Which type of individual is most likely to be subject to enhanced due diligence (EDD) checks?
Correct Answer: C
Enhanced Due Diligence (EDD) is required for high-risk clients, particularly Politically Exposed Persons (PEPs), such as government officials. * Why is Option C Correct? * Government officials (PEPs) are considered higher risk due to their potential exposure to bribery or corruption. * Financial institutions must conduct extra scrutiny on their financial transactions. * EDD Requirements Include: * Detailed background checks. * Source of wealth verification. * Ongoing transaction monitoring. * Why Not Other Options? * A (Company Director) # May require due diligence but not EDD unless a PEP. * B (Corporate Client) # EDD applies if a company is in a high-risk jurisdiction. * D (High-net-worth individual) # Wealth alone does not trigger EDD unless other risk factors exist. # Reference: Financial Action Task Force (FATF) Guidelines, CISI Wealth & Investment Management (AML).
