Risk-based approach

The risk-based approach is the central principle of anti-money laundering: the intensity of controls must be proportionate to the real risk of each business relationship, and not identical for all customers. It distinguishes 3 levels of due diligence: simplified for low risk, standard for ordinary risk, enhanced for high risk, a politically exposed person or a high-risk third country. The principle is set out in Recommendation 1 of the FATF (Financial Action Task Force), taken up under French law in Article L. 561-4-1 of the Monetary and Financial Code, which requires a risk classification to be established, and structured at European level by the AMLR regulation. Two requirements are tightening with AML6: assessment becomes continuous, and every decision must be documented, supervisors being required to review the risk assessments themselves and not only their results.