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

What does FATF Recommendation 6 require for PEP accounts?

1. No special requirements beyond standard customer verification

2. Senior management approval and ongoing enhanced monitoring

3. Frequent rotation of account managers

4. A mandatory waiting period for withdrawals

The correct answer is: Senior management approval and ongoing enhanced monitoring

FATF Recommendation 6 specifically addresses the need for enhanced due diligence when dealing with politically exposed persons (PEPs). This recognizes that PEPs are potentially higher risk customers due to their prominent public functions and the associated risks of corruption and money laundering. The requirement for senior management approval is essential when establishing a business relationship with a PEP, ensuring that an organization implements appropriate safeguards to mitigate risk. Additionally, ongoing enhanced monitoring is crucial for PEP accounts because these individuals may have more complex financial needs and activities, requiring constant oversight to detect any suspicious actions promptly. Implementing these measures reflects a proactive approach to compliance and risk management within financial institutions, reinforcing their commitment to preventing money laundering and other financial crimes.