The KYC risk rating is a calculation of money laundering risk customers might bring to the company. It ensures that organizations don't do business with a person involved in financial crimes, such as money laundering or terrorist financing.
What are the KYC classification?
Know Your Client (KYC) are standards used in the investment and financial services industry to verify customers and know their risk and financial profiles. Three components of KYC include the customer identification program (CIP), customer due diligence (CDD), and enhanced due diligence (EDD).
What are the 3 risk rating levels for new accounts?
KYC is required to be done once in every two years for high risk customers, once in every eight years for medium risk customers and once in every ten years for low risk customers. This exercise would involve all formalities normally taken at the time of opening the account.