When applying the Risk-Based Approach (RBA) to Politically Exposed Persons (PEPs), which of the following best describes the regulatory requirement for risk classification?

Question

Accepted Answer

Correct. Under the risk-based approach, Foreign PEPs (PEFPs) are automatically considered high risk. Domestic PEPs (PEDPs) and Heads of International Organizations (HIOs) are only classified as high risk if the firm's assessment determines them to be so.

When applying the Risk-Based Approach (RBA) to Politically Exposed Persons (PEPs), which of the following best describes the regulatory requirement for risk classification?

Discussion