AML Risk Assessment - Practical Guide for Companies
AML Risk Assessment - The Foundation of an Effective Compliance Program
An AML risk assessment is one of the most important elements of a money laundering and terrorist financing prevention program. Before drafting internal procedures, implementing Know Your Customer (KYC) measures, or monitoring transactions, every company must understand the specific risks of its own activity.
Law no. 129/2019 does not impose a single risk assessment model. Instead, it requires reporting entities to identify, assess, and manage money laundering and terrorist financing risks according to the nature of their activity. This principle is known internationally as the Risk-Based Approach (RBA) and underlies FATF recommendations, EU directives, and Romanian legislation.
What Is an AML Risk Assessment?
An AML risk assessment is the process by which a company identifies, analyzes, and classifies the money laundering and terrorist financing risks it is exposed to. The goal is not to eliminate all risk, but to understand it and apply measures proportional to the identified risk level.
How to Conduct an AML Risk Assessment - Step by Step
Step 1 - Identifying the Activities Carried Out
The first step is identifying activities that may generate money laundering risks: services offered, types of customers, how the activity is carried out, average transaction value, and channels used for customer relationships.
Step 2 - Analyzing Customer Types
Not all customers present the same risk level: individuals, legal entities, hard-to-identify beneficial owners, Politically Exposed Persons (PEPs), customers from high-risk jurisdictions, or complex corporate structures.
Step 6 - Determining the Risk Level
After analyzing all relevant factors, the company must set a risk level for each category: low, medium, or high risk. This classification must be justified and documented, and will determine the frequency of KYC checks and the intensity of monitoring.
Step 7 - Documenting and Updating the Risk Assessment
The risk assessment must be reviewed periodically - whenever legislative changes occur, new services are introduced, the customer base changes, or an AML audit finds deficiencies.
Common Mistakes in AML Risk Assessment
The most common mistakes include: using a standard template without adaptation, lack of justification for risk levels, no periodic updates, ignoring geographic risk, and lack of alignment with other AML documents (procedures, KYC, continuous monitoring).
What Does ONPCSB Check?
During inspections, ONPCSB checks whether the risk assessment exists, is approved, is tailored to the company's activity, is updated periodically, and is actually used to set AML measures. To better understand inspections, also read our article on the ONPCSB inspection.
Conclusion
An AML risk assessment is the starting point of any effective compliance system. A well-documented analysis allows a company to identify the risks specific to its activity, apply proportional measures, and demonstrate to authorities that it complies with Law no. 129/2019.
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