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Which type of individual is most likely to be subject to enhanced due diligence (EDD) checks?
A company director
A corporate client
A government official
A high-net-worth individual
Enhanced Due Diligence (EDD) is required for high-risk clients, particularly Politically Exposed Persons (PEPs), such as government officials.
Why is Option C Correct?
Government officials (PEPs) are considered higher risk due to their potential exposure to bribery or corruption.
Financial institutions must conduct extra scrutiny on their financial transactions.
EDD Requirements Include:
Detailed background checks.
Source of wealth verification.
Ongoing transaction monitoring.
Why Not Other Options?
A (Company Director) → May require due diligence but not EDD unless a PEP.
B (Corporate Client) → EDD applies if a company is in a high-risk jurisdiction.
D (High-net-worth individual) → Wealth alone does not trigger EDD unless other risk factors exist.
???? Reference: Financial Action Task Force (FATF) Guidelines, CISI Wealth & Investment Management (AML).
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