Which piece of information identified by customer screening would be the most likely reason to trigger consideration of exiting a business relationship with a customer because of financial crime concerns?
A.
The customer is a shareholder of a corporation declared bankrupt.
B.
The customer is linked to an organized crime group.
C.
The customer is a politically exposed person (PEP).
D.
The customer allegedly violated a construction permit limit.
Financial institutions must screen customers against adverse information and determine whether they pose a significant financial crime risk.
Option B (Correct):A direct link to an organized crime group is a severe red flag. Organized crime networks engage in money laundering, corruption, and other illicit activities. UnderFATF Recommendations 10 and 12, financial institutions must implement enhanced due diligence (EDD) for high-risk customers and consider account closure if they pose undue risk.
Option A (Incorrect):Bankruptcy does not necessarily indicate financial crime risk, though it may raise financial stability concerns.
Option C (Incorrect):While PEPs pose a higher risk for corruption, financial institutions typically apply EDD rather than immediately terminating the relationship.
Option D (Incorrect):Violating a construction permit is a regulatory issue, not directly linked to financial crime.
[Reference:FATF Recommendation 10 (Customer Due Diligence); FATF Recommendation 12 (PEPs); Wolfsberg Principles on Risk-Based Due Diligence., , , , ]
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