Which level of due diligence is triggered for high-risk customers such as politically exposed persons?

• A. Simplified due diligence
• B. Ongoing due diligence
• C. Standard due diligence
• D. Enhanced due diligence

Answer: (D)

When a customer is considered high-risk, such as a politically exposed person, the controls are intensified through enhanced due diligence. This level is specifically designed to address elevated AML risks by requiring deeper verification of identity and background, detailed information about the customer’s business and sources of funds and wealth, and a much closer, ongoing monitoring of activity. Additional steps often include obtaining senior management approval for high-risk relationships and more frequent reviews of the account’s activity to detect unusual or suspicious behavior.

Simplified due diligence is reserved for low-risk cases and involves lighter checks, while standard due diligence serves as the baseline for typical customers. Ongoing due diligence describes the continuous monitoring process that accompanies the initial CDD, but the level triggered by high-risk profiles like PEPs is enhanced due diligence.