Risk Assessment Tools & Client Risk Scoring. Regulatory Requirements: Institutions should have a risk based approach to managing AML Institutions should identify higher risk clients and perform enhanced due diligence and on going monitoring. Risk Based Approach. Product. Geography.
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Enterprise Unit AML Inherent AML Assessment
AML Program Assessment
High Risk Business Units
Branch Risk Ratings
More frequent review and training
High Risk Branches
Client Risk Scoring
Targeted client due diligence and transaction monitoring
High Risk Clients
Product Risk Assessment
Automated transaction monitoring & tighter controls
High Risk ProductsRisk Based AML Programs
AML Country Risk Model
Products / Services
Product / Service Risk Assessment
Customers / Clients
Client Type / Segment Risk ModelRBC Risk Assessment - Tools
Results should answer these questions:
What is the scope of our risk universe?
What are our inherent AML risks?
What internal controls will be needed and where?
RBC has developed and implemented a Business Unit Risk Rating System to answer these questionsEnterprise Approach
The Risk Rating System contains logic to arrive at composite risk score for unit
Higher number of points is intended to reflect a higher level of inherent AML risk within a business unit relative to other units
Business units are assigned a risk rating of “High”, “Medium” or “Low” upon a review and analysis of all AML Inherent Risk Rating results.
The model and ratings are updated annuallyUnit Inherent Risk Ratings
Solution has 2 components:
Clients are risk scored through SAS
EDD queue in the AML System
2. Enhanced Transaction Monitoring
New Queue in the Transaction Monitoring System
New rules tailored to the Client Risk TypeRBC Approach to Client Risk Scoring in Retail Banking
The key criteria used in rating client risk are:
The CRS system leverages the models RBC has developed to risk rank the attributes related to the above-noted criteria.
Politically Exposed Person
High Net Worth
Monitor (High Risk Score)
Business Client Risk Types
Money Service Business
Non Government Organization
Non Bank Financial Institutions
Monitor (High Risk Score)
Look to your regulatory guidance and your client base for appropriate categories
Examples of Client Risk Categories to Consider
Data elements are scored (e.g. Country Risk Ratings)
Risk Drivers are weighted for relative importance in determining client risk
Clients exceeding a predetermined threshold will be subject to EDDCRS Scoring Model
All are measured on frequency
and value of transactions
Consider creating a score override function:
AML risk is not a science
Override enables you to elevate a client’s score based on other informationEnhanced Due Diligence for Clients that are identified through CRS