A compliance officer at a small community bank has been asked to review existing customer onboarding policies and procedures to ensure they adequately address anti-money laundering risks. How should…

Question

Options

• AWith an annual compliance review and approval of customers
• BWith a one-time event conducted at initial customer onboarding
• CAs an ongoing activity that may vary commensurate with the risk profile of the customer
• DAs applicable to customers that pose higher money laundering or terrorist financing risk

• A
  7% (3)
• B
  9% (4)
• C
  79% (34)
• D
  5% (2)

Explanation

Customer due diligence should be implemented as an ongoing activity that may vary commensurate with the risk profile of the customer. This is because the risk of money laundering or terrorist financing may change over time, depending on the customer's behavior, transactions, products, services, and geographic locations. The institution should monitor the customer's activity and update the customer's information and risk assessment periodically, or when there are red flags or significant changes in the customer's circumstances. The institution should also apply enhanced due diligence measures for customers that pose higher risks, and simplified due diligence measures for customers that pose lower risks.

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