In its paper. Customer Due Diligence for Banks, the Basel Committee on Banking Supervision identified which risks on banking institutions as a result of an inadequate KYC program?

Question

Options

• AOutsourcing, legal, concentration, reputational
• BSecurity, information, local, operational
• CLegal, reputational, operational, concentration
• DCredit, operational, market, concentration

• A
  16% (8)
• B
  8% (4)
• C
  73% (37)
• D
  4% (2)

Explanation

The Basel Committee on Banking Supervision identified four risks to banking institutions as a result of an inadequate KYC program: legal, reputational, operational, and concentration. Legal risks include the potential for fines or sanctions for non-compliance with applicable laws and regulations. Reputational risks include the loss of customer confidence due to the institution's involvement in illicit activities. Operational risks include the potential for fraudulent or suspicious activity to go undetected. Finally, concentration risks involve the potential for a single customer or group of related customers to dominate the institution's operations.

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