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KYC Risk Rating

KYC, or Know Your Customer risk rating, is an evaluation process used by companies to assess money laundering risks linked with each customer. It’s called a risk rating because this process uses special customer risk scores, assigning low, medium, and high scores to each user based on their potential risk. 

This process is often conducted automatically through AI-powered KYC compliance software (and KYB or Know Your Business software for corporate clients) to improve the accuracy and efficiency of the screening. In general, this assessment prevents companies from doing business with individuals or entities involved in financial crimes like money laundering or terrorist financing.

Frequently asked questions

1

What is a Risk Score?

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A risk score is a risk rating system used by financial institutions and other regulated entities to identify consumers who pose a higher risk of committing financial crimes or engaging in unlawful activities, such as money laundering. 

Companies collect information like identity and occupation through the KYC system and then use these KYC risk scores to screen new customers for political exposure or criminal activity.

2

What are the Main Risk Score Categories?

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3

How Does the KYC Risk Rating Process Work?

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4

Why is KYC Risk Rating Important?

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5

What is the CDD Final Rule in the Context of Risk Rating?

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