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FIC Act Risk Management Compliance
Applying the FIC Act's risk-based approach, in which situation must Boitumelo apply Enhanced Due Diligence (EDD) rather than standard due diligence?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) Only where the client is a company or a trust rather than a natural person.
- b) For every single client, so that the firm can show maximum compliance.
- c) Never — EDD is an optional best practice, not a legal requirement.
- d) Where the client or transaction is assessed as high-risk — for example a politically exposed person.Correct
Why this is the answer
Standard due diligence is the default; EDD is mandatory where risk is elevated (e.g. PEPs, complex ownership, high-risk jurisdictions). It is not applied to everyone indiscriminately, is not triggered merely by being a legal entity, and is not optional.
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