What is the primary principle of risk-based approach?
A Risk-Based Approach (RBA) works on the primary principle: ““The higher the risk, the greater the mitigation measures.”” For instance, Upon customer risk assessment, if the businesses or institutions regulated under the AML compliance regime identify a customer as a low-risk customer, then the business may perform Simplified Customer Due Diligence (CDD). If the customer is a medium-risk customer, then the business may perform Standard CDD. However, if a customer is a high-risk customer, then the businesses must adopt RBA by performing Enhanced Due Diligence.
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