2.2.4. Customer Risk Factors

Effective from 31/10/2022

Customer-based risk factors are assessed to evaluate the level of vulnerability to ML/FT threats posed by customers based on their characteristics. Understanding the inherent risks enables an insurer, agent, or broker to identify appropriate mitigating controls and manage residual risks. Customer risk factors combined with business risk factors can be used as criteria for risk scoring to identify high-risk customers. Such risk factors include:

	•	Customer identity;
	•	Third-party involvement;
	•	Customer’s source of wealth or funds;
	•	Customers who are politically exposed persons (“PEPs”), including the direct family members and close known associates of a PEP, and legal entities where at least one beneficial owner is a PEP; and
	•	Known criminals, terrorists, or persons on sanctions lists.⁷

The following table describes attributes used to assess customer risks and provides lower- and higher-risk examples of each.

Attribute	Lower-risk example	Higher-risk example
Identification	Customer provides identification or can be identified using third-party sources.	Customer has difficulty producing identification, or the authenticity of the identification provided is questionable
Third-party relationships	No third-party involvement	Customer is controlled by a third party, or there are multiple indicators of third-party deposits or payments; customer is controlled by a gatekeeper (such as an accountant, lawyer, or other professional holding accounts or contracts at the insurer) without any interaction with the beneficial owner
Customer’s legal form	Customer is a living person or is a large, publicly-traded legal entity with clear ownership and control	Customer is a legal entity with a complex structure where it is difficult to ascertain those who own or control the entity; policyholder and/or beneficiary are companies with nominee shareholders and/or shares in bearer form
Occupation, business type, or another source of wealth or funds	Customer’s business type or occupation is in a lower-risk industry	Customer’s business or occupation is in a higher-risk industry (such as a cash-intensive business or an industry that has extensive international exposure or is associated with crime typologies) or is associated with a lower income for a high-value deposit without a confirmed source of funds or wealth (such as inheritance or real estate)
Depth and duration of relationship with customer	Customer has a long history with the insurer or its agents and additional information is on file (such as credit underwriting, insurance underwriting, customer due diligence, etc.)	Customer is new to the insurer or insurer has little or no experience with the customer
Customer only holds accounts with lower risk products and services	Customer holds policies or accounts that are registered with the government, such as a registered retirement savings plan	Customer only holds non-registered policies or accounts (e.g., investment or bank accounts with an affiliate)
Political exposure	Customer does not have any ties to politically exposed persons	Customer is considered a politically exposed person, particularly from a foreign jurisdiction
Other screening results	Customer does not have negative news media or media confirms what is known about the customer (such as career confirmation or community engagement)	Customer has ties to or is on a designated sanctions list; has a history of predicate offenses; or is associated with negative news

⁷ Please see section 3.5 below and also refer to the Executive Office’s “Typologies on the circumvention of Targeted Sanctions against Terrorism and the Proliferation of Weapons of Mass Destruction”: available at https://www.uaeiec.gov.ae/en-us/un-page?p=2#