Posted By: J_G
Changing customers from high risk to medium -when? - 01/07/18 10:53 PM
I'm curious what is acceptable when it comes to changing customers from high risk to medium risk. If a customer has been on your high risk list for a year, and there have been no unusual transactions, just typical transactions for their business type (e.g. liquor store having cash deposits), or you have a foreign based business on your high risk list, but all they have done in the past year on the account is receive less than $10k in ACH credits (for their business services from clients who pay them in the US), does that justify changing them to medium risk?
How do you determine which "higher risk" customers remain on the high risk list? If they're 'high risk' businesses, but you've had them on your high risk list for 1 or 2 years and continually review their account and it continues to be commensurate with their business type (e.g. cigar company sending wires to suppliers in the Dominican Republic, liquor store depositing cash, etc), is it ok to change them to medium risk at that point? I have a tough time with this because I had an auditor one year say that we needed to put all foreign based businesses on our high risk list and all businesses who regularly send international wires. I did that, but it sure is a waste of time to continue monitoring these accounts so heavily when they are still engaging in typical transactions for their business type.
Just curious how other banks approach this. Is it just common practice to keep all 'higher risk' businesses or customers rated higher risk simply because the FFIEC exam manual says they have high risk attributes? I would greatly appreciate some feedback. Thank you!
How do you determine which "higher risk" customers remain on the high risk list? If they're 'high risk' businesses, but you've had them on your high risk list for 1 or 2 years and continually review their account and it continues to be commensurate with their business type (e.g. cigar company sending wires to suppliers in the Dominican Republic, liquor store depositing cash, etc), is it ok to change them to medium risk at that point? I have a tough time with this because I had an auditor one year say that we needed to put all foreign based businesses on our high risk list and all businesses who regularly send international wires. I did that, but it sure is a waste of time to continue monitoring these accounts so heavily when they are still engaging in typical transactions for their business type.
Just curious how other banks approach this. Is it just common practice to keep all 'higher risk' businesses or customers rated higher risk simply because the FFIEC exam manual says they have high risk attributes? I would greatly appreciate some feedback. Thank you!