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Risk-Based Approach to AML/CTF

Updated: Dec 14, 2022

One hand holds up sticks before they fall to domino effect

On the 7th of April 2021, the FATF President Dr. Marcus Pleyer, in his speech at the 2nd G20 Finance Ministers and Central Bank Governors Meeting, highlighted the importance of risk-based supervision to detect and prevent financial crimes that undermine global economies and hinder economic recovery

What is a risk-based approach?

The risk-based approach (RBA) to AML/CTF, as defined, by the FATF, focuses on the expectation of of identifying, assessing, and understanding the ML/TF risks by the countries, competent authorities and financial institutions. Followed by the appropriate measures to tackle the risks and mitigate them effectively. The RBA should be implemented on all occasions, even if the ML/TF risks are assessed as low.

Why is a risk-based approach to AML important?

The importance of an RBA to AML/CTF lies in the proactiveness towards illicit activities and the AML compliance. Additionally, RBA ensures that even if something problematic has been detected, the impact will be minimized. Countries, competent authorities, financial institutions, and professionals with a proper RBA can protect themselves from enormous fines.

How MAQIT can assist you

With years of experience in MAQIT, we created a Risk Assessment Matrix adapted to every business. With this Matrix, you can assess the ML/TF risk of every business relationship. Additionally, through the KYCTech platform, you can conduct background checks on your clients before dealing with them.

A risk-based approach to AML is not a luxury but a requirement for continuous monitoring in the business relationship. In today's digital world, criminals are increasingly sophisticated, using various methods to bypass financial system regulations. That's why an RBA, which minimizes illegal activity, is the best way to tackle traffickers, terrorists, and other criminals.

Contact us to solve your compliance needs! Our AML/CTF-KYC team will assist you by designing the best strategy for your business.

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