Customer risk assessment in AML involves?

Customer risk assessment in Anti-Money Laundering (AML) is a crucial process that helps financial institutions and businesses identify and mitigate potential risks associated with their customers. The correct choice focuses on identifying and evaluating customer risk factors, which is essential for determining the level of due diligence required for each customer relationship.

This involves analyzing elements such as a customer's geographic location, transaction behaviors, the nature of their business, and their financial activities. By understanding these factors, institutions can categorize customers into different risk levels, allowing them to apply appropriate controls and monitoring measures tailored to the specific risks presented by each customer.

While evaluating credit scores and verifying income statements can provide some insight into a customer’s financial health, they do not directly address the broader spectrum of risks related to money laundering activities. Similarly, assessing the duration of customer relationships is less relevant since it does not provide a comprehensive understanding of potential criminal behavior or sources of illicit funds. Therefore, the emphasis on identifying and evaluating customer risk factors is foundational to effective AML practices.