Which situation would most likely increase the inherent risk of a corporate customer?
Answer(s): D
Expanding business operations beyond the home country increases inherent risk due to cross-border transactions, exposure to multiple jurisdictions, and potential dealings with regions of higher money laundering or terrorism financing risk.
A compliance officer in an international bank is reviewing new customer onboarding files. The relationship manager provides a whole set of customer documents, in addition to information from open source research. What information should be used by the compliance officer as secondary documentation to verify the primary documentation?
Answer(s): A
Secondary documentation for verification purposes should be recent, reliable, and issued by a trusted source. Utility bills, phone bills, or bank statements issued within the last three months are commonly accepted to confirm address and identity details provided in primary documentation.
Sanctions screening is important before onboarding a customer, or when using the services of a financial institution, because it:
Answer(s): C
Sanctions screening is conducted to detect whether a customer or related party is on a sanctions list or linked to a sanctioned location, ensuring compliance with legal and regulatory requirements before establishing or continuing a business relationship.
Which is the best technique to effectively document a customer profile?
Effective customer profile documentation should be clear, precise, and free from subjective language. Providing context and avoiding ambiguity ensures the information is reliable, verifiable, and usable for risk assessment and compliance purposes.
A KYC analyst is running an adverse media search on a prospective client's directors and learns that one of the directors has been accused of receiving bribery payments. Which step should the KYC analyst take next?
Answer(s): B
Allegations of bribery involving a director are a significant red flag for potential financial crime risk. The KYC analyst should escalate the finding to the compliance team for assessment and guidance before making any decision on the business relationship.
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