Under the Wolfsberg Correspondent Banking Principles, which action is considered an enhanced due diligence (EDD) obligation to correspondent banking clients that present greater risks?
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A. B. C. D.A
Under the Wolfsberg Correspondent Banking Principles, correspondent banks are required to conduct enhanced due diligence (EDD) on correspondent banking clients that present greater risks, such as those located in high-risk jurisdictions, with complex ownership structures or involved in high-risk transactions.
Answer A, the approval of a high-risk relationship by a senior management committee, is considered an EDD obligation to correspondent banking clients that present greater risks. This means that a senior management committee, consisting of senior executives within the correspondent bank, must approve any high-risk correspondent banking relationship before the bank establishes or continues such a relationship. This is considered an EDD obligation because it ensures that the bank's senior management is aware of the risks associated with the relationship and has taken responsibility for approving and managing those risks.
Answer B, ongoing monitoring of clients located in tax haven countries, is not specifically listed as an EDD obligation under the Wolfsberg Correspondent Banking Principles, but it may be a necessary measure to mitigate the risks associated with such clients. Correspondent banks are expected to identify and assess the risks associated with their correspondent banking relationships and implement measures to manage those risks, including ongoing monitoring.
Answer C, an evaluation done by the compliance officer in charge of the account, is a standard due diligence measure that is required for all correspondent banking relationships, but it is not considered an EDD obligation under the Wolfsberg Correspondent Banking Principles. The compliance officer is responsible for conducting due diligence on the correspondent banking client, including identifying and verifying the client's identity, assessing the risks associated with the client and the relationship, and ensuring that the client's activities are consistent with their stated business and risk profile.
Answer D, conduct reviews on all high-risk relationships, is not considered an EDD obligation under the Wolfsberg Correspondent Banking Principles. While reviewing high-risk relationships is an important risk management measure, it is not specific to EDD obligations. EDD obligations require additional measures beyond standard due diligence to manage the risks associated with high-risk correspondent banking relationships.
In summary, answer A, the approval of a high-risk relationship by a senior management committee, is considered an EDD obligation to correspondent banking clients that present greater risks under the Wolfsberg Correspondent Banking Principles.