Certified Anti-Money Laundering Specialist Certification (CAMS) Practice Exam

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FATF Recommendation 12 states that CDD and record-keeping also apply to which type of sectors?

Only commercial sectors
All economic sectors
Non-financial sectors
Only governmental sectors

The correct answer is: Non-financial sectors

FATF Recommendation 12 emphasizes the importance of customer due diligence (CDD) and record-keeping requirements not just for financial institutions, but also for non-financial sectors. This is significant because non-financial businesses and professions, such as real estate agents, casinos, and accountants, can also be gateways for money laundering and terrorist financing activities. By encompassing non-financial sectors, the FATF aims to create a comprehensive approach to combatting money laundering that includes a wide range of entities beyond traditional financial institutions. Additionally, by applying these standards universally to non-financial sectors, the FATF helps to ensure that these businesses are vigilant and proactive in identifying and mitigating risks associated with illicit financial flows. This recommendation thus strengthens the overall integrity of the financial system and contributes to broader efforts to prevent money laundering and terrorist financing on an international scale. Other options suggest limiting the application of CDD and record-keeping requirements to specific sectors, which would undermine the comprehensive nature of the FATF guidelines aimed at addressing the complexities of money laundering across different types of businesses.