Determining the Customer's Risk Profile
Determining the Customer's Risk Profile
Based on KYC/ KYB and screening, the reporting entities (Financial Institutions, DNFBPs and Virtual Asset Service Providers) must assess the risk associated and assign an appropriate risk rating to the customer.
The reporting entities shall assess the Customer Risk by classifying the customer risk profile depending upon the risks involved as unacceptable, high, medium, or low. The higher the risks, the more stringent controls must be in place to mitigate such risks.
In case customers are classified as “high-risk”, the reporting entities must apply Enhanced Due Diligence (EDD) measures. The following parameters can be considered while doing risk profiling:
- Customer risk
- Transaction risk
- Customers Jurisdiction/ Geographical risk
- Product/ Service risk
- Delivery channel-related risk
- Other relevant factors.
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