Successful risk-based approach design is at the heart of all Anti-Money Laundering and Terrorist Financing (AML/CFT) regulations. This approach is considered to be a prudential strategy

The Risk-Based Approach aims to improve the efficiency of control processes (More effectiveness at a lower cost), by adapting due diligence measures to the risks involved and optimizing the administration of allocated resources. In other words, the greater the risk involved, the more priority will be given to contract lines ocirc; the internal and the more resources and resources will be reserved for it. On a practical level, the implementation of a Risk-Based Approach consists of two levels, a first Global and transversal Approach at the level of the financial institution and its wider ecosystem, and a second Individual Approach focused on the business relationships established between the financial institution and its customer base

The Global Risk-Based Approach, commonly referred to as “Risk Mapping”, is the final starting point for any prudential approach. Its objective is to understand the social, geographical and economic environment of the financial institution, to learn about its organization and management and to understand its markets, the nature of its customers and the methods of its distribution, in order to be able to identify, evaluate and classify the Money Laundering and Terrorist Financing risks to which it is exposed. The Global Risk-Based Approach must be an Ad Hoc approach, proportional to the nature and size of the financial institution and adapted to its organization, to the complexity of its products and services and to its degree of international exposure (Multinational Firms, Cross-border Business Relations, Foreign Currency Transaction Flow,