Related Terms
DEFINITION
Risk-Based Approach
A risk-based approach involves allocating compliance resources proportionally to the level of money laundering and financial crime risks posed by different clients, focusing enhanced due diligence on situations presenting higher risks as identified through risk assessments.
Synonyms
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Acronyms
RBA
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Synonyms
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Acronyms
RBA
Examples
The bank takes a risk-based approach to transaction monitoring, with lower thresholds and more frequent screening for higher risk clients.
FAQ
What are the benefits of a risk-based approach to compliance?
A risk-based approach allows banks to allocate more resources to higher risks, enhancing effectiveness and efficiency.
How are risk appetites and tolerances set?
Risk appetite is set by the board in line with business strategy, considering factors like revenue goals, customer targets and regulatory expectations.
How does a risk-based approach impact resource allocation?
More compliance staff, technology investments, and senior attention are directed to business lines, clients and products deemed higher risk.
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