General risk assessment
General risk assessment for money laundering
The general risk assessment is a comprehensive analysis that obliged entities must carry out to identify and evaluate the risks that their business could be exploited for money laundering or the financing of terrorism. This assessment is a cornerstone of the risk-based approach required by the anti-money laundering framework and is the first step in an effective AML programme.
Unlike customer-specific risk assessments, the general risk assessment focuses on the organisation’s overall risk exposure and should take into account factors such as products, services, customer categories, distribution channels and geographical risks. The purpose is to create a complete picture of the inherent risks and vulnerabilities related to money laundering and terrorist financing. This assessment underpins the design of the organisation’s procedures, guidelines and other anti-money laundering measures, and it drives the scope of know your customer (KYC) measures and other controls.
What is a general risk assessment under AML?
The general risk assessment builds understanding of the organisation’s risk exposure and sets the parameters for ongoing work to prevent money laundering and the financing of terrorism. By analysing how the business could be exploited for money laundering or terrorist financing, obliged entities can prioritise resources and implement effective control measures. Put simply, if you are asking what is a general risk assessment, it is the top-level analysis that informs all AML controls and governance.
This helps protect the organisation from misuse while ensuring compliance with legal requirements. The general risk assessment is central to compliance with the anti-money laundering legislation.
The general risk assessment is not static. It is a living tool that adapts as the business and external environment change. New products, services, customer groups, markets, distribution channels or legislative changes may introduce new risks that must be considered. It is therefore essential that obliged entities regularly review and revise the assessment to ensure it continues to reflect current risk exposure and that control measures remain fit for purpose.
the risk assessment process
General risk assessment: conducting the process
The process for conducting a general risk assessment involves several steps. First, identify and describe the organisation’s products, services, customer categories, distribution channels and geographical risks, followed by an analysis of the risk associated with each area. It is also important to evaluate the effectiveness of existing controls to understand the residual risks after measures have been implemented. The steps include:
- Mapping: Identify and document the products, services, customer categories, distribution channels and geographical areas in which the organisation operates.
- Risk analysis: Analyse the identified areas to determine which risks are most relevant to the business.
- Evaluation of controls: Assess the effectiveness of existing control measures and identify potential gaps.
- Residual risks: Document and analyse the risks that remain after control measures have been implemented.
- Documentation: Ensure the entire process is documented and updated at least annually or upon major changes in the business.
The general risk assessment for money laundering must be documented in writing and kept up to date, at least annually or more frequently in the event of significant changes. The outcome is used to develop procedures and guidelines that mitigate the risk of the organisation being exploited for money laundering and the financing of terrorism.
For support, an AML lawyer from Morling Consulting can provide valuable expertise. With specialist knowledge of anti-money laundering legislation, counsel can assist throughout the process, from identifying risk factors to designing appropriate control measures, including the practical use of a general risk assessment form and guidance on preparing a general risk assessment example tailored to your business model.
In summary, the general risk assessment is an essential analysis to map and manage risks related to money laundering and terrorist financing. Conducting this assessment helps obliged entities meet legal requirements and actively contribute to combating economic crime in society.
Contact Morling Consulting to learn more
Get in touch if your organisation is subject to the anti-money laundering framework and it is time to update your general risk assessment for money laundering. Morling Consulting can also help design a compliance programme, whether you have operations in progress or are about to start a business that will be subject to the anti-money laundering regime. We operate across Europe.
Common questions and answers on general risk assessment under the anti-money laundering framework
A general risk assessment is a high-level analysis of the risks to which a business is exposed with respect to money laundering and the financing of terrorism. The assessment is a legal requirement and forms the basis for how the organisation designs its measures to counter these risks. For those asking what is a general risk assessment, it is the organisation-wide evaluation that calibrates all AML controls and governance.
A sound assessment should consider several risk areas:
- The products and services offered by the organisation.
- Customer categories and their risk profile.
- Distribution channels and how services are delivered.
- Geographical areas where the organisation is active.
- Other relevant aspects needed to assess risk.
A general risk assessment should be updated at least once a year to ensure it is current and reflects the risks to which the organisation is exposed. It also needs to be revised upon major changes, for example when new services are launched, the business expands into new markets or the business model changes.
The general risk assessment is a central tool for companies to identify and understand their vulnerabilities in preventing money laundering and terrorist financing. It helps the organisation meet the requirements of the anti-money laundering framework and ensures the right level of KYC and control measures are implemented. A well-executed assessment reduces the risk of the business being exploited for criminal purposes and strengthens preventive efforts.
Morling Consulting’s lawyers have specialist knowledge of anti-money laundering legislation. They can assist with:
- Identifying risk factors in your specific business.
- Producing a documented, up-to-date and accurate risk assessment.
- Designing tailored procedures and control measures.
- Ongoing advice and support in the event of changes or supervision.
The general risk assessment analyses the organisation’s overall risk exposure, whereas the customer-specific risk assessment focuses on the risk profile of individual customers. In brief:
- General risk assessment: Covers the entire business and forms the basis for procedures and control levels.
- Customer-specific risk assessment: Conducted for each customer relationship and determines the level of know your customer (KYC) required to manage the risk.
If the general risk assessment is incomplete or not updated regularly, the organisation becomes more vulnerable to money laundering or the financing of terrorism. Deficiencies may also lead to inadequate control measures and incorrect customer risk classification, undermining the entire AML programme. During supervision this may result in remarks or sanctions from the Swedish Financial Supervisory Authority (FI). In addition, the company’s reputation may suffer, affecting trust among both customers and partners.
The requirement applies to all obliged entities subject to the anti-money laundering legislation. Examples include banks, financial institutions, auditors and accounting consultants.
Legal advice can be tailored to business needs and may include, for example:
- Guidance on how to identify and document risk factors.
- Review and quality assurance of the existing risk assessment.
- Support in designing methods for risk classification.
- Advice on how measures are linked to identified risks.
- Help to adapt the assessment when entering new markets or distribution channels.
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If you prefer phone, please feel free to contact Felix Morling at +46 70 444 42 85
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