What does the Basel Committee's Customer Due Diligence for Banks paper suggest that a bank needs to have in place when establishing an account for a corporate business entity?

Question

Options

• AAn understanding of the structure of the company
• BA policy requiring all identified beneficial owners to undergo a national police check
• CA process to ensure that the approval of senior management is obtained prior to opening the
• DA fee structure that reflects the banks' costs in monitoring the risks associated with entity's

• A
  82% (28)
• B
  9% (3)
• C
  3% (1)
• D
  6% (2)

Explanation

According to the Basel Committee's Customer Due Diligence for Banks paper, one of the essential elements of a sound KYC programme is customer identification. This includes obtaining sufficient information to understand the nature and purpose of the customer relationship, the source of funds, and the beneficial ownership and control structure of the customer. For corporate business entities, this means that a bank needs to have an understanding of the structure of the company, such as its legal form, its ownership, its directors, its line of business, and its geographical locations. This will help the bank to assess the risk profile of the customer, to verify its identity and legitimacy, and to monitor its transactions for any suspicious activities.

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