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FIC Act Compliance Anti-Money Laundering
Which ONE of the following statements best describes the main purpose of Customer Due Diligence (CDD) under the FIC Act?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) To identify and verify the identity of a client to mitigate money laundering risks.Correct
- b) To determine the client's investment preferences and risk tolerance.
- c) To calculate the client's tax obligations for SARS.
- d) To market additional financial products to the client.
Why this is the answer
Customer Due Diligence (CDD), also known as 'Know Your Customer' (KYC), is a mandatory process under the FIC Act to identify and verify who the client is, in order to prevent the financial system from being used for money laundering or terrorist financing.
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