The bank's Compliance Officer is tasked with designing standards based on Basel's KYC principles. Which essential elements should be included in the program? (Choose two.)

Question

Options

• AAppointing an independent audit function
• BConducting a money laundering risk assessment
• CDocumenting a customer acceptance policy
• DEstablishing on-going monitoring of high-risk accounts
• EReporting suspicious activity

• A
  13% (3)
• B
  4% (1)
• C
  78% (18)
• E
  4% (1)

Explanation

According to the Basel Committee on Banking Supervision, banks should adopt a risk-based approach to customer due diligence, which includes four essential elements: A customer acceptance policy that defines the types of customers that are likely to pose a higher than average risk to the bank. A customer identification program that collects and verifies information about the customer's identity, beneficial ownership, and purpose of the account or relationship. An on-going monitoring of high-risk accounts to detect and report any unusual or suspicious activity, and to keep customer information up-to-date. A risk management program that ensures that the bank's policies and procedures are implemented effectively, and that the bank's staff are trained and aware of their AML/CFT obligations. Therefore, documenting a customer acceptance policy and establishing on-going monitoring of high- risk accounts are the correct choices for the essential elements that should be included in the program based on Basel's KYC principles.

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