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

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Who do the CDD and record-keeping requirements apply to according to FATF Recommendation 12?

Only financial institutions
Non-financial businesses and professions
Only governmental agencies
Non-profit organizations

The correct answer is: Non-financial businesses and professions

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 businesses and professions. This inclusivity recognizes that a wide range of sectors can be vulnerable to money laundering and terrorist financing risks. By requiring non-financial businesses and professionals to implement CDD measures, the recommendation aims to ensure that those in sectors such as real estate, casinos, and legal or accounting services maintain vigilance regarding their customers. This way, they can identify and verify the identity of clients and monitor transactions that may be suspicious or indicative of illicit activities. In addition to enforcing these standards on non-financial entities, the recommendation underscores the necessity of comprehensive record-keeping practices, which benefit law enforcement investigations and the overall integrity of the financial system. This broad scope is crucial for a holistic approach to combating money laundering and increasing transparency across various sectors.