All RE5 questions
FIC Act FIC Act Compliance (CDD, AML/CFT, Reporting)
The FIC Act requires a risk-based approach to compliance. What is its essential principle?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) The intensity of due diligence must be proportionate to the money-laundering risk presented.Correct
- b) The FSP must report every transaction it processes, whatever the risk.
- c) The FSP must charge each client a fee scaled to their risk profile.
- d) The FSP must take on only low-risk clients.
Why this is the answer
Under the risk-based approach the firm assesses risk and matches the depth of CDD to it — simplified for low risk, enhanced for high risk. It is not about pricing by risk, refusing higher-risk clients outright, or blanket-reporting everything.
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