Cryptoasset Anti-Financial Crime Specialist (CCAS) Certification Practice Test

Which customer(s) require enhanced due diligence?

1. Educational associations.

2. Domestic savings institutions.

3. Publicly listed companies.

4. Private banking clients.

The correct answer is: Private banking clients.

Enhanced due diligence is typically required for customers or client categories that present a higher risk of involvement in financial crime, money laundering, or terrorist financing. In this context, private banking clients are often subjected to enhanced due diligence measures due to several inherent risk factors associated with their profiles. Private banking clients generally require personalized financial services, which may include investment management, wealth planning, and tailored financial products. They often possess significant assets, complex financial structures, and may have connections to international markets or entities, which can pose heightened risks in terms of transparency and regulatory scrutiny. Because of this complexity and potential exposure to higher risk jurisdictions, financial institutions must implement more stringent measures to verify the identity of such clients, understand their source of funds, and monitor their transactions more closely. In contrast, educational associations, domestic savings institutions, and publicly listed companies typically undergo standard due diligence processes as they are generally regarded as lower risk. Educational institutions often rely on public funding or donations with less complexity in financial transactions, domestic savings institutions generally serve a more straightforward customer base, and publicly listed companies are already subject to rigorous disclosure and regulatory requirements, making them less likely to engage in activity that would necessitate enhanced scrutiny. Therefore, the nature of private banking clients drives the need for enhanced due