kyc-escalation

KYC Escalation Skill

This skill helps compliance teams document internal escalations well: facts separated from inference, red flags mapped to a taxonomy, and a recommendation the MLRO or reporting decision-maker can act on. It documents and escalates — it does not decide, and it does not draft regulatory reports.

Boundaries — apply these without exception. Never draft a SAR/STR or its narrative — that is the designated reporting officer's regulated act; this memo is the internal input to that decision. Never advise on structuring transactions, avoiding detection, or evading monitoring, for any party. Never include tipping-off risk material — the memo is internal-only; do not draft customer-facing language about the investigation.

What This Skill Produces

• A factual, time-stamped trigger description
• A profile-vs-activity mismatch analysis (expected vs observed)
• Red flags mapped to a taxonomy, each with its supporting fact
• An "information still needed" list with sources
• A recommendation: clear / enhanced due diligence / exit consideration / refer to reporting decision-maker — with rationale

Required Inputs

Ask for what's missing; never fabricate transaction details — mark gaps [not in file]:

• Trigger — the alert, transaction(s), or observation, with dates, amounts, counterparties
• Customer profile — KYC file basics: stated occupation/business, expected activity, source of funds/wealth, tenure, risk rating
• Activity history — recent pattern for context
• Prior alerts or escalations on this customer

Escalation Framework

1. Trigger description — facts only. What was observed, when, in what amounts, involving whom. Time-stamp everything. No adjectives, no inference — "three cash deposits of 9,400–9,800 on consecutive days", not "obvious structuring".

2. Profile vs activity mismatch. Two columns: what the KYC file says to expect (business type, turnover, geographies, counterparties, channels) vs what was observed. The mismatch — or its absence — is the analytical core. An alert consistent with a well-documented profile may support "clear"; activity inconsistent with the file is what escalates.

3. Red-flag taxonomy mapping. Map observations (never speculation) to categories: structuring patterns (amounts near reporting thresholds, split transactions); rapid movement/pass-through (in-and-out with no business purpose, layering hops); third parties (unexplained payers/payees, funnel patterns); jurisdiction risk (high-risk geography exposure inconsistent with profile); entity opacity (shell characteristics, nominee patterns, circular ownership); source-of-funds gaps (wealth/activity unexplained by the file); behavioural (reluctance to provide documents, unusual urgency, threshold awareness); adverse media / PEP or sanctions proximity (cite the specific source and date). Each flag cites its fact; list relevant categories checked and not present too.

4. Information still needed. What would resolve the ambiguity, and its source (customer outreach — flag tipping-off sensitivity for the decision-maker; internal records; registries; screening re-run). Distinguish "needed before any decision" from "needed for EDD".

5. Recommendation with rationale. Exactly one of: clear (documented, consistent explanation); enhanced due diligence (mismatch resolvable with more information); exit consideration (risk outside appetite regardless of reporting outcome — note exit timing may need the reporting decision-maker's input first); refer to reporting decision-maker (facts that a reasonable person could regard as grounds for suspicion). Two sentences of rationale tying flags to the recommendation.

Output Format

KYC escalation memo — INTERNAL: [customer ref / date / analyst]

1. Trigger — time-stamped facts. 2. Customer profile summary — risk rating, expected activity, tenure. 3. Profile vs activity — expected | observed table. 4. Red flags — category | observation | source/date. Plus categories checked, not present. 5. Prior history — earlier alerts and outcomes. 6. Information still needed — item | source | blocking or EDD-stage. 7. Recommendation & rationale — one of the four, two-sentence rationale.

End with: "This memo is analytical support for internal escalation, not a compliance determination. Reporting, exit, and customer-contact decisions rest with your institution's designated decision-makers under its policy and applicable regulation."

Quality Checks

• Trigger section contains zero inference — every claim has a date and amount
• Facts and analysis are in separate sections; the word "suspicious" appears only, if at all, in the recommendation's rationale
• Every red flag cites a specific observation; checked-but-absent categories are listed
• Recommendation is exactly one of the four options with rationale
• No SAR/report narrative drafted; no customer-facing text included
• Gaps marked [not in file], never filled in

Anti-Patterns

• Do not draft the SAR/STR or its narrative — this memo informs the reporting decision-maker; it is not the report
• Do not advise anyone on structuring, thresholds, or evading monitoring — including hypothetically
• Do not state guilt or intent — describe activity and mismatch; suspicion determinations belong to the designated officer
• Do not include customer-facing language or anything creating tipping-off risk
• Do not recommend customer outreach without flagging the tipping-off sensitivity for the decision-maker
• Do not fabricate transaction data to complete a pattern — mark it [not in file]