OTHER ASSESSMENT SOURCES AND TOOLS
EXCHANGE OF INFORMATION
LOCAL REPORTING REQUIREMENTS
LOCAL DUE DILIGENCE REQUIREMENTS
REPORTS AND PROFILES
Country risk ratings tools are often developed in house in major financial institutions or are available on the internet. They will use various data sources relating to country risk and weight these depending upon the perceived seriousness of risk to produce a ratings table that measures country risk either numerically, with fixed banding categories, or a traffic light system.
Financial institutions that undertake a significant amount of transactions in a relatively short period of time will need to rely upon some form of rating system for geographical risk and set its risk assessment parameters accordingly.
However, caution should be employed when generally defining many jurisdictions as being ‘low risk’ because they do not rate poorly on any of the data sources comprising the risk rating tool and, consequently, that due diligence and risk controls will be eased off for any customer or customer business related to those ‘low risk’ jurisdictions.. Over the last few years, international banks located in many of those countries that would normally be deemed ‘low risk’, especially Western European and North American countries, have admitted to massive violations of money laundering controls and sanction busting over relatively long periods of time.