When onboarding new corporate customers, financial institutions must conduct thorough due diligence (KYC/CDD) to assess the risk profile of the business.
Option A (Correct): Knowing the customer's business activity is critical to identifying if it is a high-risk industry (e.g., cash-intensive businesses, virtual assets, shell companies).
Option D (Correct): Identifying senior management and account operators ensures that the rightful owners and controllers are known.
Option E (Correct): Jurisdictional risk is a key factor. If the company operates in a high-risk country, enhanced due diligence (EDD) may be required.
Option B (Incorrect): Employment profiles of all employees are not relevant unless the employees are politically exposed persons (PEPs) or linked to financial crime.
Option C (Incorrect): Knowing where a business previously banked is not standard practice unless the entity is flagged for suspicious activity.
AML Risks in Corporate Banking:
Shell Companies & Complex Ownership Structures: Can be used to hide beneficial owners and launder illicit funds.
High-Risk Countries & Sanctions Exposure: Customers linked to high-risk jurisdictions (FATF Grey/Blacklist) may require EDD measures.
Unusual Business Nature: Some businesses (e.g., cash-intensive industries, cryptocurrency firms) have higher financial crime risks.
Best Practices:
Conduct KYC/CDD at account opening and periodic reviews for risk management.
Use beneficial ownership registries to verify the ultimate beneficial owners (UBOs).
Cross-check against sanction lists (OFAC, UN, EU, etc.).
Reference:
FATF Recommendation 10 (Customer Due Diligence)
6th EU Anti-Money Laundering Directive (6AMLD)
Wolfsberg Group Guidance on Corporate Banking Risks