CoinPort Client Risk Rating Program
Version: 1.0
Effective Date: [DD/MM/YYYY]
Approved by: [Chief Compliance Officer]
1. Purpose
This document defines CoinPort’s Client Risk Rating (CRR) Program, a risk-based approach to categorise clients based on their potential exposure to money laundering (ML), terrorism financing (TF), and other financial crimes. The program ensures compliance with AUSTRAC’s AML/CTF Act 2006 and FATF Recommendations for VASPs.
2. Risk Rating Methodology
Clients are assigned a risk score (Low, Medium, High) based on five risk factors:
| Risk Factor | Low Risk (1) | Medium Risk (2) | High Risk (3) |
|---|---|---|---|
| Client Type | Verified retail user | Corporate account (non-PEP) | PEP, shell company, NPO |
| Jurisdiction | Australia, FATF-compliant | Partial compliance (e.g., Singapore) | High-risk (e.g., Iran, DPRK) |
| Transaction Behavior | < AUD 10k/month | AUD 10k–100k/month | > AUD 100k/month or rapid movements |
| Funding Source | Bank transfer, regulated exchange | Private wallet (verified) | Mixer/Tornado Cash, darknet-linked |
| Product Usage | Spot trading, stablecoins | Derivatives, OTC | Privacy coins, unaudited DeFi |
Risk Score Calculation:
- Low Risk (5–7 points)
- Medium Risk (8–12 points)
- High Risk (13–15 points)
3. Risk Mitigation Measures
3.1 Low-Risk Clients
- Standard KYC: ID + proof of address.
- Basic Monitoring: Automated transaction screening.
3.2 Medium-Risk Clients
- Enhanced KYC: Source of Funds (SoF) verification.
- Monthly Review: Unusual pattern alerts.
3.3 High-Risk Clients
- Full EDD:
- Source of Wealth (SoW) documentation.
- Senior management approval for onboarding.
- Restrictions:
- Lower transaction thresholds (e.g., AUD 5k/day).
- Mandatory manual withdrawal reviews.
4. Ongoing Monitoring & Review
- Automated Re-Scoring: Triggered by:
- Changes in jurisdiction (e.g., user relocates to high-risk country).
- Sudden activity spikes (>200% volume increase).
- Annual Manual Review: For all High-Risk clients.
5. Roles & Responsibilities
| Role | Duty | |————————|————————————————————————–| | Compliance Team | Assign risk ratings, conduct EDD. | | MLRO | Approve High-Risk clients, file SMRs. | | IT Team | Maintain risk-scoring algorithms and alerts. |
6. Documentation & Audit Trail
- Risk ratings stored for 7 years post-account closure.
- Audit logs of all rating changes and approvals.
Review Cycle: Biannual
Last Updated: [DD/MM/YYYY]
Here’s a ready-to-implement risk-rating template and workflow diagram to operationalize CoinPort’s Client Risk Rating Program:
1. Client Risk Rating Template (Excel/CRM Integration)
Download: [CoinPort_RiskRating_Template.xlsx] (fictional link for illustration)
| Client ID | Name | Jurisdiction | Client Type | Tx Volume (30d) | Funding Source | Product Risk | Total Score | Risk Tier | Next Review Date |
|---|---|---|---|---|---|---|---|---|---|
| CP-1001 | John Doe | Australia | Retail | AUD 8,000 | Bank transfer | Spot trading | 6 | Low | 30/06/2025 |
| CP-1002 | XYZ Corp | Singapore | Business | AUD 75,000 | Private wallet | Derivatives | 10 | Medium | 15/07/2025 |
| CP-1003 | Jane Lee | Iran* | PEP | AUD 500,000 | Mixer | Privacy coins | 15 | High | Pending CCO Approval |
Key:
- Red highlight = Auto-flagged for EDD.
- Formulas:
Total Score = SUM(Factors 1–5),Risk Tier = IF(Score>=13,"High",IF(Score>=8,"Medium","Low")).
2. Workflow Diagram
graph TD
A[New Client Onboarding] --> B{KYC Verification}
B -->|Basic KYC| C[Low Risk?]
B -->|Enhanced KYC| D[Medium Risk?]
B -->|EDD Required| E[High Risk?]
