Which are essential elements of a KYC program identified by the Basel Committee on Banking Supervision?
(Select Two.)
Correct Answer: B,D
According to the Basel Committee on Banking Supervision (BCBS), a sound KYC program should consist of four essential elements: (i) customer acceptance policy; (ii) customer identification; (iii) on-going monitoring of higher risk accounts; and (iv) risk management. Therefore, B and D are the correct choices among the given options. A customer acceptance policy defines the types of customers that the bank is willing to accept and the conditions for doing so. A risk management system ensures that the bank has adequate policies, procedures, and controls to identify, measure, monitor, and mitigate the risks arising from its KYC program.
References:
BCBS, Customer due diligence for banks, October 2001, p. 41
BCBS, Consolidated KYC Risk Management, October 2004, p. 42