According to the 5th EU Money Laundering Directive, member states require entities to apply enhanced customer due diligence measures with respect to business relationships or transactions involving high-risk third country nationals. Which are included in these requirements? (Choose three.)
Click on the arrows to vote for the correct answer
A. B. C. D. E. F.DEF
The 5th EU Money Laundering Directive requires entities to apply enhanced customer due diligence (CDD) measures when conducting business relationships or transactions involving high-risk third country nationals. These measures are designed to identify and mitigate the risk of money laundering and terrorist financing.
The enhanced CDD measures that entities must apply with respect to high-risk third country nationals include:
Obtaining the approval of senior management for establishing or continuing the business relationship - This means that senior management must review and approve the business relationship or transaction involving high-risk third country nationals. This is to ensure that the entity understands and is willing to accept the increased risk associated with dealing with such customers.
Obtaining information on the reasons for intended or performed transactions - Entities must obtain information on the reasons for the intended or performed transactions involving high-risk third country nationals. This is to ensure that the entity understands the nature of the transaction and can identify any potential suspicious activity.
Obtaining information on the source of funds and source of wealth of the customer and of the beneficial owner(s) - Entities must obtain information on the source of funds and source of wealth of the customer and beneficial owner(s). This is to ensure that the entity can identify any potential illicit activity and assess the risk associated with the transaction or relationship.
Therefore, answers A, D, and F are correct as they are the enhanced CDD measures that entities must apply with respect to high-risk third country nationals according to the 5th EU Money Laundering Directive.
Answers B, C, and E are incorrect as they do not relate to the enhanced CDD measures required for high-risk third country nationals under the 5th EU Money Laundering Directive. Obtaining copies of passports for all authorized persons is a standard CDD measure, establishing and verifying the address of the client is a simplified CDD measure, and obtaining tax reference details for the client is not specifically required for high-risk third country nationals.