CAMS Exam Dumps : Certified Anti-Money Laundering Specialist (CAMS7 the 7th edition)

The risk-based approach (RBA) is a foundational principle of FATF standards. It requires countries, regulators, and financial institutions to identify, assess, and understand their money laundering and terrorist financing risks.

Once risks are understood, entities must apply proportionate mitigation measures. Higher risks require stronger controls, while lower risks may justify simplified measures. However, no risk is ignored or exempted from mitigation.

Regulators do not expect all residual risks to be reduced to low; rather, risks must be managed within an acceptable risk appetite. Resource allocation under an RBA prioritizes AML/CFT activities, not unrelated tasks.

Therefore, the correct definition of an RBA focuses on understanding and managing risk proportionately.

FATF standards require organizations to adopt a risk-based approach (RBA) that is informed by both internal risk factors and national and sectoral risk assessments. These assessments provide critical insight into prevalent money laundering and terrorist financing threats within specific jurisdictions and industries.

Organizations should integrate relevant findings from these assessments into their internal risk assessments to ensure that policies, controls, and monitoring systems are aligned with identified risks. This enables institutions to tailor enhanced due diligence (EDD) measures and allocate compliance resources effectively.

Ignoring national or sectoral assessments would weaken the organization’s ability to respond to known threats and would be inconsistent with regulatory expectations. These assessments are not limited to worst-case scenarios nor intended solely for regulators; they are a foundational input for private-sector AML programs.

Receiving funds from a decentralized mixer and using multiple incoming wires from different sources to purchase virtual currency are red flags, as they can indicate attempts to obscure the origin of funds and facilitate money laundering through virtual asset transactions.