Compliance Risk Model

Definition ∞ A compliance risk model is a structured framework used by financial institutions and digital asset entities to identify, assess, and mitigate potential violations of laws and regulations. It evaluates the likelihood and impact of non-compliance events across various operational areas. This model helps organizations maintain legal and ethical standards in their activities. Effective models adapt to evolving regulatory landscapes.
Context ∞ News concerning compliance risk models often relates to regulatory scrutiny within the digital asset sector, particularly regarding anti-money laundering (AML) and know-your-customer (KYC) requirements. Financial bodies frequently update these models to address new types of digital asset transactions and market structures. The implementation of robust compliance frameworks is a critical factor for institutional adoption and regulatory acceptance.