Building an AML Vocabulary
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Building an AML Vocabulary

It can be confusing to move through legal vocabulary. Over the next few weeks we will be breaking down AML terms to help you build a dictionary, assisting you to meet your legal requirements.


What Is A Risk Based Approach?

A Risk Based Approach is firstly a method of how you are going to look at the information in your report. Using this approach you are going to sift through the report to determine the amount of risk present and then determine the best course of action based on what you find. 

You can do this by considering the following questions: 

  • Have you met your client? Or is this an online transaction?
  • Have they gone through due diligence with another Arcarta member?
  • Are they from or residing in a high risk country?
  • What is their profession, are they a politically exposed person? 

Based on the answers to these questions you can then assess how risky this transaction is and how to proceed. The higher the risk, the more layers of due diligence you will need to conduct. By assessing risk and then making decisions on how to conduct DD, you are exercising a Risk Based Approach.

For example, let's say you have a collector who you know very well. They have provided their ID and proof of address and live in the UK. The way in which you conduct due diligence is going to look very different than a new buyer whom you have never met buying a work online from a high risk country. 

By training your staff to ask these questions, you equip them with the tools to build their AML vocabulary and make informed decisions. 

If you feel like you need a refresh, you can always take our AML training course where we cover a risk based approach alongside due diligence and sanctions.

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