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Financial Intelligence Centre Act, 2001 (Act No. 38 of 2001)


Guidance Note 3

Guidance for Banks on Customer Identification and Verification and Related Matters

Anti-Money Laundering and Terrorist Financing Policies and Procedures

3. Risk indicators to be used to differentiate between clients



Risk Indicators


The FIC Act and the Regulations require that banks identify all clients with whom they do business unless an exemption applies in a given circumstance. Banks, however, are not required to follow a "one size fits all" approach in the methods that they use and the levels of verification that they apply to all relevant clients.


It is imperative that the money laundering risk in any given circumstance be determined on a holistic basis. In other words, the ultimate risk rating accorded to a particular business relationship or transaction must be a function of all factors that may be relevant to the combination of a particular client profile, product type and transaction.


A combination of the following factors may be applied to differentiate between high risk, medium risk and low risk clients:

product type;
business activity;
client attributes, for example, whether the client is on the United Nations list, duration of client relationship with bank, etc;
source of funds;
jurisdiction of client;
transaction value;
type of entity.


Please refer to Guidance Note 1 for further particulars on the implementation of a risk-based approach.