BSA/AML Contextual Awareness of High Risk Customers

The management of compliance risk requires a thorough evaluation of the customer base. Determining the risk rating of a customer – especially those seen as High Risk – plays an important role in the construction of a complete and accurate BSA/AML Risk Assessment. The determination of High Risk Customers may involve a wide array of variables, carefully rated and scored, or a single variable that overrides all others. The factors to calculate high risk – or any risk – must drive an on-boarding system – computer-based or manual. How many high-risk customers must an institution have before the meaning of high risk becomes meaningless? The USA Patriot Act has laid out the requirements for Customer Due Diligence and Enhanced Due Diligence for High Risk customers. The recently implemented FinCEN CDD Rule which formalized the concept of beneficial ownership, provides guidance for the management of high risk customers.