Mitigating actions are specific steps or measures taken to reduce the likelihood or potential impact of a risk identified during the risk assessment process. Typically in KYC (Know Your Customer), due diligence and financial crime prevention processes and compliance, mitigating actions are implemented after evaluating a counterparty's risk profile to ensure that potential threats - such as money laundering, fraud, terrorist financing or sanctions breaches - are proactively managed and controlled.

These actions are tailored to the nature and severity of the identified risk. For example, if a customer is deemed high risk due to their location in a high-risk jurisdiction, a mitigating action might include applying Enhanced Due Diligence (EDD), increasing the frequency of ongoing monitoring or requesting additional documentation to verify the source of funds or wealth. Similarly, if a screening process reveals a potential sanctions screening match or adverse media alert, the mitigating action could involve escalating the case to a compliance officer, conducting further investigations or declining to proceed with the business relationship.

Mitigating actions are a core part of the risk-based approach that underpins most regulatory frameworks, including those aligned with the Financial Action Task Force (FATF) recommendations. Proper documentation and implementation of these actions help organizations demonstrate regulatory compliance, make informed business decisions and protect themselves from financial, legal and reputational harm.