3.1.1.2 Identifying and assessing the risks associated with specific customers.

يسري تنفيذه من تاريخ 16/6/2021

The LFI should assess the risk of each customer to identify those that require enhanced due diligence (EDD) and to support its entity risk assessment. In assessing the risks of a DPMS or real estate sector participant, LFIs should consider:

i.	Geographic Risk: The risks associated with the jurisdictions in which the customer lives (for individuals) or is registered/headquartered (for legal persons) and where it operates, including the jurisdictions where it has subsidiaries, where it sources its products (where relevant), and where its main counterparties are based. These may include the overall risk of money laundering, terrorist financing, and financing of proliferation, as well as what is known regarding the prevalence of abuse of entities in these sectors.
	There are a number of sources that LFIs can use to develop a list of high-risk countries, jurisdictions, or regions. LFIs should consult any publications issued by the National Anti-Money Laundering and Combating the Financing of Terrorism and financing of Illegal Organizations Committee (NAMLCFTC)⁵, UAE FIU and by the FATF, including the FATF's list of jurisdictions subject to countermeasures and to increased monitoring. LFIs may also use public free databases such as, for example, the Basel AML Index⁶ or the Transparency International Corruption Perceptions Index.⁷ LFIs should not rely solely on public lists, however, and should consider their own experiences and the nature of their exposure to each jurisdiction when assessing the risk of that jurisdiction.
ii.	Customer Risks: For real estate agents and brokers and DPMS, customer risk can be assessed as the proportion of higher-risk customer types (e.g. PEPs, legal persons, and customers from high- risk jurisdictions) within a customer's customer base.
iii.	Product, Service, and Delivery Channel Risk: LFIs should assess risk in this category on two dimensions:
	a.	The products and services that the customer offers to its customers, and the delivery channels through which it offers these products and services. Products, services, and delivery channels that promote the rapid, anonymous transfer of high values are particularly attractive to illicit actors. These may include, but are not limited to:
		i.	Online/non-contact sales: Non-face to face transactions make it easier for criminals to hide their identifies.
		ii.	Accepting cash for high-value purchases. Cash is very difficult to trace and can be exchanged without involving the formal banking system, and thus is particularly attractive to criminals.
		iii.	Accepting virtual assets: Virtual assets, like cash, are anonymous and difficult to trace to their users. Unlike cash, virtual assets allow parties to carry out transactions even when they are at a distance from one another. These qualities, combined with the lack of consistent regulation of entities that deal in virtual assets, make virtual assets high risk for abuse by illicit actors.
		Specific high-risk products and services offered by each customer type are discussed below in sections 3.1.2 and 3.1.3.
	b.	The LFI products and services that the customer intends to use, and the delivery channels through which the LFI will provide these services. LFIs should draw on their entity risk assessment to assess the risk of the products and services each customer uses or intends to use. (This subject is also discussed in section 3.2.1.3.2 below in relation to understanding the nature and purpose of the business relationship.)
iv.	Controls Risk: LFIs should seek to understand the regulatory requirements in place for the customer, as well as how well they are enforced. This assessment is particularly important for those DPMS and real estate brokers that qualify as DNFBPs and therefore are also subject to such requirements. Other participants in the real estate sector, such as developers, are not required to comply with AML/CFT preventive measures. In addition, participants in the precious metals and stones sector may also be required to comply with UAE requirements or global standards related to sourcing precious metals and stones and transparency of supply chains. Where relevant to a customer's business, LFIs should consider whether its customer conducts appropriate supply chain due diligence.

Questions that an LFI may ask to determine customer risk profile include, but are not limited to:

	•	Where is the customer incorporated? Where does it operate? Are these high-risk jurisdictions?
	•	What products and services does the customer provide?
	•	What is the trading volume of the business?
	•	What customer base does the customer serve?
	•	What is the regulatory environment in the jurisdiction(s) where the customer is incorporated/has operations?
	•	Is there an authority that actively enforces the requirements?
	•	Is the customer required to perform CDD on cash customers above a certain threshold in all jurisdictions where it operates? In such scenarios, is it required to identify the beneficial owners of legal person customers?
	•	Is the customer required (as are DNFBPs in the UAE) to conduct a regular independent audit? Did the most recent audit have any material findings?
	•	Does the customer perform sanctions screening?
	•	What is the main channel (in-person vs. online) and methods (cash, wire transfers, checks, etc.) of conducting transactions and in which currency (or multiple currencies)?

In addition to risk rating customers, LFIs should also consider the risks of specific transactions, especially high-value transactions, those involving high-risk jurisdictions, and those that represent departures from a customer's standard or expected behavior. LFIs should be aware of sectoral risks when reviewing large transactions associated with the DPMS or real estate sectors, or transactions of any size that do not have a clear licit economic purpose.

⁵ Available at: https://www.namlcftc.gov.ae/en/high-risk-countries.php
⁶ Available at: https://baselgovernance.org/basel-aml-index
⁷ Available at: https://www.transparency.org/en/cpi/2020/index/nzl