Inherent Risk

In AML context, inherent risk assessment involves evaluating the potential money laundering or terrorist financing risk posed by a client or transaction without considering any mitigating controls. Factors considered typically include the client's industry, geographic location, transaction types, and delivery channels. For accountants, understanding inherent risk is crucial in determining the level of due diligence and ongoing monitoring required. High inherent risk doesn't necessarily mean a client or transaction should be avoided, but it does indicate that stronger controls and more intensive monitoring may be necessary.