Risk-Based Approach in the Prevention of Money Laundering

Abstract

New compliance regulations developed in the past several years by international organizations for tackling money laundering emphasize the risk-based approach as a critical element in the prevention of the crime. This article elaborates on the new trends in this field. The first section looks at the main documents underlying the legal framework set in place to protect the financial system from being used for money laundering purposes. Highlighting key concepts in the selected documents, the article reveals important changes in the philosophy backing up anti-money laundering policies: from sanctioning to prevention through the application of macro and micro risk assessments. In this context, the article further discusses the requirements for businesses to follow a risk-based approach in evaluating the risk of money laundering in establishing business relationships with new customers; the need to monitor and control these relationships. Specific steps are proposed to design a comprehensive riskbased anti-money laundering program.