Q&As

What is the ‘risk-based approach’ in relation to anti-money laundering, and what does it mean to me?

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Published by a LexisNexis Practice Compliance expert

Published on: 11 February 2021

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The risk-based approach (RBA) is a core concept of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), SI 2017/692, as amended.

The general concept of an RBA is simple: you cannot monitor everything done by each member of staff for every client all the time. You should therefore identify where your greatest risks lie and apply your resources appropriately.

Organisation-wide risk assessment

You should not confuse your organisation-wide risk assessment with the RBA.

If the MLR 2017 apply to your organisation, you must take appropriate steps to identify and assess your organisation’s money laundering and terrorist financing risks, ie conduct an organisation-wide risk assessment.

The organisation-wide risk assessment is intended to inform your anti-money laundering (AML) and counter-terrorist financing (CTF) measures. It will enable you to take a considered RBA to devising and implementing your systems and controls where such an approach is permitted or required

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Jurisdiction(s):

United Kingdom

Key definition:

risk definition

What does risk mean?

any reasonably identifiable circumstance or event having a potentially adverse effect on the security of network and information systems

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