According to Basel Committee guidelines, which level of the organization should determine whether or not to enter business relationships with higher risk customers?

Question

Options

• AFirst-level management
• BSenior management
• CAccount opening staff
• DMiddle management

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

Explanation

According to the Basel Committee guidelines, banks should formulate a customer acceptance policy and a tiered customer identification programme that involves more extensive due diligence for higher risk customers. The customer acceptance policy should be approved by senior management and include clear guidelines on the types of customers that are likely to pose a higher than average risk to the bank. Senior management should also ensure that the bank has adequate resources and systems to effectively manage the risks associated with higher risk customers. Therefore, senior management should determine whether or not to enter business relationships with higher risk customers, based on the bank's risk appetite, policies, and

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