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The risk-based approach (RBA) is central to the effective implementation of the FATF Recommendations. It means that supervisors, financial institutions, and intermediaries identify, assess, and understand the money laundering and terrorist financing (ML/TF) risks to which they are exposed, and implement the most appropriate mitigation measures. This approach enables them to focus their resources where the risks are higher.

The Guidance aims to support the design and implementation of the RBA, taking into account national ML/TF risk assessments and AML/CFT legal and regulatory frameworks. It underlines some of the specificities of the life insurance sector, in particular, the nature and level of ML/TF risk of life insurance products. Indicative risk ratings are provided for a set of life insurance products, as well as examples of products’ inherent risk factors. The Guidance also looks at the involvement of intermediaries in the distribution of life insurance, and how it affects the split of AML/CFT responsibilities.

The Guidance also recalls that the intensity and depth of risk mitigation measures depend on the ML/TF risks. Regarding customer due diligence measures specifically, it emphasises that the identity and status of parties to life insurance contracts, including the beneficiary and where relevant the beneficial owner(s), will determine the extent of the controls to be performed.