De-risking is where financial institutions end or limit business relationships by using classes of client. It is a complicated subject that extends beyond anti-money laundering (AML) and counter-terrorist financing (CFT).
The international Financial Action Task Force (FATF) have launched a project to explain issues, and hope to stop anymore banks from withdrawing their services from certain jurisdictions in order to avoid being reprimanded under money laundering regulations. The FATF states that generally its procedures do not require customer due diligence tests to be performed by banks on their clients.
The FATF have been working with the private sector to collect information behind what is encouraging de-risking. They found that there is a need to progress the evidence base to find out more about the impact, scale and causes of de-risking.
Although there will be allowances made for in high risk scenarios, the FATF regulations do not need banks to implement this measure, with normal customer due diligence on the customers of their banking partners when founding and sustaining correspondent banking relationships.