# FATF R.1 — Assessing risks and applying a risk-based approach - **Part of:** [[FATF Recommendations]] Countries must identify, assess and understand their money laundering and terrorist financing risks, designating an authority or mechanism to coordinate the assessment and applying resources so risks are mitigated effectively. Based on that assessment, countries must apply a risk-based approach so measures are proportionate to the risks identified: higher risks must be adequately addressed, and where lower risks are identified, countries must allow and encourage simplified measures as appropriate. Countries must also identify, assess and understand their proliferation financing risk — the risk of breach, non-implementation or evasion of targeted financial sanctions under Recommendation 7 — and take proportionate action, while still fully implementing Recommendation 7 regardless of risk level. Financial institutions and DNFBPs must identify, assess and take risk-based action to mitigate their own ML, TF and proliferation financing risks. ## Keyed AMLR articles - [[AMLR Art. 4 - Exemptions for certain gambling services|AMLR Art. 4]] — Exemptions for certain gambling services - [[AMLR Art. 6 - Exemptions for certain financial activities|AMLR Art. 6]] — Exemptions for certain financial activities - [[AMLR Art. 10 - Business-wide risk assessment|AMLR Art. 10]] — Business-wide risk assessment - [[AMLR Art. 41 - Residence-by-investment applicants|AMLR Art. 41]] — Residence-by-investment applicants ## Further AMLR connections - [[AMLR Art. 9 - Scope of internal policies|AMLR Art. 9]] — AMLR Art. 9 requires written policies, procedures and controls to mitigate ML/TF risks (identified at Union, Member State and entity level) and the risks of non-implementation or evasion of targeted financial sanctions; R.1 requires institutions to identify, assess and take risk-based action to mitigate their own ML, TF and proliferation-financing risks, so it also covers the assessment step (AMLR Art. 10). *(related)* - [[AMLR Art. 33 - Simplified due diligence|AMLR Art. 33]] — R.1 requires countries to permit simplified measures for lower risk; AMLR Art. 33 is the EU rule that lets obliged entities apply them, within listed conditions. *(direct)* - [[AMLR Art. 34 - Scope of enhanced due diligence|AMLR Art. 34]] — R.1 sets the general principle that higher risks need adequate, proportionate measures; AMLR Art. 34 implements it as an enhanced due diligence regime with a measures catalogue. *(related)* ## Authoritative text > [!quote]- FATF Recommendation 1 — text of the Recommendation (FATF Recommendations, updated June 2026); interpretive note not reproduced > **1. Assessing risks and applying a risk-based approach** > Countries should identify, assess, and understand the money laundering and terrorist financing risks for the country, and should take action, including designating an authority or mechanism to coordinate actions to assess risks, and apply resources, aimed at ensuring the risks are mitigated effectively. Based on that assessment, countries should apply a risk-based approach (RBA) to ensure that measures to prevent or mitigate money laundering and terrorist financing are proportionate to the risks identified. This approach should be an essential foundation to efficient allocation of resources across the anti-money laundering and countering the financing of terrorism (AML/CFT) regime and the implementation of risk-based measures throughout the FATF Recommendations. Where countries identify higher risks, they should ensure that their AML/CFT regime adequately addresses such risks. Where countries identify lower risks, they should allow and encourage simplified measures as appropriate. > Countries should also identify, assess, and understand the proliferation financing risks for the country. In the context of Recommendation 1, "proliferation financing risk" refers strictly and only to the potential breach, non-implementation or evasion of the targeted financial sanctions obligations referred to in Recommendation 7. Countries should take proportionate action aimed at ensuring that these risks are mitigated effectively, including designating an authority or mechanism to coordinate actions to assess risks, and allocate resources efficiently for this purpose. Where countries identify higher risks, they should ensure that they adequately address such risks. Where countries identify lower risks, they should ensure that the measures applied are proportionate to the level of proliferation financing risk, while still ensuring full implementation of the targeted financial sanctions as required in Recommendation 7. > Countries should require financial institutions and designated non-financial businesses and professions (DNFBPs) to identify, assess and take effective and risk-based action to mitigate their money laundering, terrorist financing and proliferation financing risks.