What is the difference between compliance and risk-based approach?
Compliance measures such as Customer Due Diligence and ongoing monitoring are prescriptive in nature. In practice, businesses and institutions often resort to a tick-box approach when adhering to compliance requirements set forth by regulatory authorities. Visit this illustration to explore the benefits of adopting a risk-based approach.
Contrastingly, a risk-based approach is a proactive strategy of anticipating risks that a business or institution may be exposed to and implementing proportionate mitigation measures.
Thus, Risk-Based Approach is widely recognised as an essential component of Anti-Money Laundering (AML) compliance