CAMS · Question #632
CAMS Question #632: Real Exam Question with Answer & Explanation
The correct answer is A. The client refuses to update information.. According to the Financial Action Task Force (FATF), financial institutions should apply a risk- based approach to customer due diligence (CDD), which includes obtaining and updating information on the identity, beneficial ownership, and business activities of their clients. If a
Question
Options
- AThe client refuses to update information.
- BThere is a change in ownership structure.
- CThe client is a politically exposed person.
- DThe country of incorporation has been elevated to high-risk.
Explanation
According to the Financial Action Task Force (FATF), financial institutions should apply a risk- based approach to customer due diligence (CDD), which includes obtaining and updating information on the identity, beneficial ownership, and business activities of their clients. If a client refuses to provide or update such information, or provides false or misleading information, the financial institution should consider this as a red flag for potential money laundering or terrorist financing, and should exit the relationship with the client, unless the circumstances warrant otherwise. Exiting the relationship with a client who refuses to update information is also consistent with the FATF's Recommendation 10, which requires financial institutions to terminate the business relationship if they are unable to perform CDD measures.
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