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#628059 - 10/23/06 06:40 PM Risk Rating of Customers
Waterfall Offline
Member
Joined: Oct 2006
Posts: 96
PA
I am a BSA Administrator and am discussing with the rest of the Compliance staff if we should risk rate each individual account or by customer. Is there are specific recommendation out there to do one or the other?

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#628060 - 10/24/06 01:25 PM Re: Risk Rating of Customers
CalifDreamin Offline
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CalifDreamin
Joined: Mar 2002
Posts: 2,207
Far from Calif
I don't know that I have really seen anything specific on this from the regulators except from the examination manual where it says that the risk assessment should include products, services, customers, entities and geographic locations. The Risk Assessment sections of the manual all seem to look to the evaluating the risk of the customer/entity as opposed to the account.

Seems to me that the best way to accomplish a truly meaningful and thorough risk assessment is to first look to the risk level of the customer, then you would evaluate the types of accounts, transactions, etc. of that particular customer. Once you have historical data on the high risk customer, for example, you could potentially consider particular accounts of that customer to be lower risk. But, I'd be careful there since you really want to be looking at the customers entire relationship and transactions between its various accounts when the customer is high risk.

To me, once an account shows high risk activity, it's the customer and not just the account that becomes high risk since that is who conducts the activity itself.
Last edited by FlamingoGal; 10/24/06 01:38 PM.
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#628061 - 10/24/06 02:29 PM Re: Risk Rating of Customers
Pinkie CRCM Offline
Gold Star
Joined: Aug 2003
Posts: 399
KY
Due to our processor, we were only capable of risk rating accounts. From that, however, we elevated it to customer level to include the entire relationship and products we provide. The entire relationship is taken into account for annual reviews, and activity from all products is reviewed.

I agree with flamingogal, it's the customer and not just the account.

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#628062 - 10/24/06 02:44 PM Re: Risk Rating of Customers
Bagweaver Offline
Diamond Poster
Joined: Nov 2005
Posts: 2,409
SW GA
Our regulator is the OTS and they have said it's the customer not the account.

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#628063 - 10/24/06 03:22 PM Re: Risk Rating of Customers
BrendaC Offline
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BrendaC
Joined: Sep 2001
Posts: 6,029
Sweet Home AL
We exempt the customer. The types of accounts/services they have with the bank are factors in the risk rating process.
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#628064 - 10/24/06 03:31 PM Re: Risk Rating of Customers
homestar Offline
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Joined: Feb 2001
Posts: 2,245
US of A
You should determine the risk of the *customer* based upon several factors. One of those factors includes the types of accounts he/she/it holds at your bank.
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#628065 - 10/24/06 05:51 PM Re: Risk Rating of Customers
Tachikara Offline
Junior Member
Joined: Feb 2006
Posts: 48
Minnesota
Are you truly risk rating EVERY customer? Or just customers you have flagged as a risk (i.e. gas station, consumer with many int'l wires, etc.)?

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#628066 - 10/24/06 06:03 PM Re: Risk Rating of Customers
BrendaC Offline
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BrendaC
Joined: Sep 2001
Posts: 6,029
Sweet Home AL
All new customers as of a certain date and existing customers that were selected through a risk-based process.
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#628067 - 10/24/06 07:57 PM Re: Risk Rating of Customers
Tachikara Offline
Junior Member
Joined: Feb 2006
Posts: 48
Minnesota
Does anyone have a questionnaire or information they use to risk-rate new customers? I'm just starting to put together our risk assessment and would like to include that for all of our bankers. Thanks!

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#628068 - 10/24/06 07:53 PM Re: Risk Rating of Customers
Dazed and Confused Offline
Gold Star
Dazed and Confused
Joined: Feb 2006
Posts: 250
Big XII South
There are several risk-rating checklists and forms on the Bankers Tools website under the AML/BSA section.

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#628069 - 10/24/06 11:59 PM Re: Risk Rating of Customers
Dip Offline
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Dip
Joined: Mar 2005
Posts: 6,298
San Diego, CA
we do customers...we did all our existing and do all new going forward based on the accounts and services requested at the start of the new relationship. when i do a high risk review, i pull all the customer's deposit and loan accounts and look at the activity as a whole, not each accoutn separately.

i've shared my forms with a handful of the BOLers already, but if anyone else wants them, pm me your address. plus, my forms and processes are ok with the occ.
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