Geographic Risk Assessment

A geographic risk assessment is the process by which a bank, payment firm or other regulated business rates the financial crime risk of countries and regions, so that it can apply stronger controls where the risk is higher. Firms usually draw on several sources: the FATF blacklist and FATF greylist, the EU list of high-risk third countries, sanctions programmes, corruption and governance indicators, tax transparency assessments, national risk assessments and FATF mutual evaluation results. Each country is given a rating, often low, medium, high or prohibited, which is reviewed regularly and whenever a list changes. The ratings feed the country element of the firm's business-wide risk assessment and of its customer risk rating model, and help set monitoring rules for payments to and from particular places. Also see geographic risk indicator.