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Today, the Federal Deposit Insurance Corporation (FDIC) released a Financial Institution Letter that applies to all FDIC-supervised institutions regarding the assessment approach used for evaluating customers. The letter encourages a risk-based approach in assessing the services that can be provided to customers, as opposed to denying banking services to entire categories of customers.
A risk-based approach can result in more customers receiving the banking services they need. When assessing customers based on widespread categories, it disregards the varying levels of risk associated with each individual customer. By using a case-by-case approach, a given institution can evaluate the level of risk to better help the customer and establish a potential relationship. The institution can also use this approach to help reduce the risk associated with a customer.