Rating a customer high risk is a decision with consequences that firms often do not follow through. Four things should change, and in many books only one of them does. This page is about the other three, and about the quieter question of what it means to keep carrying a customer you have rated at the top of your own scale.
Four things that change, not one
More evidence, and specifically evidence about the source of funds and the source of wealth rather than only identity. An approval by somebody other than the person who opened the file. A written rationale that another person could follow. And a shorter review interval. Most firms do the first and skip at least one of the others, usually the rationale, which is the one that would have been read.
High risk is not a synonym for suspicious
This distinction is worth stating plainly because teams get it wrong in both directions. A high-risk rating says this relationship carries more risk and therefore gets more attention. It does not say the customer has done anything wrong, and firms that treat the two as the same either refuse business they could have taken or, worse, avoid rating customers up in order to avoid the implication. Rate honestly and let the extra work be the response.
The standing decision to keep them
A high-risk customer is a decision your firm renews every time a review passes without a change. That is worth making explicit at the review: not only is the evidence current, but is this relationship still one we want on these terms. Writing that down converts an accumulating exposure into a decision with a date on it, and it is a much better answer to an outside question than a file that has simply never been closed.
Questions people ask about high risk customer
What makes a customer high risk?
Your own model, applied to factors you wrote down in advance: the customer type, the product, the geography, the acquisition channel and the ownership structure. Some categories are treated as higher risk in rules that may apply to your firm, and your policy should reflect them.
How often should a high-risk file be reviewed?
More often than a standard one, and the interval should come from your policy rather than from whoever is doing the work. The free checklist takes an interval per rating as an input, because that is how the review load actually behaves.
Can we just refuse high-risk customers?
You can, and some firms do. It is a business decision rather than a compliance one, and it has its own cost: a book with no rated-up customers usually means a model nobody is applying rather than a customer base that is uniformly plain.