A bank cannot apply Simplified Customer Due Diligence where the customer is which of the following?

A bank cannot apply Simplified Customer Due Diligence where the customer is which of the following?

• A. Public body only
• B. All of the above
• C. Politically Exposed Person only
• D. Another bank only

Answer: (C)

In a risk-based approach to customer due diligence, Simplified CDD is used only for lower-risk customers; higher-risk categories require more thorough scrutiny. Politically Exposed Persons are regarded as higher risk due to potential involvement in corruption or influence, so banks must apply Enhanced Due Diligence rather than Simplified. Therefore, a bank cannot apply Simplified CDD when the customer is a Politically Exposed Person. Public bodies or other banks aren’t automatically excluded from Simplified CDD and may be treated as lower risk after assessment, depending on the regime.

In a risk-based approach to customer due diligence, Simplified CDD is used only for lower-risk customers; higher-risk categories require more thorough scrutiny. Politically Exposed Persons are regarded as higher risk due to potential involvement in corruption or influence, so banks must apply Enhanced Due Diligence rather than Simplified. Therefore, a bank cannot apply Simplified CDD when the customer is a Politically Exposed Person. Public bodies or other banks aren’t automatically excluded from Simplified CDD and may be treated as lower risk after assessment, depending on the regime.