Select Tools > FME Options and click the Workspace Defaults icon.
Arc/Ellipse Stroking
This advanced setting is used by FME whenever arcs need be stroked into lines to make sure the distance between resulting line and the true mathematical arc is never more than the value specified.
You can set a default tolerance here for all workspaces, or you can set it on individual workspaces through Workspace Settings > Advanced > Stroking Tolerance.