ASSESSMENT OF INDIVIDUAL CLIENT RISK AS A BASIS FOR PREVENTING MONEY LAUNDERING AND TERRORIST FINANCING

Abstract

Assessing the risk of money laundering and financing terrorism (ML/TF) is the basis for implementing adequate risk-based measures to manage the negative processes arising from these types of criminal activities. However, this evaluation is not a homogeneous process and includes several pyramidal structured levels, namely (from the lowest to the highest): Assessment of individual client risk; Assessment of the risk of the obligated person regarding the use of the products and services provided by him for the purposes of ML/TF; Sectoral risk assessment; National risk assessment; In some cases, even a supranational risk assessment (for example, the European Union) is required. In this sense, this article explores the role of individual customer risk assessment as a basis for measuring and understanding all other risks in the chain. Moreover, this basis should be the primary tool for measuring the effects of the policies undertaken to prevent and counter ML/TF and provide feedback regarding strategic planning in the field. Another reading of the main conclusions of this article is related to answering why the assessment of the individual risk of ML/TF has practical positives for the persons who are legally obliged to carry it out (the persons under Article 4 of the Law on Measures against Money Laundering (LMML)).