A close relative of a privately-owned bank's senior manager requests to open an account. Because of this relationship, the staff expedites the opening of the account without following established…

Question

Options

• AFailure to conduct proper due diligence.
• BThe possibility of lawsuits that adversely affect the operations of a bank.
• CThe bank's exposure to politically exposed persons.
• DNot having appropriate information to share with Financial Intelligence Units.

• A
  76% (13)
• B
  6% (1)
• C
  12% (2)
• D
  6% (1)

Explanation

According to the Basel Committee on Banking Supervision principles, one of the core principles for effective banking supervision is that the supervisor determines that banks have adequate policies and processes for identifying, assessing and managing the risk and impact of exposures to and transactions with related parties, and that these policies and processes are effectively implemented. Failure to conduct proper due diligence on a close relative of a senior manager who requests to open an account poses the highest operational risk, as it could result in conflicts of interest, reputational damage, legal liability, or financial losses for the bank. The other options are not necessarily the highest operational risk, as they depend on the nature and extent of the relationship, the type and size of the account, and the regulatory and legal framework of the

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