C --> F[Automated Monitoring]
D --> G[Monthly Manual Review]
E --> H[CCO Approval]
H -->|Rejected| I[Account Denied]
H -->|Approved| J[Restricted Account + Ongoing EDD]
F & G & J --> K[Annual Re-Scoring]
Steps Explained:
- Onboarding: Client submits KYC.
- Automated Scoring: System calculates risk (Low/Medium/High).
- Actions:
- Low: Automated alerts only.
- Medium: Monthly review + SoF checks.
- High: CCO sign-off + transaction limits.
- Re-Scoring: Annual review or triggered by risk events.
3. AUSTRAC-Aligned Risk Indicators
Template for Manual Reviews (High-Risk Clients):
## **Client:** [Name/ID]
### **Risk Factors:**
1. **Jurisdiction:** Iran (FATF blacklist).
2. **Activity:** 200K USDT from unhosted wallet → AUD off-ramp in 48h.
3. **Adverse Media:** Linked to [News Source] corruption case (2024).
### **Mitigation Actions:**
- [x] SoW/SoF documents requested.
- [ ] SMR filed? (Y/N)
- [ ] CCO approval obtained on [Date].
4. Tools for Implementation
- CRM Integration: Use Salesforce AML or ComplyAdvantage for auto-scoring.
- Dashboard Alerts: Power BI/Tableau visualization of risk distribution.
Approval: [CCO Name]
Review: Quarterly (or after FATF updates).
Here’s a ready-to-implement risk-rating template and workflow diagram to operationalize CoinPort’s Client Risk Rating Program:
1. Client Risk Rating Template (Excel/CRM Integration)
Download: [CoinPort_RiskRating_Template.xlsx] (fictional link for illustration)
| Client ID | Name | Jurisdiction | Client Type | Tx Volume (30d) | Funding Source | Product Risk | Total Score | Risk Tier | Next Review Date |
|---|---|---|---|---|---|---|---|---|---|
| CP-1001 | John Doe | Australia | Retail | AUD 8,000 | Bank transfer | Spot trading | 6 | Low | 30/06/2025 |
| CP-1002 | XYZ Corp | Singapore | Business | AUD 75,000 | Private wallet | Derivatives | 10 | Medium | 15/07/2025 |
| CP-1003 | Jane Lee | Iran* | PEP | AUD 500,000 | Mixer | Privacy coins | 15 | High | Pending CCO Approval |
Key:
- Red highlight = Auto-flagged for EDD.
- Formulas:
Total Score = SUM(Factors 1–5),Risk Tier = IF(Score>=13,"High",IF(Score>=8,"Medium","Low")).
2. Workflow Diagram
graph TD
A[New Client Onboarding] --> B{KYC Verification}
B -->|Basic KYC| C[Low Risk?]
B -->|Enhanced KYC| D[Medium Risk?]
B -->|EDD Required| E[High Risk?]
C --> F[Automated Monitoring]
D --> G[Monthly Manual Review]
E --> H[CCO Approval]
H -->|Rejected| I[Account Denied]
H -->|Approved| J[Restricted Account + Ongoing EDD]
F & G & J --> K[Annual Re-Scoring]
Steps Explained:
- Onboarding: Client submits KYC.
- Automated Scoring: System calculates risk (Low/Medium/High).
- Actions:
- Low: Automated alerts only.
- Medium: Monthly review + SoF checks.
- High: CCO sign-off + transaction limits.
- Re-Scoring: Annual review or triggered by risk events.
3. AUSTRAC-Aligned Risk Indicators
Template for Manual Reviews (High-Risk Clients):
## **Client:** [Name/ID]
### **Risk Factors:**
1. **Jurisdiction:** Iran (FATF blacklist).
2. **Activity:** 200K USDT from unhosted wallet → AUD off-ramp in 48h.
3. **Adverse Media:** Linked to [News Source] corruption case (2024).
### **Mitigation Actions:**
- [x] SoW/SoF documents requested.
- [ ] SMR filed? (Y/N)
- [ ] CCO approval obtained on [Date].
4. Tools for Implementation
- CRM Integration: Use Salesforce AML or ComplyAdvantage for auto-scoring.
- Dashboard Alerts: Power BI/Tableau visualization of risk distribution.
Approval: [CCO Name]
Review: Quarterly (or after FATF updates).