Financial Crime Client Risk Assessment | Case study

The Situaton

Following a regulatory review it had been highlighted that the organisation did not have an up to date risk view of its client base
The regulator had put the organisation under pressure to resolve this situation and had put restrictions on new business.

Issues

The organisation had a static risk rating that relied upon several unconnected risk factors which were open to interpretation
The resulting risk score was hard to reconcile and lacked evidence
There was a lack of consistency in scoring and thus a lack of confidence in results.

How P2 FinCrime helped

Reviewed the existing process and approach in order to establish existing data that could be re used
Defined the key elements of a common CRA tool and built out a proof of concept to test the approach with users and stakeholders
Each division was reviewed in isolation taking into consideration the differing risk factors of their core clients
Having established the minimum data required for a compliant score we engaged Technology to agree on the source of data points
Working with front office, compliance, operations, and technology the inputs and outputs were tested and approved
Controls were designed to ensure data was robust and exception reports used to seek anomalies
An audit trail was established for the CRA scores so that internal and external stakeholders could understand and test outputs
All processes, controls, documentation, and approaches were logged and handed over to BAU for ongoing running.

The Outcome

The entire customer book was re-rated and new scores loaded onto the core banking platform
As a result, a number of customers were downgraded from high to medium or low and some were upgraded to medium or high based on approved data inputs
A small number of New High-Risk customers were prioritised for immediate event-driven reviews
Periodic Review schedules were re-worked to align to the new risk profiles with a drop in overall demand
The regulatory finding was closed once evidence had been reviewed and assurance completed by 2LOD.

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