The prospective client is the parent of a government minister, which classifies them as a family member of a Politically Exposed Person (PEP). According to global anti-money laundering (AML) and counter-terrorist financing (CTF) standards, relationships with PEPs and their close associates present a higher risk of potential involvement in bribery and corruption. Consequently, financial institutions are required to conduct Enhanced Due Diligence (EDD). A mandatory component of the EDD process for any PEP-related account is to obtain approval from the institution's senior management before establishing the business relationship. This ensures the decision to accept the heightened risk is made at an appropriate level of authority.

A. Relationship management: The relationship manager is responsible for managing the client relationship, not for providing the final compliance approval for a high-risk PEP account.

C. Team management: While a team manager may review the case, they do not have the ultimate authority to approve a PEP relationship; this decision must be escalated higher.

D. Project management: This role is entirely unrelated to the Know Your Customer (KYC) client onboarding and compliance approval process.

1. Financial Action Task Force (FATF). (2023). International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation - The FATF Recommendations. FATF

Paris

France. Recommendation 12

part (b)

states that financial institutions are required to "obtain senior management approval to establish (or continue

for existing customers) such business relationships."

2. The Wolfsberg Group. (2017). Wolfsberg Guidance on Politically Exposed Persons (PEPs). Section 3.2

"Approval

" page 8

specifies that "The decision to enter into

or maintain

a relationship with a PEP must be taken by senior management."

3. Basel Committee on Banking Supervision (BCBS). (2016). Sound management of risks related to money laundering and financing of terrorism. Bank for International Settlements. Annex 2

Paragraph 26

notes that for PEPs

banks should "obtain approval from senior management to establish or continue such relationships."