
Top 6 Practises For Your Business To Pinpoint Key Risk Areas

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As global industries continue to evolve and digitise, customer risk assessment has become a critical aspect of business compliance worldwide. With the increase in digital transactions and remote onboarding, it is critical for companies to understand the complexities of the risk assessment procedures and how it can help them to fight fraud whilst meeting KYC AML compliance. Failing to perform adequate risk assessment results in non-compliance and can cost businesses billions of dollars in fines. Financial firms and banks were amongst the most penalised in 2022, with almost $5bn for “anti-money laundering” infractions, breaching sanctions, and failings in their “know your customer” system.
This blog aims to shed light on the complexities of risk assessment and provide detailed insight on its importance for your business.
Risk assessment is a significant part of managing the risk of financial crime which has continuously changed with modernisation; its origin being traced to the turn of the century whereby the first anti-money laundering regulation was introduced.
As the global financial industry expanded, banks have to consider the potential risk associated with clients from various industries and countries, increasing the importance of conducting a risk assessment. Moreover, the exponential rise in financial crimes and identity theft has further stressed the significance of customer risk assessment, as criminals are becoming more sophisticated in finding new ways to exploit businesses’ security systems.
Over the years, various regulatory obligations have emerged that have impacted the development of customer risk assessment. For instance, the USA Patriot Act, introduced after the world trade centre tragedy, further broadened the scope of anti-money laundering and increased the focus on customer risk assessment. The EU also emerged with the 4th, 5th, and 6th Anti-money Laundering Directives that have played a vital role in forming risk assessment standards.
In light of these developments, risk assessment has become an imperative tool in the fight against money laundering and other financial crimes, whilst continuing to evolve to meet the changing demands of regulatory obligations and the financial industry.
As part of a risk assessment strategy, businesses need to consider a series of risk factors, monitor their customers against them, and have defined pathways in place upon risk identification.
Specifically, these are:
Conducting a proper risk assessment is vital to effective AML and KYC programs.
By using best practices, financial firms and banks can limit the risk of losing money, improve their brand image, make operations fool-proof, and ensure the safety of their customers.
Identifying and fighting financial crimes is essential for digital businesses and is the right time for enterprises to invest in risk assessment solutions. It’s an ideal way to counter money launderers and other financial criminals.
Shufti Pro’s customer risk assessment service is perfect for any type of business, aiming to provide its customers with a risk-free experience. Our solution ensures your business remains compliant and mitigates the risk of losing money or damaging your business reputation. Shufti Pro’s risk assessment holds the potential to verify customers against rigid KYC and AML checks with 99% accurate results.
Still confused? Learn more about our risk assessment service and how it can help your businesses in the fight for security in the digital economy.