2.1.2.4 Deriving at the KYC Risk Score

A customer is risk-scored by considering different risk factors listed in Appendix-A: Parameters. The risk score is a combination of all factors and provides a complete customer risk profile view. The customer is scored using both the Rule-based and Algorithm-based models. The Algorithm-based risk assessments give a complete profile of the customer and help the investigator understand the other risk factors better. If the customer meets the rule, then it indicates that the customer must be monitored more closely as they have met the rule values which the institution defines for closer review. The maximum score of the Rule-based or Algorithm-based model is taken to be the customer’s risk score.

For every customer identified and risk-scored, a risk assessment is created. If a customer is risk-scored using both the Rule-based and Algorithm-based models, then the customer will have one risk assessment with both the scores available. The Risk assessments are further analyzed after creation to check which is to be promoted to case and closed by the system.

After the risk assessment is performed for a customer the system verifies if the risk assessment is to be closed by the system or promoted to case based on the range of the KYC risk score.

The Risk Category table captures the value for the User Review flag for different ranges of scores. If the User Review flag is Y then the system does not close the risk assessment but promotes it to a case for further investigation. If the User Review flag is N, then the system closes the risk assessment. For information on how to provide values on the Risk Category, see the Adding Risk Parameters and Rules (KYC Batch) section in Oracle Financial Services Know Your Customer Administrator Guide.

There are exceptions to a process of risk assessment being Closed by the System. Even when the ranges defined in the Risk Category table have the User Review flag set to N, KYC promotes the risk assessments to a case in the following situations:

  • Watch List Scores for Promotion: If the primary customer’s or interested parties’ watch list score is greater than or equal to the score defined in the Watch List Score parameter in the jurisdiction-specific application parameter table.
  • Risk Tolerance: If the difference between the calculated Customer Effective Risk score and the prior risk score is above the value provided in the Risk Tolerance parameter in the jurisdiction- specific Application Parameter table, the assessment is promoted to a case even if it falls under the range of Closed by System.