What is a Risk-Based Approach?

11 Dec What is a Risk-Based Approach?

A Risk Based Approach means companies should identify, assess and understand the money laundering and terrorist financial risk of their customers, this is determined by evaluating each individual customer on their own merit and not using a ruled based approach where all customers are treated the same.

Companies should take into account a Risk Based Approach at the time of setting up their AML policy and procedures in order to have an effective foundation to their Anti Money Laundering and Counter Financing Terrorism program. Most importantly by having a Risk Based Approach companies are able to adjust the level of due diligence required in line with the risk presented by the customer.