FRM Part II · FRM Exam Part II · Sound Management of Risks Related to Money Laundering and Financing of Terrorism
A bank's onboarding team is reviewing a prospective corporate client. Under the Basel Committee guidelines on sound management of ML/FT risks, which of the following best describes the purpose of the bank's customer acceptance policy?
A customer acceptance policy sets out the criteria and risk factors determining which customers the bank will accept, so higher-risk relationships get enhanced scrutiny and some may be refused. It supports a risk-based approach and does not replace ongoing monitoring or apply uniform due diligence.
- ATo set out criteria for the types of customers the bank will accept, based on risk factors, so that higher-risk relationships receive more scrutiny and some may be declinedCorrect
- BTo guarantee that no customer will ever be reported to the financial intelligence unit
- CTo replace ongoing monitoring once the customer has been accepted
- DTo require identical due diligence for all customers regardless of risk
Explanation
The customer acceptance policy defines which customers the bank will take on and the risk factors used to categorise them, supporting a risk-based approach. It does not replace monitoring and does not require uniform treatment. Option D describes a one-size-fits-all approach that contradicts risk-based CDD.
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