What is a risk-based approach?

Anti-money laundering rules do not ask for the same checks on every customer. They ask you to assess the risk each customer poses, from who they are, where they are, what they do and how they pay, and to match your checks to it.

Low-risk customers can go through lighter checks; high-risk customers get enhanced due diligence and closer monitoring. What matters is consistency: the same risk should lead to the same treatment, every time.

You also need to be able to explain your ratings, because a regulator will ask why a customer was rated the way they were.