A risk-oriented perspective enables a financial institution to more efficiently deploy its resources where its risks are the highest.
How Are Risks Classified?
Classification logic first differentiates among various types of business relationships: private or retail banking, corporate customer business, institutional investors or brokerages. Their business behavior differs. For example, in the case of corporate customers, large money inflows and outflows are the order of the day. In contrast, this transaction pattern would be more unusual for a private account.
Classic Risk Factors include:
- Country risk
- Transaction behavior
- Legal form
- Financial circumstances
- Industry
- Politically exposed person (PEP)
- Occupation
The results of risk classification are used, for example, to define limits for transaction monitoring.
Risk Classification with the MLDS Money Laundering Detection System
The MLDS Money Laundering Detection System classifies both business relationships and customers according to their typical business behavior and takes into account the above risk factors. The rules of risk classification are depicted graphically; the business department can create, test and revise rules on its own.