Basel Committee's Customer Due Diligence Principles

A

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The Basel Committee on Banking Supervision (BCBS) is an international committee that provides guidelines and standards for banks and financial institutions to follow. One of their guidelines is the Customer Due Diligence (CDD) principles, which provide recommendations on how banks can conduct customer due diligence to identify and mitigate risks associated with money laundering and terrorist financing.

When it comes to accepting business from non-face-to-face customers, the BCBS suggests that banks should apply additional measures to mitigate risks. The correct answer to the question is (D) requiring additional review of account opening documents by senior management.

This means that the bank's senior management should review the customer's account opening documents to ensure that they comply with the bank's policies and procedures. This is an important step because non-face-to-face transactions can be more difficult to verify than face-to-face transactions.

For example, a customer may be able to provide falsified documents or information online. By requiring senior management to review the account opening documents, the bank can add an extra layer of scrutiny to the process and potentially identify any red flags that may indicate potential money laundering or terrorist financing.

Certification of documents presented (A) is a common practice in customer due diligence where the bank will require certain documents to be certified by a professional such as a lawyer or notary public to attest to their authenticity. This measure is useful but is not specific to non-face-to-face customers.

Requiring an in-person interview with the customer (B) may not always be possible with non-face-to-face customers, which is the focus of the question. Additionally, an in-person interview does not necessarily mitigate risks associated with money laundering or terrorist financing.

Imposing a limit on permissible account activity for a defined period of time (C) is a risk mitigation measure that may be useful in certain circumstances. However, it does not specifically address the risks associated with non-face-to-face customers and is not the best answer to the question.