Documents

FATF Guidance on the Risk-Based Approach to Combating Money Laundering and Terrorist Financing - High Level Principles and Procedures

The Guidance on the Risk-Based Approach to combating Money Laundering and Terrorist Financing was developed by the FATF in close consultation with representatives of the international banking and securities sectors.  It was published in June 2007.  

Since the adoption of revised FATF Recommendations in 2012, the FATF is in the process of reviewing its set of RBA guidance papers.  In October 2014, the FATF adopted Risk-Based Approach Guidance for the Banking Sector.  A separate guidance will be developed for the Securities Sector. 

The Guidance supports the development of a common understanding of what the risk-based approach involves, outlines the high-level principles involved in applying the risk-based approach, and indicates good public and private sector practice in the design and implementation of an effective risk-based approach.

The purpose of this Guidance is to:

  • Support the development of a common understanding of what the risk-based approach involves.
  • Outline the high-level principles involved in applying the risk-based approach. And
  • Indicate good public and private sector practice in the design and implementation of an effective risk-based approach.

Target Audience, Status and Content of the Guidance:

The Guidance is primarily addressed to public authorities and financial institutions. However, many of the high level principles contained in this document will be equally applicable to designated non-financial businesses and professions. The overall document is structured into three interdependent sections. Section one sets out the key elements of the risk-based approach and provides the basis for which to interpret section two (Guidance for Public Authorities) and section three (Guidance for Financial Institutions). There is also Annex 1, which contains descriptions of additional sources of information.

The Guidance aims to set out the key elements of an effective risk-based approach and identifies the types of issues that both public authorities and financial institutions may wish to consider when applying a risk-based approach.

The Guidance recognises that each country and its national authorities, in partnership with its financial institutions, will need to identify the most appropriate regime, tailored to address individual country risks. Therefore, the Guidance does not attempt to provide a single model for the risk-based approach, but seeks to provide guidance for a broad framework based on high level principles and procedures that countries may wish to consider when applying the risk-based approach with the understanding that this guidance does not override the purview of national authorities.