Implementing Due Diligence Actions for Private Banking in Accordance with Wolfsberg Group's AML Principles

C

The Wolfsberg Group is an association of global banks, whose aim is to develop financial services industry standards, including anti-money laundering (AML) principles, policies, and practices. These principles and policies are designed to combat money laundering, terrorist financing, and other illicit financial activities. The group's members include many of the world's largest banks, including Bank of America, Citigroup, and JPMorgan Chase.

In the context of private banking, due diligence actions to be implemented according to the AML principles of the Wolfsberg group are required in situations where the bank is dealing with high-risk customers or transactions that may involve a higher level of risk for money laundering or terrorist financing.

Out of the given options, the situation that requires due diligence actions to be implemented according to the AML principles of the Wolfsberg group is option C: "A wealthy individual from a high-risk country wants to open an account with a private bank." This is because dealing with high net worth individuals from high-risk countries presents a higher risk for money laundering and terrorist financing activities.

When dealing with such customers, private banks are required to conduct enhanced due diligence (EDD) measures, which may include additional checks on the source of funds, the purpose of the account, and the customer's background and reputation. These measures are designed to ensure that the bank has a full understanding of the customer's risk profile and can monitor their transactions effectively.

In contrast, options A, B, and D may also require due diligence measures to be implemented, but they may not necessarily require the more robust EDD measures mandated for high-risk customers. For example, option A involves a local wealthy individual who wants to become a customer of a local retail bank, which may not present as high a risk for money laundering or terrorist financing as option C. Similarly, option B involves a beneficial owner of an exchange house who wants to open an account with the bank, which may require standard due diligence measures but not necessarily EDD measures. Option D involves a new customer who wants to set up an exchange house using the bank as the correspondent, which may also require standard due diligence measures but may not present the same level of risk as dealing with high-risk customers from high-risk countries.