1. Risk Assessment Guide
  2. Introduction

1 Introduction

This section provides an introduction on the types of Risk assessments performed by the KYC application based on the customer or prospect type.

Risk Assessments

Know Your Customer (KYC) assesses the risk that a customer poses to a bank or Financial Institutions (FIs). KYC is a continuous process of customer assessment and not a one-time activity. Below are the different stages for KYC risk assessment during a customer life cycle.

  • Customer Onboarding
    • Every new prospect is risk assessed during onboarding based on the risk attributes defined by particular jurisdiction and prospect type (namely Individual, Financial Institution & Organization). KYC provides a REST-based API for real-time KYC risk assessment for the same.
      • System risk assesses both primary and secondary prospects as part of onboarding.
  • Continuous Monitoring (also called KYC Batch)
    • Deployment Initiation
      • Here, all the bank’s existing customers are risk assessed on Day 0 at the time of KYC going live. The system assigns the next periodic review date based on the risk category (High/Medium/Low) for each jurisdiction.
    • Periodic Review
      • Customers are risk assessed based on their respective next periodic review dates.
    • New Account Review
      • Customers are risk assessed when they open an additional new account with the financial institution.
    • Accelerated Re-review (ARR)
      • Customers are risk assessed if there is a change in any key KYC profiles like Occupation change, change in the country of residence, etc. This list of profiles is pre-configured in the system.

Key Concepts - Types of Assessments

There are two assessment types, users can configure to assess the risk associated with each relationship type for each jurisdiction - Full KYC Assessment and Watchlist Screening.

For example: Full KYC assessment for company UBO relationship and Watchlist Screening for company's director is performed. If there is no mapping for a particular relationship type for a jurisdiction, the default is Full KYC Assessment.
  • Full KYC Assessment: In Full KYC Assessment, the system performs both Watchlist Screening and final KYC Risk Scoring for the respective party. Watchlist risk is one of the risk attributes for KYC risk scoring.
  • Watchlist Screening: In Watchlist Screening, no KYC risk score is computed for the respective party as the system only performs Watchlist Screening.

    Note:

    Watchlist Screening is an optional service during KYC implementation.
The following are the Assessment types based on the customer and prospect:
  • Customer Risk Assessment
    • The system performs a Full KYC Assessment for the primary customer.
    • The system assigns a unique risk assessment ID to only the primary customer. All other interested parties with Full KYC Assessment undergo KYC Scoring. Their scoring details as a part of this assessment are attached to the same risk assessment ID.
    • A case is created for manual investigation at the primary customer level if the KYC Risk Score of the primary customer exceeds the defined threshold score for case creation.
  • Prospect Risk Assessment
    • The system performs a Full KYC Assessment for the primary prospect.
    • The system assigns a unique risk assessment ID to every prospect with a Full KYC Assessment.
    • A case is created for manual investigation if the KYC Risk Score of a primary or secondary prospect exceeds the defined threshold score for case creation.

Key Concepts - Risk Inheritance

  • Customer Risk Assessment
    • For the primary customer, the watchlist risk score is calculated based on watchlist matches of both primary customer and interested parties. The primary customer inherits the maximum watchlist score of interested parties (for whom the assessment type is Watchlist Screening).
    • The primary customer also inherits the maximum KYC risk score among all the interested parties for whom the assessment type is Full KYC Assessment.
  • Prospect Risk Assessment
    • For the primary prospect, the watchlist risk score is calculated based on watchlist matches of primary and secondary prospects. The primary prospect inherits the maximum watchlist score of secondary prospects (for whom the assessment type is Watchlist Screening).