Customer risk rating · Concepts · European Finance Observatory

Roles that need it

Risk-based approach (AML)The risk-based approach is the principle that firms and supervisors identify and assess money laundering and terrorist financing risks and apply controls in proportion: more intense measures where risk is higher, simplified ones where it is demonstrably lower. It starts from a documented business-wide risk assessment.
KYC (Know Your Customer)Know Your Customer is the process a firm uses to establish and verify who its customer is, who owns and controls it, what the relationship is for and how risky it is, before onboarding and throughout the relationship. In EU law it is carried out through customer due diligence measures.
EDD (Enhanced Due Diligence)Enhanced due diligence is the set of additional customer due diligence measures required for higher-risk situations, such as politically exposed persons, high-risk third countries, cross-border correspondent relationships and unusual transactions. It typically includes source of wealth and funds checks, senior management approval and closer monitoring.
Periodic KYC reviewA periodic KYC review is the scheduled refresh of a customer's due diligence file, at a frequency set by its risk rating, to confirm that identity, ownership, activity and risk data are still accurate. Event-driven reviews happen earlier on triggers such as ownership change or unusual activity. Also called KYC refresh or remediation.

Updated 31 Oct 2026.