Before starting a business relationship with Paul, a Politically Exposed Person, Mark must:

• A. Run a police check on Paul.
• B. Obtain written permission from the Department of Justice.
• C. Ask Paul to confirm in writing whether he is a PEP.
• D. Obtain ACE senior management approval to take Paul on as a client.

Answer: (D)

When a client is a Politically Exposed Person, the firm treats them with Enhanced Due Diligence because of the higher risk of corruption or improper influence. The key governance step is to obtain formal approval from ACE senior management before taking the client on, ensuring a thorough risk assessment and plan for ongoing monitoring is in place.

Police checks aren’t the primary gating factor for PEP onboarding and don’t address the elevated AML/CTF risk. Government permission isn’t a standard requirement for onboarding a client. Relying on a client to declare in writing whether they are a PEP isn’t sufficient for proper risk management. The approved path is the senior management sign-off to take on the client.