According to the Financial Action Task Force 40 Recommendations, to fulfill identification requirements concerning legal entities, financial institutions should take measures to verify

Question

Options

• Athe financial status of the legal entity through documented proof of the entity's other banking
• Ba person purporting to act on behalf of the legal entity who is a resident in a country with strict
• Cthe legal existence and ownership structure of the legal entity.
• Dfunds or trusts maintained by terrorists.

• A
  10% (3)
• B
  6% (2)
• C
  81% (25)
• D
  3% (1)

Explanation

According to the Financial Action Task Force (FATF) 40 Recommendations, Recommendation 10 requires financial institutions to identify and verify the identity of their customers, including legal persons and arrangements, using reliable and independent sources. This includes verifying the legal existence and structure of the legal entity, such as by obtaining a certificate of incorporation, a partnership agreement, or a trust deed. Additionally, financial institutions should identify and verify the identity of the beneficial owners of the legal entity, such as by obtaining information on the natural persons who ultimately own or control the entity, or who exercise effective control over The other options are not consistent with the FATF 40 Recommendations. Verifying the financial status of the legal entity, or the entity's other banking relations, is not a requirement for identification purposes, although it may be relevant for risk assessment or due diligence purposes. Verifying a person purporting to act on behalf of the legal entity is also not sufficient, as the person may not be authorized or may not disclose the true identity or beneficial ownership of the entity. Verifying funds or trusts maintained by terrorists is not a specific identification requirement, but rather a general obligation to comply with targeted financial sanctions and freeze the assets of designated persons or entities.

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