FRM Part II · FRM Exam Part II · Sound Management of Risks Related to Money Laundering and Financing of Terrorism
A bank uses an introducer, a regulated financial firm, to onboard customers. The introducer provides copies of customer identification documents. Which statement best reflects the bank's responsibilities under the guidance on reliance on third parties?
Ultimate responsibility for customer due diligence remains with the bank. It must be satisfied that the third party is regulated, supervised, applies adequate CDD and record-keeping, and can provide the data promptly. A written agreement does not transfer accountability to the introducer.
- AUltimate responsibility for customer due diligence stays with the bank, which must satisfy itself that the third party is regulated, supervised and able to supply CDD data without delayCorrect
- BResponsibility for CDD passes to the introducer once the bank has a written agreement with it
- CThe bank may rely on any introducer regardless of its country's AML/CFT standards if the customer's balances are small
- DThe bank need not obtain the CDD information at onboarding, only the introducer's assurance that it holds it
Explanation
When a bank relies on a third party for CDD, ultimate responsibility remains with the bank. It must be satisfied the third party is regulated and supervised, has measures in place, and can provide the CDD information immediately on request. A contract does not transfer accountability, and country risk matters regardless of balance size.
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