According to the Basel Committee on Banking Supervision, banks should deal with high-risk customers by:

Question

Options

• Amaintaining segregated records to enable easy inspection by law enforcement in case of a
• Bassigning those customers to specified private bankers for better monitoring of their offshore
• Cperforming enhanced due diligence including enhanced ongoing monitoring of the account
• Dseeking approval from the board of directors before establishing the relationship.

• A
  3% (1)
• B
  14% (4)
• C
  76% (22)
• D
  7% (2)

Explanation

According to the Basel Committee on Banking Supervision, banks should apply a risk-based approach to customer due diligence, which means that they should adopt enhanced measures for higher-risk customers and simplified measures for lower-risk customers. Enhanced due diligence (EDD) may include obtaining additional information on the customer's identity, source of funds, business activities, beneficial owners, and expected transactions, as well as conducting more frequent and intensive monitoring of the account activity. EDD is especially important for customers who are politically exposed persons (PEPs), who are from or have connections with high-risk countries or jurisdictions, or who are involved in high-risk industries or sectors. Therefore, performing EDD including enhanced ongoing monitoring of the account activity is the correct way for banks to deal with high-risk customers.

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