The FinCrime Wire · By LearnAML
Sources checked 9 October 2026 · 3 minute read
A long document list is easy to measure. A well-reasoned customer decision is harder. Proportionate customer due diligence starts with the risk you need to understand and the evidence needed to understand it.
The FATF change behind the discussion
In February 2025, FATF amended Recommendation 1 and related provisions to strengthen proportionality and require countries to allow and encourage simplified measures in lower-risk scenarios. Corresponding changes affected the interpretive notes to Recommendations 10 and 15. The changes also clarify that remote relationships are not inherently higher risk where appropriate mitigation is in place. Source: FATF standards update, 25 February 2025.
FATF then published financial inclusion guidance in June 2025, supporting a proportionate risk-based approach. These are international standards and guidance: the measures available to your institution depend on domestic rules and your approved framework. Source: FATF financial inclusion guidance.
Ask three questions before simplifying
- What makes this relationship lower risk? Describe the actual product, expected activity, customer and delivery channel rather than attaching a label to an entire population.
- Which measure can legitimately be adjusted? Link the proposed adjustment to an applicable rule and an approved procedure. Avoid inventing an exception at the onboarding desk.
- What would trigger a fresh review? Set clear prompts for changed activity, new information or unresolved concerns.
These are suggested review questions, not an exhaustive regulatory test. A useful file explains both the judgement and its limits.
A fictional example: a restricted account
An applicant wants an account with tightly limited functionality for predictable domestic payments. The institution’s approved framework permits a defined simplified route for qualifying lower-risk relationships. The reviewer records why this case qualifies, the identity evidence obtained, the permitted restrictions and the circumstances that require escalation.
If the applicant later requests a materially different service, the old decision should not become a permanent shortcut. Reassess the changed relationship using the applicable procedure. If eligibility cannot be established, refer the case rather than assuming it.
Make evidence requests easier to answer
Explain what a document will establish. Ask focused questions about the expected account use and gaps in the file. Where your rules permit alternatives, explain the available route clearly. This helps applicants provide useful evidence and helps reviewers avoid collecting material without a purpose.
Practise the judgement
Work through customer risk, beneficial ownership and escalation decisions in CDD and EDD in Practice. Free access for registered learners. For local context, explore the country learning packs.