While there is no agreed upon set of risk factors and no single methodology to apply these risk factors in determining the ML/TF risk of customers, a Capital Market Service Provider must establish an appropriate set of risk factors which, among others, include:
(a) Country risk: Customers with residence in or connection with high risk jurisdictions;
(b) Customer risk: type of customers e.g. resident or non-resident, occasional or one-off, legal person structure, status as PEP, occupation;
(c) Products, services and transactions risk: services that inherently provide more anonymity, ability to pool underlying customers/funds or cash-based or face-to-face or non face-to-face or domestic or cross-border; and
(d) Delivery/distribution channel risk: The distribution channel for products may alter the risk profile of a customer. This may include sales through online, postal or telephone channel where a non-face-to-face account opening approach is used. Distribution or sale of products through intermediaries may also increase risk as the business relationship between the customer and the Capital Market Service Provider becomes indirect.
Added: January 2020