Risk-based approach (RBA)

The definition of a risk-based approach is to identify the highest compliance risk for your organization. It is essential for controlling compliance with organizational requirements, policies, and procedures.

A risk-based approach is prominent in the effective implementation of the FATF recommendations. A risk-based approach means that countries' competent authorities and banks identify, assess, and understand the risks of money laundering and terrorist financing.

Adopting a risk-based approach (RBA) means that entities or governments understand their level of exposure to money laundering and terrorism financing risks. They will put in place appropriate AML/CFT measures to effectively mitigate these risks.

The FATF standard requires countries to assess and mitigate risks associated with virtual asset financing activities and providers.

A virtual asset service provider (VASP) can adopt an RBA by implementing steps to mitigate the risks inherent to cryptocurrencies. They can, for example, implement KYC processes, appoint a compliance officer, or use transaction monitoring tools.

Discover more about blockchain crypto and compliance with our Glossary.

About Scorechain

Scorechain is a Risk-AML software provider for cryptocurrencies and digital assets. As a leader in crypto compliance, the Luxembourgish company has helped over 200 customers in 40 countries since 2015, ranging from cryptocurrency businesses to financial institutions with crypto trading, custody branch, digital assets, customers onboarding, audit and law firms, and some LEAs.

Scorechain solution supports Bitcoin analytics with Lightning Network detection, Ethereum analytics with all ERC20 tokens and stablecoins, Litecoin, Bitcoin Cash, Dash, XRP Ledger, Tezos, Tron with TRC10 and TRC20 tokens, and BSC with BEP20 tokens. The software can de-anonymize the Blockchain data and connect with sanction lists to provide risk scoring on digital assets, transactions, addresses, and entities. The risk assessment methodology applied by Scorechain has been verified and can be fully customizable to fit all jurisdictions. 300+ risk-AML scenarios are provided to its customers with a wide range of risk indicators so businesses under the scope of the crypto regulation can report suspicious activity to authorities with enhanced due diligence.