What type of additional due diligence is appropriate for high-risk accounts?

• A. Accepting verification solely from the customer
• B. Requiring references from another financial institution to verify identity
• C. Relying on a single government-issued ID without corroboration
• D. Completing standard due diligence only for low-risk accounts

Answer: (B)

For high-risk accounts, the emphasis is on enhanced due diligence that goes beyond the customer’s own claims. Requiring references from another financial institution provides independent corroboration of identity and background, creating a cross-check that reduces the chance of fraud or money laundering slipping through. This external verification helps confirm key details and the legitimacy of the relationship, which is essential when risk is elevated due to factors like large premiums, cross-border activity, or complex ownership. Relying solely on verification from the customer is insufficient because self-reported information can be falsified, and a single government-issued ID without corroboration may not be reliable in high-risk scenarios. Likewise, applying standard due diligence only to low-risk accounts fails to address the greater risk presented by high-risk clients, since enhanced measures are required for these cases.