FRM Part II · FRM Exam Part II · Sound Management of Risks Related to Money Laundering and Financing of Terrorism
Under the Basel Committee guidelines on sound management of ML/FT risks, a bank's customer acceptance policy should be designed to do which of the following?
A customer acceptance policy should set clear, risk-based criteria for accepting customers and require more extensive due diligence for higher-risk ones. It does not demand identical treatment, bar all politically exposed persons, or leave the decision to the sourcing relationship manager alone.
- ASet out clear criteria for which customers the bank will accept, based on the risk they pose, and require more extensive due diligence for higher-risk customersCorrect
- BRequire identical due diligence for every customer so that no customer is treated differently
- CProhibit the bank from taking on any customer who is a politically exposed person
- DDelegate acceptance decisions entirely to the relationship manager who sources the customer
Explanation
The guidelines call for a risk-based customer acceptance policy that defines who may be accepted and scales due diligence to risk. Uniform treatment ignores the risk-based approach, PEPs are not automatically barred but need enhanced measures and senior management approval, and acceptance should not rest only with the sourcing relationship manager.
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