Risk-Based Approach to AML/CFT Implemented in Réunion

Réunion has adopted a risk-based approach (RBA) to anti-money laundering and combating the financing of terrorism (AML/CFT), strengthening global safeguards and protecting the integrity of the financial system.

Definition of RBA

The Financial Action Task Force (FATF) defines the RBA as a method of identifying, assessing, and understanding money laundering and terrorist financing risks, taking measures commensurate with those risks to mitigate them effectively. This approach is not a “zero failure” approach, as there may be instances where an institution has taken all reasonable measures to identify and mitigate AML/CFT risks but is still used for money laundering or terrorist financing purposes.

Implementation in Réunion

The Réunion government implemented the RBA in response to FATF’s updated recommendations in 2012, which placed greater emphasis on the risk-based approach, particularly in relation to preventive measures and supervision. The RBA is now considered an essential foundation of a country’s AML/CFT framework, applicable to all relevant FATF recommendations.

Benefits of RBA

According to the FATF, the RBA allows countries like Réunion to:

• Adopt a more flexible set of measures
• Target resources more effectively
• Apply preventive measures commensurate with the nature of risks

This approach enables countries to focus their efforts in the most effective way to combat money laundering and terrorist financing. The application of an RBA is no longer optional but rather a prerequisite for the effective implementation of FATF standards.

Conclusion

The risk-based approach to AML/CFT implemented in Réunion demonstrates the country’s commitment to strengthening global safeguards and protecting the integrity of the financial system. By adopting this approach, countries can effectively identify and mitigate money laundering and terrorist financing risks, ensuring a safer and more secure financial environment for all.