Risk Assessment
With the SCOPE CDD On Demand Risk Assessment you can easily automate your risk policy. After configuration, you will always have an unambiguous risk assessment and a lot of time is saved.
Advantages
- Flexible parameters
- Efficient and effective
- Time-saving.
- Accurate and unambiguous
- Prevent human errors
- Automatic risk conclusion
- Reliable and official sources
- Daily monitoring
- Easy to print
According to section 2b of the AMLD, an institution must have a risk policy and record and update all the results of each risk assessment.
Following the Annex III to the revised Fourth Anti-Money Laundering Directive, when making a risk assessment, an institution must in any case take into account the risk factors, this concerns:
- Client
- Industry
- Source of wealth
- Distribution canal
- Geography
The risk policy states which customers (or types of customers) are assigned a risk "stamp" and which considerations and measures are involved. The data required for a client risk assessment is obtained by combining known client data with data obtained from external sources. The resulting risk assessment may also lead an institution to conclude that insufficient control measures are possible and that therefore certain risks should be avoided altogether.
Important factors for a good risk assessment
An important factor for a thorough risk assessment is good data. Incorrect or incomplete (know-your-customer) data plays a major role in the creation of incorrect risk assessments and also causes unnecessary manual work.
A risk assessment model should be clear, whether the input is (largely) automatic in an integrated system or the information is entered by the consultant. Moreover, questions should be clear and not multi-interpretable. Consistent risk assessments are only possible if the assessment is based on facts and clear questions. To ensure this, an (automated) risk assessment based on configurable business rules is required. The risk assessment is free of form, which means that the institution determines the policy itself and the risk assessment is a reflection of this policy. This policy obviously differs per institution and per sector and is subject to innovative insights and regulations.
In order to demonstrate which criteria were used at the time of the risk assessment, for example during a check or audit, it is necessary that the criteria used can be requested at all times.
How does it work?
First you set up your own 'risk set' compliant with your own policy (or you can use a standard set provided by the software). Then, after entering the personal data, you can choose which risk assessment set you want to use, for example, natural persons. Then you fill in the additional data for the risk assessment and the person or organization is checked on all entered data and a risk conclusion is given (low, medium, high, no go).
Example of possible risk components
In the risk assessment of CDD On Demand you can enter the risk components yourself. This ensures that your own risk policies can be automated into the risk assessment. So you can link your own components to certain risk classifications. After you have entered the parameters for all risk components, you can run the risk assessment.
- Geography
- Client (e.g. PEP)
- Industry
- Purpose and nature of the relationship
- Employment
- Distribution channel
- Source of wealth
Example of risk components. In the risk assessment of CDD On Demand you can enter the risk components yourself.
Geography
Several risk country lists are checked. The FATF list and the high-risk country list of the European Union can be included in this check, among others.
Client (e.g. PEP)
The compliance check within the CDD On Demand solution automatically requests data from various sources about the person and/or organization you entered. The person and/or organization is checked on various points, ranging from PEP and sanction lists to insolvency registers.
Industry
You can determine the industry risk in two ways. 1) Use the list of the SBI codes of the Chamber of Commerce to assign different risk classifications to certain sectors 2) Enter a list of high-risk sectors yourself.
Purpose and nature of the relationship
The purpose and nature of the relationship is determined by the client's objective of becoming a client of yours. In the case of an asset manager, you might think of increasing wealth, building retirement income or saving for children.
Employment
Assesses whether the client has a position with a higher risk of money laundering or terrorist financing. You can provide the input for this risk component yourself.
Distribution channel
Distribution channel risk includes the risks associated with the channel through which the client came in contact with you. Some channels have higher risk than others. The way services and products are delivered to the client can be through direct or indirect distribution. Direct distribution means that the products are delivered directly to the client and not through an intermediary, for example. A webshop or sale through an intermediary is therefore indirect distribution. Input for this risk component can be entered by yourself.
Source of wealth
The source of your client's Wealth. This can range from salary to home equity. In the risk assessment set, you can determine the types of origin of wealth you want to include in the risk assessment and the risks associated with the different origins.