The 'Client Risk Assessment' (CRA), commonly known as the 'AML Risk Model,' is a structured calculation based on crucial factors such as customer, service, channel, and jurisdiction risks. A2CO can design a bespoke risk model that aligns with your business needs while adhering to anti-money laundering (AML/CFT) regulations and local authority expectations.

Under the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR), entities must conduct a CRA before initiating a business relationship or a single transaction linked to specific jurisdictions via various channels. This assessment enables the creation of a customer risk profile and guides the level of Customer Due Diligence according to the Customer Acceptance Policy (CAP). Completing the CRA is essential before starting any business engagement or infrequent transaction.

 

The data gathered from entities should match the complexity of the planned business relationship or transaction. When executing the CRA, the information requirement scales with the complexity. However, for low-risk scenarios, entities can employ standardised approaches, ensuring an accurate risk assessment of money laundering.

 

A2CO specialises in developing CRAs that encompass all factors influencing a customer's risk profile,  including :

Customer Risk :

This risk arises from business interactions or transactions with individuals or entities. The risk varies, with certain profiles like Politically Exposed Persons (PEPs) or cash intensive businesses posing higher risks. However, regulated market entities generally present a lower risk, barring those in high-volume sectors like EMIs or Payment Service Providers.

 

Jurisdiction Risk :

Engaging with clients linked to specific geographical areas introduces certain risks. Entities must perform jurisdiction risk assessments to enforce Enhanced Due Diligence (EDD) for high-risk countries and understand the risks related to products, services, and transactions.

 

Product/Service/Transaction Risk :

The risk level associated with a specific product, service, or transaction depends on transparency, complexity, and value. Payment method choices, such as cash payments versus bank transfers, also influence the risk level.

 

Delivery Channels Risk :

This risk varies based on the interaction method with the customer and the channels used. Non-face-to-face interactions generally pose higher risks, whereas in-person engagements reduce the risk of money laundering and terrorist financing.

Subject persons must also consider the customer's type, reputation, and behaviour, ensuring no ties to financial crimes  or behaviours indicating a high risk of money laundering or terrorist financing. The effectiveness of the CRA depends on its alignment with the business risk assessment (BRA).

 

A2CO provides guidance in creating a tailored CRA, which requires top management approval and thorough documentation of every decision and aspect of the methodology used. For a professional Customer Risk Assessment (CRA) tailored to your firm, consult our experts today.

 

CONTACT: 
CONTACT: 
John Caruana 
Anton Dalli
Compliance Director
Partner
Group 34 (1)
CONTACT:
John Caruana
Compliance Director
Group 26 (3)
CONTACT:
Anton Dalli
Partner
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