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#2261477 - 10/22/21 06:55 PM high risk customers
JennKK2 Offline
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during a state exam it was noted the best practice recommendation was to present board with high-risk customer list.
how many banks do this and what exactly do you provide
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#2261478 - 10/22/21 06:57 PM Re: high risk customers JennKK2
April Offline
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We just had that recommendation as well and we started including the total number of high risk customers in our Board reports.
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#2261487 - 10/22/21 07:45 PM Re: high risk customers JennKK2
#Just Jay Offline
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We simply mention the number of them in our annual risk assessment. We do not provide a list, but we also a relatively low number of HR customers, and do not bank most risky types of HR customers.
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#2261490 - 10/22/21 08:22 PM Re: high risk customers JennKK2
Beachbum, CRCM Offline
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We only provide the # of HR customers to the Board on an annual basis comparing #s yr over yr
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#2261529 - 10/25/21 03:36 PM Re: high risk customers JennKK2
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Same as above, only #'s. I feel providing a list of actual customers would be a moot point as the list could change often and could be outdated as soon as you give it to the board.

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#2261553 - 10/25/21 06:55 PM Re: high risk customers JennKK2
John Burnett Offline
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And you really don't want board members attempting to tweak your risk assignments (one of them is surely going to know one of the higher risk customers, and ....). So stick with the count.
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#2264329 - 01/05/22 07:58 PM Re: high risk customers JennKK2
JennKK2 Offline
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i know it's been awhile but my question still follows the topic of High Risk Customers, but now my question is for those who have multiple branches...

are you as the BSO solely responsible for determining who may be placed on the HRL or are you having someone at each location communicate who and why they feel a customer should be added? I feel they are more apt to detect and investigate and then communicate back to the BSA O for further consideration - obviously following any BSA process to add or remove.

appreciate any feedback
thank you
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#2264333 - 01/05/22 08:14 PM Re: high risk customers JennKK2
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All of the banks I have been at have a customer risk rating methodology which risk rates customers automatically. Occasionally we have manual overrides, but for the most part, risk rating is done by a module.
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#2264334 - 01/05/22 08:16 PM Re: high risk customers JennKK2
JennKK2 Offline
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we do not have any automated module - all done on a case by case basis
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#2264346 - 01/05/22 09:18 PM Re: high risk customers JennKK2
Oursisnottoreasonwhy Offline
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https://www.bankersonline.com/tools/42660

Check out this Risk Rating form

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#2264369 - 01/06/22 04:19 PM Re: high risk customers JennKK2
ColoradoAML Offline
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Creating a methodology is difficult in the short term but will save time long term and will definitely be better than subjectively adding customers, even if the person with the subjective decision is a qualified BSA Officer.

The tool Ourisisnot linked is excellent for initial risk rating, and maybe consider creating some specific criteria for existing customers to automatically be rated high risk based on whatever tools you have access to. SARs filed along with wire and cash volume over a certain amount is usually a pretty good starting point, so maybe pulling reports of those quarterly and anyone over $x is high risk and requires whatever due diligence you perform.

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#2264383 - 01/06/22 05:17 PM Re: high risk customers JennKK2
JennKK2 Offline
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thank you oursisnottoreasonwhy!

as much as the resources i have accumulated over time have given me a better idea how to communicate the importance of risk rating and the argument for how an automated system could provide assistance in assigning a risk rating, there is no way i'll get anyone to sign on to anything different from what we already use. our system prints out a form with low and high categories which the new accounts person reviews and signs off on. yes i have the final review and can question or change. i once tried to encourage a Medium risk category and that was shot down. i cant imagine trying to get a numeric system implemented will be any more welcomed, certainly not another step in the process. i know it has been strongly recommended to utilize a more systematic approach but i'm not seeing any argument i could give will persuade the change.

at this time my approach will be to reach out to the individual branches, train on risk rating, our current risk worksheet, the bank's method of determining risk, and encourage communication back of who and why a person should be considered high risk.
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#2264406 - 01/06/22 08:45 PM Re: high risk customers JennKK2
JennKK2 Offline
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thank you ColoradoAML!
The HR methodology had never been in writing or part of the program, though producing a HRL always existed. odd and backwards i know. admittedly my weakest point which is why i'm focusing so hard on trying to conduct a more comprehensive program hence all my questions. the methodology is complete. given my recent role change i do know i'll have the time to dedicate to this area so i appreciate the suggestion to pull wire reports over a certain dollar amount and use them as additional tools for re-evaluating risk rating as well as to "profile" new but similar customers
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#2273317 - 07/23/22 10:11 PM Re: high risk customers JennKK2
AML360 Offline
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It is not necessary to provide the Board with a list of all high risk customers. Best practice is to provide the Board with a breakdown on the proportion of high risk customers. Therefore as an example, Low risk 75%, Medium risk, 20%, High risk 5%. It would be helpful to also provide the factors that have increased the risk profile. Examples are: (a) country risk, (b) product/service type, (c) volume of transaction activity, (d) value of transaction activity, (d) 3rd party risk, etc.

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Last edited by Andy_Z; 07/24/22 02:17 PM.
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