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Financial crime risk is often assessed as the product of likelihood and impact.


In the context of financial crime risk is often assessed as the product of likelihood and impact. Here’s a brief explanation:

Likelihood refers to the probability of a financial crime risk event occurring. This can depend on various factors, such as:-

  • The nature of a business,
  • The types of customers it serves,
  • The countries it operates in, and
  • The robustness of its internal controls.

Impact refers to the potential harm or damage that could result from a money laundering event. This can include:-

  • Financial loss,
  • Reputational damage,
  • Legal penalties, and
  • Operational disruptions.

Therefore, the risk associated with money laundering can be represented as:

  • Risk = Likelihood [×] Impact

Important to note that various factors can influence both likelihood and impact and can vary greatly depending on the specific circumstances. Therefore, businesses regulated by the Money Laundering Regulations must assess the risk that they could be used for money laundering, including terrorist financing, proliferation financing and targeted sanctions [collectively finical crime].


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