Determining the Customer's Risk Profile | AML UAE
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Dear AML Subscribers, AML regulations
Dear AML Subscribers, AML regulations in the UAE provide for adopting a risk-based approach to mitigate the financial crime risk; the higher the risk, the more stringent the AML controls. Accordingly, the regulated entities must conduct a customer risk assessment to classify each customer risk category – either as low, medium, or high- and implement methods to prevent or mitigate these risks.
In this video, we will discuss the risk parameters to be considered for conducting a customer risk assessment to identify the money laundering and terrorism financing crime they pose to the business, including the intensity of the risk.
Customer Risk Profiling can be done basis of the following primary risk indicators:
• Type or Nature of the customer
• Transactional parameters
• Risk arising out of the jurisdiction of the customer
• Peculiarities of the products/services
• Delivery channels involved
If you are a cooperative customer or a resident of the UAE, the risk from such a customer may be considered low. A customer with no adverse media or a non-PEP customer has low ML risks. But the risk is average if you find a customer with a high net worth, non-resident, and a complex business structure.
While customers engaged in goods or services associated with money laundering, typologies, such as Virtual Asset Service Providers or Designated Non-Financial Businesses and Professions, can be construed as posing a little higher risk.
A customer with a criminal history or being evasive and non-cooperative raises high suspicion. The risk is unacceptably high if the customer is on a sanctioned list.
If the customer makes the payment from their own bank account, cheque, or bank transfer, such transactions can be treated as safe from a financial crime exploitation perspective. Also, suppose the value of the transaction is normal (ordinary for the customer or similar customer considering the nature of the customer or type of business activities) or is consistent with the economic profile of the customer. In that case, the risk posed by such a customer is on the lower side.
A cross-border transaction or involvement of agents or a high frequency of transactions are average risks. An unusually high-value or full cash payment transaction can pose a higher financial crime risk. Customers will be construed as high risk if they insist on paying through an unrelated third-party account or using virtual assets without any business rationale.
One of the critical elements of Customer Risk Profiling is the customer’s jurisdiction. A country not subjected to any sanctions, having strict anti-financial crime regulations, is known for fighting corruption and other predicate offenses, or having transparent financial reporting requirements, is treated as posing a lower ML FT risk to the business.
A customer from a country or a jurisdiction with
• Vague financial reporting requirements
• Weak money laundering or terrorism financing laws
• A tax-haven country
• Notorious for corruption and bribery
• Political instability
• Blacklisted or grey-listed by FATF
Pose an increased money laundering and terrorism financing risk upon the business.
A product or service’s characteristics can also define a customer’s risk profile. Like, ML activities do not occur in routine products, services, or goods that are difficult to move. A product with transparency about its ownership is non-suspicious.
A customer becomes suspicious when it deals in luxurious items, keeps less or weak documentation, or is associated with an unregulated industry. It is highly risky when the customer goods have dual-use or executes a series of small volume transactions of high-value goods or services connected to financial crime typologies.
Customers engaging in regular direct personal interaction with no involvement of agents or making payments from their own bank account are not suspicious.
But you must be suspicious when a customer avoids face-to-face meetings or insists on involving third parties or intermediaries without any business sense.
Trust that this video helps you design your Customer Risk Profiling methodology and adequately identify the risk your customers pose to your business.
Stay tuned for more videos on various AML measures.
Chapters:
0:00 Introduction on Customer's Risk Profile
0:41 Primary risk indicators of Customer Risk Profiling
1:02 Customer specific risk
1:52 Transaction specific risk
2:42 Customer's jurisdiction-related risk
3:30 Product/Service specific risk
4:08 Delivery channel-related risk
#AMLUAE #uaeaml #customerriskassessment #amlregulations
#aml #mlft #amlrisks #amllaws #pep #dnfbps #vasps #antimoneylaundering #aml #sanctionscompliance #uae #riskbasedapproach #amlcft
In this video, we will discuss the risk parameters to be considered for conducting a customer risk assessment to identify the money laundering and terrorism financing crime they pose to the business, including the intensity of the risk.
Customer Risk Profiling can be done basis of the following primary risk indicators:
• Type or Nature of the customer
• Transactional parameters
• Risk arising out of the jurisdiction of the customer
• Peculiarities of the products/services
• Delivery channels involved
If you are a cooperative customer or a resident of the UAE, the risk from such a customer may be considered low. A customer with no adverse media or a non-PEP customer has low ML risks. But the risk is average if you find a customer with a high net worth, non-resident, and a complex business structure.
While customers engaged in goods or services associated with money laundering, typologies, such as Virtual Asset Service Providers or Designated Non-Financial Businesses and Professions, can be construed as posing a little higher risk.
A customer with a criminal history or being evasive and non-cooperative raises high suspicion. The risk is unacceptably high if the customer is on a sanctioned list.
If the customer makes the payment from their own bank account, cheque, or bank transfer, such transactions can be treated as safe from a financial crime exploitation perspective. Also, suppose the value of the transaction is normal (ordinary for the customer or similar customer considering the nature of the customer or type of business activities) or is consistent with the economic profile of the customer. In that case, the risk posed by such a customer is on the lower side.
A cross-border transaction or involvement of agents or a high frequency of transactions are average risks. An unusually high-value or full cash payment transaction can pose a higher financial crime risk. Customers will be construed as high risk if they insist on paying through an unrelated third-party account or using virtual assets without any business rationale.
One of the critical elements of Customer Risk Profiling is the customer’s jurisdiction. A country not subjected to any sanctions, having strict anti-financial crime regulations, is known for fighting corruption and other predicate offenses, or having transparent financial reporting requirements, is treated as posing a lower ML FT risk to the business.
A customer from a country or a jurisdiction with
• Vague financial reporting requirements
• Weak money laundering or terrorism financing laws
• A tax-haven country
• Notorious for corruption and bribery
• Political instability
• Blacklisted or grey-listed by FATF
Pose an increased money laundering and terrorism financing risk upon the business.
A product or service’s characteristics can also define a customer’s risk profile. Like, ML activities do not occur in routine products, services, or goods that are difficult to move. A product with transparency about its ownership is non-suspicious.
A customer becomes suspicious when it deals in luxurious items, keeps less or weak documentation, or is associated with an unregulated industry. It is highly risky when the customer goods have dual-use or executes a series of small volume transactions of high-value goods or services connected to financial crime typologies.
Customers engaging in regular direct personal interaction with no involvement of agents or making payments from their own bank account are not suspicious.
But you must be suspicious when a customer avoids face-to-face meetings or insists on involving third parties or intermediaries without any business sense.
Trust that this video helps you design your Customer Risk Profiling methodology and adequately identify the risk your customers pose to your business.
Stay tuned for more videos on various AML measures.
Chapters:
0:00 Introduction on Customer's Risk Profile
0:41 Primary risk indicators of Customer Risk Profiling
1:02 Customer specific risk
1:52 Transaction specific risk
2:42 Customer's jurisdiction-related risk
3:30 Product/Service specific risk
4:08 Delivery channel-related risk
#AMLUAE #uaeaml #customerriskassessment #amlregulations
#aml #mlft #amlrisks #amllaws #pep #dnfbps #vasps #antimoneylaundering #aml #sanctionscompliance #uae #riskbasedapproach #amlcft
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