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Regulatory explainer 27 May 2026 6 min read

The risk-based approach: what it means and how to evidence it

AUSTRAC's foundational principle in plain English, and the four artefacts every program needs to demonstrate it.

By Sophie Maddox

The AML/CTF Act is built on a risk-based approach: your obligations scale with the risk profile of your business, your customers and your services. This is more flexible than a prescriptive regime — and harder to evidence. AUSTRAC will ask 'show me your risk assessment' before it asks anything else.

The four artefacts

  • A documented business risk assessment covering products, customers, channels and jurisdictions.
  • Risk-tiered customer categorisation (low / medium / high) with criteria.
  • Risk-tiered controls — what changes between a low-risk and a high-risk onboarding.
  • An annual review cycle with version-controlled updates.

What 'evidence' actually looks like

A 6–10 page risk assessment document, signed by the AMLCO and a director, with appendices covering product mix, customer typology distribution, jurisdiction exposure, and channel risk. Updated annually with a tracked-changes log. Most providers ship a template you can fill in within a working day.

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