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FIC Act FIC Act Compliance (CDD, AML/CFT, Reporting)
A prospective client is a senior government official who fits the definition of a domestic prominent influential person (a type of PEP). How must the FSP treat the relationship 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) Apply enhanced due diligence and obtain senior-management approval to establish or continue the relationship.Correct
- b) Apply reduced (simplified) due diligence because public officials are inherently low risk.
- c) Refuse to deal with the person at all, as PEPs may never be clients.
- d) Treat the person exactly like any other client, with no additional steps.
Why this is the answer
PEPs (including domestic prominent influential persons and foreign PEPs) carry higher ML risk, so the FIC Act requires enhanced due diligence, senior-management sign-off, and steps to establish the source of funds/wealth — not simplified due diligence, and not an outright ban.
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