Question 95

Enhanced due diligence (EDD) is warranted in specific high-risk scenarios.

Scenarios that involve individuals in positions of power or connections to high-risk jurisdictions necessitate enhanced due diligence. In this case, options B, C, and D represent situations where EDD is required due to the potential for increased risk of money laundering or corruption.

A) An existing local league footballer trying to open a bank account with a bank in their local jurisdiction

This scenario is not considered high risk, as the individual is an existing local athlete opening an account in their familiar jurisdiction. There is no indication of significant risk factors such as political exposure or international dealings that would necessitate enhanced due diligence.

B) The current prime minister of a country trying to open a bank account in another country

This scenario warrants enhanced due diligence due to the individual's high-profile status and potential exposure to corruption risks. As a political leader, the prime minister's financial transactions may be subject to scrutiny, making it essential for financial institutions to conduct thorough checks to prevent illicit activities.

C) An individual with a current bank account who resides in one country becoming the ambassador of another country

This situation also requires enhanced due diligence, as the individual is now a diplomatic representative and may have access to significant resources and influence. Ambassadors often hold positions that can facilitate corruption or money laundering, thus necessitating a more rigorous examination of their financial activities.

D) A bank located in a higher risk country trying to establish a correspondent-respondent banking relationship with a bank in a lower-risk country

This scenario is another clear case for enhanced due diligence. The interplay between a higher risk jurisdiction and a lower risk one raises concerns about the potential for money laundering or other financial crimes. Banks must take extra precautions to ensure that they are not inadvertently facilitating illicit activities through such relationships.

E) The former personal secretary to the minister of transport in a low-risk country 25 years ago opening a bank account at a bank in a neighboring low-risk country

While this scenario involves a former government employee, the long time elapsed and the low-risk context diminish the need for enhanced due diligence. The individual’s past role does not imply a current risk factor that would warrant increased scrutiny in this banking context.

Conclusion

Enhanced due diligence is essential in scenarios B, C, and D due to the involvement of individuals in positions of power or the complexities of cross-border banking relationships. The risks associated with potential corruption and money laundering in these cases necessitate careful monitoring and assessment, while the other options do not present significant risk factors that require such thorough investigation.