Customer risk rating
Also known as: Customer risk rating · Risk rating · Customer risk scoring · Risk tiering · Customer risk profile
Assigning each customer a risk level — typically low, medium or high — that determines how deep the due diligence is and how intensely the relationship is monitored.
Legal basis
FATF — Recommendations (Recommendation 1, risk-based approach)
Anti-money-laundering is risk-based: you do not treat every customer the same, you treat each according to the risk they represent. The customer risk rating combines factors — customer type, activity, geography, product, PEP exposure, screening results — into a level that sets everything else. Low risk warrants simplified due diligence; high risk triggers enhanced due diligence and tighter monitoring. In the US this is the risk-based approach the FFIEC BSA/AML manual expects, and FATF's Recommendation 1.
The rating is not static: it is the piece that ties perpetual KYC to transaction monitoring. When an event changes the profile — the customer becomes a PEP, appears in adverse media, changes behavior — the rating rises and the controls follow. Done badly, it concentrates effort on the wrong customer; done well, it puts attention where the risk actually is.
Frequently asked questions
What is a customer risk rating?
It is the risk level (low, medium, high) assigned to each customer from factors such as activity, geography, product and PEP exposure. It defines how much due diligence and monitoring the customer receives, following the risk-based approach of anti-money-laundering programs.