ML/TF) is more effective in protecting communities from harm than pursuing prosecution of the activity after it happens. AML/CFT supervisors [For the purposes of this Guidance, the term 'supervisors' refers to the designated competent authorities or non-public bodies with responsibilities aimed at ensuring compliance by regulated entities of AML/CFT requirements and includes Self-Regulating Bodies (SRBs) designated to perform this function.] play an essential role in protecting the financial system and other sectors from misuse by criminals and terrorists by: (1) increasing regulated entities[Under the FATF Standards this includes: financial institutions (FIs); Virtual Asset Service Providers (VASPs); and Designated Non-Financial Businesses and Professions (DNFBPs) which are casinos; real estate agents; dealers in precious metals and stones; lawyers, notaries and other legal professionals and accountants; and, trust and company service providers. It can also include any other businesses and professions a country decides to include in this category based on risk.] awareness and understanding of the ML/TF risks and setting regulatory obligations and facilitating and encouraging good practices, (2) enforcing and monitoring compliance with AML/CFT obligations, and (3) taking appropriate measures where deficiencies are identified. In order to perform this function effectively and efficiently, supervisors must implement a risk-based approach.