4.1.3. Delivery Channel Risk
Effective from 11/11/2021Under Article 4.1 of the AML-CFT Decision and Paragraph 16.2.3 of the Standards, LEH must identify, assess, understand, and mitigate the risk presented by the delivery channels they use. Some delivery channels can increase ML/FT risk because they increase the risk that the LEH does not truly know or understand the identity and activities of the customer.
| 1. | IDENTIFY: The LEH should identify the delivery channels that they use to provide their products and services to customers. These may include, for example: face-to-face; via a website; via an introducer or other third party; and other methods. | |
| 2. | ASSESS: The LEH should assign an inherent risk rating to the delivery channels identified. The rating should take into consideration the characteristics and attributes of these delivery channels that make them more susceptible to abuse by illicit actors, and could include factors such as whether the delivery channel makes it more difficult to observe the customer’s behavior or to be certain that the person transacting is in fact the identified customer, allows for faster transactions, or involves reliance on a third party. | |
| 3. | CALCULATE EXPOSURE: The LEH should then determine what proportion of its transactional activity involves each delivery channel, both by volume and value. Where a LEH delivers a large proportion of its products or services via higher-risk delivery channels, its overall risk is likely to be higher as well. | |
| 4. | DOCUMENT: A LEH’s approach to categorizing risk should be clearly documented. The LEH should keep detailed records of its assumptions, statistics used to complete this process, and the resulting analysis and outcomes. | |