A bank cannot apply Simplified Customer Due Diligence where the customer is which of the following?

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Prepare for the Qualified Financial Adviser Regulations Exam 2 with multiple choice questions, flashcards, and expert tips. Enhance your financial advising skills and confidently ace your exam!

Multiple Choice

A bank cannot apply Simplified Customer Due Diligence where the customer is which of the following?

Explanation:
In a risk-based approach to customer due diligence, Simplified CDD is used only for lower-risk customers; higher-risk categories require more thorough scrutiny. Politically Exposed Persons are regarded as higher risk due to potential involvement in corruption or influence, so banks must apply Enhanced Due Diligence rather than Simplified. Therefore, a bank cannot apply Simplified CDD when the customer is a Politically Exposed Person. Public bodies or other banks aren’t automatically excluded from Simplified CDD and may be treated as lower risk after assessment, depending on the regime.

In a risk-based approach to customer due diligence, Simplified CDD is used only for lower-risk customers; higher-risk categories require more thorough scrutiny. Politically Exposed Persons are regarded as higher risk due to potential involvement in corruption or influence, so banks must apply Enhanced Due Diligence rather than Simplified. Therefore, a bank cannot apply Simplified CDD when the customer is a Politically Exposed Person. Public bodies or other banks aren’t automatically excluded from Simplified CDD and may be treated as lower risk after assessment, depending on the regime.

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