What is the risk-based approach to assessment?
The Risk-Based Approach (RBA) is a central part of a business’s Anti-Money Laundering (AML) compliance program. It provides for the implementation of AML risk controls based on the Money Laundering (ML), Terrorism Financing (TF), and Proliferation Financing (PF) risks identified through risk assessment.
The RBA approach follows the principle of “higher the risks, higher the control.” ML/TF/PF risk assessment is the first step to implementing effective ML/TF/PF risk control measures.
During the ML/TF/PF risk assessment process, risks emanating from factors such as customers, products and services, geographies that the business serves, delivery channels used, etc, need to be assessed. These risk factors should be assessed based on their likelihood of occurrence and their potential impact to the business. These risks can then be categorised into low, medium and high-risk categories.
Read this blog to understand RBA in detail