When the FATF Force first began combatting money laundering, the best practice at the time was to prescribe a fixed set of rules to deal with specific situations. They later realised that this sort of narrow-mindedness was irrational and substituted the rules-based approach with the risk-based approach to the issue of client identification and verification.

A core principle of the risk-based approach is that Accountable Institutions’ treatment of their clients must vary according to each client’s risk profile.

Three crucial FICA amendments are:

• The introduction of the risk management and compliance programme (RMCP)
• record keeping and reporting
• The extension of the know-your-customer (KYC) obligations