For years, a common reaction to rising AML compliance pressures has been “de-risking”—the wholesale termination of business relationships with entire customer segments or geographic regions deemed too high-risk. While seemingly a prudent defensive move, this blunt approach has a significant dark side, potentially harming legitimate customers and even undermining the very goals of the AML regime. Now, a more sophisticated strategy is gaining traction globally and in the UAE: “re-risking.” This article explores why global standard-setters and local regulators are pushing for this shift from risk avoidance to intelligent risk management.
The Problem with De-Risking
De-risking is the practice of financial institutions and other businesses exiting services or relationships to avoid, rather than manage, perceived money laundering or terrorist financing risks. While intended to reduce a firm’s risk exposure, this strategy carries a host of negative and often unintended consequences.
- It Can Backfire on AML Goals: As the Governor of the UAE Central Bank has warned, when legitimate businesses and individuals are denied access to the formal financial system, they may be forced to turn to informal, unregulated channels. This pushes financial activity into the shadows, making it more difficult for authorities to monitor and detect illicit flows.
- It Stifles Economic Growth: De-risking can cut off essential financial services to entire sectors that are vital for economic diversification, such as small and medium-sized enterprises (SMEs) and exchange houses, even if the vast majority of businesses in those sectors are legitimate.
- It Undermines Financial Inclusion: The practice disproportionately affects vulnerable and low-income populations, migrants, and non-profit organizations, preventing them from accessing basic financial services. This runs contrary to global development goals and can exacerbate social and economic inequality.
- It Creates Systemic Risks: In the context of international banking, de-risking can sever crucial correspondent banking relationships, forcing cross-border payments through more complex and potentially less transparent channels, thereby increasing operational risk for the entire system.
The Global Shift: FATF’s New Guidance on Financial Inclusion
Recognizing these harms, the Financial Action Task Force (FATF), the global AML standard-setter, is leading the charge to reverse this trend. In June 2025, the FATF issued updated guidance that explicitly reframes financial inclusion as a core component of an effective AML/CFT framework.
The core message of this new guidance is that de-risking is an improper application of the risk-based approach. Instead of avoiding risk, institutions should use the flexibility of the risk-based approach to safely bank underserved populations. In fact, the FATF now considers financial exclusion itself to be a risk factor for money laundering, as it drives activity underground. A key principle of the new guidance is encouraging the proper use of Simplified Due Diligence (SDD) for demonstrably low-risk customers to make financial services more accessible without compromising security.
The “Re-Risking” Solution: Managing Risk, Not Avoiding It
The antidote to de-risking is “re-risking.” This does not mean taking on risk recklessly. Rather, it signifies a strategic commitment to investing in the systems, technology, and expertise needed to understand, price, and manage risk effectively. It is the true embodiment of the FATF’s risk-based approach.
The pillars of a successful re-risking strategy include:
- Granular Risk Assessment: Developing a sophisticated methodology to assess risk at the individual customer level, rather than painting entire segments with the same broad brush. This allows for the precise application of CDD measures.
- Investment in Modern Technology: Leveraging AI-driven compliance solutions for more accurate real-time transaction monitoring, advanced analytics to identify subtle patterns of illicit behavior, and a significant reduction in costly “false positive” alerts.
- Enhanced Due Diligence Capability: Building the internal expertise and processes to properly conduct EDD on higher-risk clients, allowing you to bank them safely instead of simply turning them away.
- Expert Staff Training: Cultivating a team of compliance professionals who can make nuanced, well-documented risk decisions, moving beyond a rigid, rules-based mindset.
This shift in thinking is powerfully aligned with the CBUAE’s own advanced regulations on risk management, which demand that financial institutions have mature systems to measure, monitor, and stress-test all material risks. The message from regulators is clear: we do not expect you to avoid risk entirely; we expect you to demonstrate the capability to manage it professionally and effectively.
Conclusion: From Risk Aversion to Risk Intelligence
The future of AML compliance in the UAE and globally is not about building higher walls, but about developing clearer windows into financial activity. A “re-risking” strategy, underpinned by modern technology and deep expertise, enables businesses to expand their services, promote financial inclusion, and grow their bottom line safely and sustainably. It represents a fundamental move away from a defensive posture of risk aversion and towards a proactive strategy of risk intelligence. Are you de-risking valuable customer segments out of fear or a lack of capability? Contact DPMS Global to explore how modern compliance solutions can empower your business to adopt a smarter, more effective re-risking strategy.