Why dynamic risk assessments are a must for AML/KYC

As pressures continue to rise for financial institutions to meet mounting anti-fraud regulatory requirements, dynamic risk assessments will become more vital.

KYC Portal recently explored the need for a strong KYC and AML platform that can handle dynamic risk assessment. This is a term used to describe a risk assessment that is carried out during an evolving environment where the item being assessed changes while the assessment is completed.

 Enterprises with high-risk exposures need dynamic risk assessment to meet pressures to curb illicit financial transactions. This means they will need a way to adapt rules, parameters and scenarios to meet risk profiles for accounts or individuals, it said.

KYC Portal’s solution, for example, provides compliance teams with full control to define and maintain their regulatory framework. Users can create and tailor processes, regardless of the service or product offered, to meet specific risk perspectives.

The solution also allows compliance teams to dictate and dynamically tweak the system. This includes the definition of the risk-based approach, the scoring methodology, the data required for each type of entity, the document requirements and the associated risk levels for enhanced due diligence, among many others.

KYC Portal also remarked that organisations need a more accurate, holistic and dynamic view of an entity’s behaviour across all products, businesses, channels and risk factors.

There are a few different processes used currently, but they are not good enough. The first style is using excel sheets. Not only are these reliant on heavy manual input, but they also use static data that consistently needs to be changed. The other style is the “I know all my customers” syndrome. This is where processes are lax and risk reviews are rare due to an assumption they have a close relationship with the customer.

It said, “However, based on statistics, we can confirm that having a robust, central automated risk-based platform at the core of the entire process of lifetime due diligence will not only reduce the risk to perform the risk-based assessment, but will also maximise efficiencies all throughout the entire due diligence process of the company.”

Find out more here.


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