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Demo practice questions for guest users.
A legal entity applies to open an account in a financial institution. The owners of the entity are 20 individuals with equal shareholding. Who should be identified as the Ultimate Beneficial Owner (UBO), per Financial Action Task Force (FATF) guidelines?
FATF guidelines require identifying UBOs as individuals owning more than 25% or, if no one meets that threshold, those who exercise control through other means. In this case, no shareholder owns more than 25%, so the UBO is identified based on control, typically the person(s) in senior management.
Assets under management show an increase of investors whose income originates from high-risk jurisdictions. This indicates higher risk in which area?
FATF considers jurisdictions with weak AML/CFT controls as high-risk. An increase in investors from such regions raises geographical risk, since the customers’ funds originate from locations with elevated money laundering or terrorism financing threats.
During a routine CDD update in a financial institution, a junior member of the compliance department identifies that the spouse of the reviewed client was elected as a member of government. Which action should the junior member take?
FATF guidelines require enhanced due diligence when a client becomes a Politically Exposed Person (PEP) or is related to one. Since the client’s spouse is now a government member, the client must be classified as related to a PEP, and the institution’s records must be updated accordingly.
A KYC analyst is onboarding a high-net-worth client and, during the screening process, notices that the prospective client is the parent of a government minister. After the analyst performs a source of wealth analysis, whose approval is needed before opening the account?
FATF requires that the decision to establish or continue a business relationship with a Politically Exposed Person (PEP), or their close family members, must be approved by senior management after appropriate enhanced due diligence has been completed.
A politically exposed person (PEP) is eager to open a private account with an international bank. In addition to performing the normal CDD, which measure should be required from the AML officer?
FATF requires that before establishing a business relationship with a PEP, financial institutions must obtain senior management approval, along with applying enhanced due diligence measures such as verifying the source of wealth and funds.