In managing, the ML/TF risk assessment is a powerful diagnostic tool that allows a reporting entity to understand its ML/TF risk exposure, set its risk appetite, and implement effective mitigating controls and downstream processes accordingly. A failure to effectively conduct an ML/TF risk assessment may inhibit a reporting entity’s ability to detect and disrupt ML/TF activity, thereby exposing the reporting entity to potential regulatory scrutiny, reputational damage, and financial penalties.
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