ACCA Applied Knowledge · Business and Technology · Regulation and financial crime
A firm is taking on a new corporate client. Its policy requires enhanced due diligence only where the risk is higher. Which situation would most clearly call for enhanced due diligence?
Enhanced due diligence is most clearly needed for a company linked to a politically exposed person and held through a chain of offshore entities. These features raise corruption risk and hide beneficial ownership. The other clients show no unusual risk indicators.
- AThe client is a long-established local company with audited accounts and a UK-style board
- BThe client is a politically exposed person's company, owned through a chain of offshore entitiesCorrect
- CThe client is a small company that asks for a fee quote in writing
Explanation
Politically exposed persons and complex offshore ownership structures that obscure the beneficial owner are classic higher-risk indicators requiring enhanced due diligence. The other two situations show no higher-risk features.
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