Customer Risk vs. Due Diligence and Suspicious Activity Monitoring

For Illustration Only

Certain customer relationships may pose a higher risk than others. This chart provides an example of how a bank may stratify the risk profile of its customers (See Legend and Risk Levels). Because the nature of the customer is only one variable in assessing risk, this simplified chart is for illustration purposes only. The chart also illustrates the progressive methods of due diligence and suspicious activity monitoring systems that banks may deploy as the risk level rises. (See Observed Methods.)

Observed Methods of Due Diligence & Suspicious Activity Monitoring

Bar graph depicts different customer and account types going from lower risk to higher risk:

1. Resident Consumer Acct (DDA, Savings, Time, CD)

2. Nonresident Alien Consumer Acct (DDA, Savings, Time, CD)

3. Small Commercial and Franchise Businesses

4. Consumer Wealth Creation (at a threshold "Payable Through" Accounts) to the bank's risk appetite)

5. Nonresident Alien Offshore Investor

6. High Net Worth Individuals (Private Banking)

7. Multiple Tiered Accts (Money Managers, Financial Advisors

8. Offshore and Shell Corporations

The graph also indicates different compliance requirements for different risk levels:

High-risk levels require customized transaction profile with tailored monitoring against transaction profile.

Medium-risk levels require a source of wealth statement and financial statement.

Medium- to low-risk levels require a unique profile specific to products and services used by customer.

Medium-risk levels require a basic profile and generic threshold monitoring.