Which risk factors are considered when assessing risk rating of customers? (Select Three.)

Question

Options

• ACustomer risk
• BGeographic risk
• CProduct risk
• DCredit risk
• EFraud risk
• FEmployment risk

• A
  77% (40)
• D
  6% (3)
• E
  13% (7)
• F
  4% (2)

Explanation

Customer risk: This refers to the characteristics of the customer that may affect their risk profile, such as their identity, occupation, source of funds, business activities, reputation, and political exposure. For example, customers who are politically exposed persons (PEPs), cash-intensive businesses, non-resident customers, or customers with complex ownership structures may pose a higher risk of money laundering or terrorist financing. Geographic risk: This refers to the location of the customer, their business, or their transactions, and the level of risk associated with that location. For example, customers who are based in, operate in, or transact with jurisdictions that have weak anti-money laundering (AML) regulations, high levels of corruption, or are subject to sanctions or embargoes may pose a higher risk of money laundering or terrorist financing. Product risk: This refers to the type of products or services that the customer uses or offers, and the level of risk associated with those products or services. For example, customers who use or offer products or services that are anonymous, complex, or facilitate cross-border transactions may pose a higher risk of money laundering or terrorist financing. Other risk factors that may be considered include transaction risk, delivery channel risk, and industry risk. However, these are not among the options given in the question.

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