What are the best strategies for managing high-risk clients?

2 Apply enhanced due diligence

The second strategy for managing high-risk clients is to apply enhanced due diligence (EDD). EDD is the additional level of scrutiny and verification that you need to perform for clients who pose a higher risk of money laundering or terrorist financing. EDD may include obtaining more information about the client's background, ownership, beneficiaries, purpose, and nature of the relationship, as well as conducting site visits, interviews, or audits. EDD also involves applying stricter transaction monitoring and reporting rules, such as lower thresholds, more frequent reviews, or automated alerts.

3 Segment and prioritize your portfolio

The third strategy for managing high-risk clients is to segment and prioritize your portfolio. Segmentation is the process of dividing your clients into different groups based on their risk levels, characteristics, and needs. Prioritization is the process of allocating your resources and attention to the most important or urgent clients. Segmentation and prioritization help you optimize your risk management and customer service by focusing on the clients who matter most, while reducing the costs and efforts for the clients who pose less risk or generate less revenue.

4 Train and empower your staff

The fourth strategy for managing high-risk clients is to train and empower your staff. Training is the process of providing your staff with the necessary knowledge, skills, and tools to identify, assess, and mitigate the risks associated with high-risk clients. Empowerment is the process of giving your staff the authority, responsibility, and incentives to make decisions and take actions that are in line with your risk appetite and policies. Training and empowerment help you create a culture of compliance and accountability, while enhancing your staff's performance and satisfaction.

5 Communicate and collaborate with stakeholders

The fifth strategy for managing high-risk clients is to communicate and collaborate with stakeholders. Stakeholders are the internal and external parties who have an interest or influence in your relationship with high-risk clients. They may include regulators, auditors, law enforcement, senior management, or other business units. Communication is the process of sharing information, feedback, and expectations with your stakeholders. Collaboration is the process of working together to achieve common goals, resolve issues, or improve processes. Communication and collaboration help you build trust and credibility, while avoiding conflicts or penalties.

6 Review and improve your processes

The sixth and final strategy for managing high-risk clients is to review and improve your processes. Review is the process of evaluating the effectiveness and efficiency of your processes for managing high-risk clients. It may involve collecting data, measuring performance, identifying gaps, or soliciting feedback. Improvement is the process of implementing changes or enhancements to your processes based on your review findings. It may involve updating your policies, procedures, systems, or controls. Review and improvement help you ensure compliance, quality, and innovation, while adapting to changing circumstances or regulations.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?