A bank can apply Standard Customer Due Diligence requirements to a customer on a risk-based approach if the bank takes account of the:

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Prepare for the Qualified Financial Adviser (QFA) Exam 1 with flashcards and multiple choice questions with helpful hints and explanations. Gear up for success!

Multiple Choice

A bank can apply Standard Customer Due Diligence requirements to a customer on a risk-based approach if the bank takes account of the:

Explanation:
Applying standard CDD on a risk-based approach means adjusting the depth of due diligence to the level of risk the customer brings. To do this well, the bank must consider multiple risk indicators: the purpose and intended nature of the business relationship; the customer’s risk profile (including sources of funds); and other relevant risk factors such as geographic exposure and the complexity or volume of transactions. Since each factor informs how stringent the due diligence should be, all three areas must be taken into account. Therefore, the option that includes all the factors is the best choice.

Applying standard CDD on a risk-based approach means adjusting the depth of due diligence to the level of risk the customer brings. To do this well, the bank must consider multiple risk indicators: the purpose and intended nature of the business relationship; the customer’s risk profile (including sources of funds); and other relevant risk factors such as geographic exposure and the complexity or volume of transactions. Since each factor informs how stringent the due diligence should be, all three areas must be taken into account. Therefore, the option that includes all the factors is the best choice.

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