Risk Categorisation

Para 12 Of Master Directions on Know Your customers directions, 2016

Customers shall be categorised as low, medium and high-risk category, based on the assessment and risk perception of the RE

Broad principles may be laid down by the REs for risk-categorisation of customers.

Risk categorisation shall be undertaken based on parameters such as customer’s identity, social/financial status, nature of business activity, and information about the customer’s business and their location, geographical risk covering customers as well as transactions, type of products/services offered, delivery channel used for delivery of products/services, types of transaction undertaken – cash, cheque/monetary instruments, wire transfers, forex transactions, etc. While considering customer’s identity, the ability to confirm identity documents through online or other services offered by issuing authorities may also be factored in.