116. While mutual evaluations demonstrate some successes in applying the risk-based approach to supervision, in three out of four evaluations, major and fundamental improvements are required. The majority of the 102 countries evaluated against the 2013 FATF Methodology are rated "moderate" for IO.3. A Core Issue by Core Issue review shows that the largest gaps to achieving "substantial" ratings are in the implementation of the risk-based approach to supervision (Core Issue 3.2) and the application of sanctions for non-compliance (Core Issue 3.4). Analysis of a sample of 59 evaluations suggests that only 24% of FI supervisors and 7% of DNFBP supervisors have conducted an updated risk assessment. Analysis of Core Issue 3.2 of these reports reveals that the ability to apply supervision on a risk-sensitive basis is not necessarily connected to sector supervised, but rather to the overall quality of supervision (i.e. means and tools available to supervisors). Supervisors with more resources and tools were able to mitigate, although not eliminate, this gap and adequately supervise both FI and DNFBP sectors.

117. Countries are performing generally very well in terms of technical compliance with requirements related to supervision, with largely compliant to compliant ratings obtained in most Recommendations. However some weaknesses remain with 44% countries rated NC on R.28, related to the supervision of DNFBPs.