How does the AML risk rating influence the internal audit function?

The AML risk rating significantly influences the internal audit function by helping to develop the audit program and determining which entities should be audited and prioritized. This approach ensures that resources are allocated effectively, focusing on areas with higher risk, which is crucial in an environment where organizations must comply with stringent anti-money laundering regulations.

By assessing the risk associated with various entities, the audit function can prioritize audits based on the level of risk they present. This means that higher-risk areas, where potential non-compliance or fraudulent activities could have larger ramifications, will receive more attention and scrutiny. This not only enhances the effectiveness of the audit process but also aligns the internal audit function with the organization's overall risk management strategies.

The other options, while related to the audit process, do not capture the core function of the AML risk rating like the correct choice does. For example, while team composition and audit frequency can be influenced by risk factors, they do not directly address how risk ratings guide the overall targeting and prioritization of the audit program.