From Checklists to Change: FATF’s Risk-Based Approach and Its Impact on Malta’s AML Framework

Rafal Balina, Marta Spyra, Filip Rozynski and Olga Podlinska

European Research Studies Journal, 2025, vol. XXVIII, issue 3, 518-530

Abstract: Purpose: This article explores the global shift in Anti-Money Laundering (AML) regulation from a rule-based compliance model to a risk-based, outcome-driven paradigm, as exemplified by the evolving standards of the Financial Action Task Force (FATF). Design/Methodology/Approach: By analyzing the experiences of Malta, the United Arab Emirates (UAE), and Iceland—jurisdictions subjected to FATF greylisting and subsequent reforms—we assess how regulatory effectiveness is now measured not by the presence of formal frameworks, but by the demonstrable reduction of financial crime. Integrating insights from regulatory theory, institutional behavior, and international political economy, the article highlights the practical implications of the Risk-Based Approach (RBA) for financial institutions, compliance professionals, and policymakers. Findings: The study emphasizes the need for adaptive systems, cultural change, and integrated enforcement to meet new global AML expectations. The comparative analysis illustrates that successful compliance under RBA demands more than technical alignment—it requires strategic engagement, operational resilience, and a measurable commitment to transparency and accountability. Practical implications: The findings underscore that effective AML compliance in the era of the Risk-Based Approach (RBA) requires financial institutions to move beyond box-ticking exercises and adopt dynamic, intelligence-led frameworks. Regulators must develop adaptive supervisory models, invest in inter-agency coordination, and foster cultures of accountability. For policymakers, aligning AML reforms with broader governance and development goals is essential, particularly in jurisdictions vulnerable to FATF scrutiny. The study also signals to compliance professionals the growing need for strategic thinking, cross-sector expertise, and proactive risk assessment capabilities. Originality Value: This article provides one of the first comparative, theory-informed analyses of how FATF’s shift toward outcome-based evaluation reshapes national responses to greylisting. By integrating case studies with insights from regulatory theory and political economy, it highlights the deeper institutional and strategic transformations required under the Risk-Based Approach (RBA). The paper offers a novel perspective on the intersection of global financial governance, national sovereignty, and compliance effectiveness, with direct relevance for scholars, regulators, and practitioners.

Keywords: FATF; risk-based approach; anti-money laundering (AML); financial regulation; Malta. (search for similar items in EconPapers)
JEL-codes: F36 G28 H26 K42 O17 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ers:journl:v:xxviii:y:2025:i:3:p:518-530

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