During the regular periodic review of a high-risk client, a KYC analyst performs EDD checks and detects the presence of a politically exposed person. The KYC analyst should escalate this issue to the:
Answer(s): B
When a politically exposed person (PEP) is identified during enhanced due diligence, FATF requires that senior management approve the decision to continue or terminate the relationship due to the elevated financial crime risk.
A politically exposed person (PEP) wants to open an account with a financial institution and provides no evidence for source of wealth.Which procedure should the financial institution follow?
For PEPs, FATF requires enhanced due diligence, including verification of the source of wealth before onboarding. The account should only be opened after receiving and validating sufficient evidence.
Which is the most relevant risk factor for an individual client?
Answer(s): A
The country of residence is the most relevant risk factor because it determines the jurisdiction where the client primarily lives and conducts financial activities, directly impacting exposure to geographical money laundering or terrorism financing risks.
A KYC analyst suspects a transaction is related to a sanctioned individual. How should the analyst respond?
Answer(s): D
Any suspicion of a link to a sanctioned individual must be reported immediately through the institution's defined sanctions compliance procedures to ensure legal and regulatory obligations are met without tipping off the customer.
During adverse media screening, a KYC analyst discovers a customer's beneficial owner is implicated in an article about a tax evasion scandal. Which is the best next step?
Adverse media findings should be verified for credibility and accuracy before taking action. Cross- referencing with another reliable source ensures the information is factual and not based on unverified or biased reporting.
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