Certain customers, vendors, and intermediaries represent a higher compliance risk than others. Risk indicators include geography, relationships to government officials, business type, method of payment, and dollar volume.
In places where risks are very low, compliance burdens can be reduced. Where risks are not low, compliance is heightened . When there are more red flags, the proper response is more compliance.
The key to a risk-based approach is tracking and sorting the critical elements. Apply enhanced due diligence and heighten ongoing monitoring of high-risk parties proportionate to their risk profiles.
