The CAMS 6th Edition clearly identifies a risk-based approach as the cornerstone of effective AML/CFT programs. Risk assessments should consider various risk factors that directly influence exposure to ML/TF.
Product risk (A): Certain products or services may present higher ML/TF risks, such as private banking, correspondent banking, or cash-intensive products.“Products and services offered, and their inherent risk levels, must be assessed as part of the risk-based approach.”(CAMS 6th Edition, AML Compliance Program, Risk Assessment)
Geographic risk (C): Jurisdictions where the customer operates or where transactions are conducted may present higher or lower risks due to factors such as weak AML regulations or high corruption.“Geographic risk considers where a customer is located and/or where transactions occur, referencing countries with increased risk, such as those identified by the FATF.”(CAMS 6th Edition, Risk Assessment Factors)
Customer risk (D): The type of customer, such as PEPs, non-residents, or companies with complex structures, may present higher ML/TF risks.“Customer risk assessment is based on the customer’s profile, activity, and ownership structure, and is a critical component in risk-based monitoring.”(CAMS 6th Edition, CDD/EDD)
Incorrect Options:
B (Credit risk): Related to creditworthiness, not ML/TF.
E (Liquidity risk): Refers to a firm’s ability to meet financial obligations; not an AML risk factor.
[References:, CAMS Study Guide 6th Edition, AML Compliance Program, “Risk-Based Approach”, FATF Guidance: National Money Laundering and Terrorist Financing Risk Assessment (2013), , , , , ]
