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Financial advisory
RES5Financial Advisory Services✓Which of the following does the study guide list as red flags at account opening? (a) The prospective client is evasive about source of funds. (b) There are windfall or lump sum payments that are unexplained. (c) The client's background and profile do not match the size of the account relationship and the conduct of the account. (d) The client is an entity listed on a stock exchange and subject to regulatory disclosure requirements on beneficial ownership. Which of the following are CORRECT?
Guide ch.7.9.15 lists evasiveness about source of funds, business activity inconsistent with the business profile, a mismatch between the client's profile and the size and conduct of the account, unexplained windfalls or lump sum payments, an unclear purpose for the account and non-transparent ownership. A listed entity subject to disclosure requirements on beneficial ownership sits on the opposite list: it is one of the cases where the firm need not inquire into beneficial ownership (ch.7.9.5.2) and may consider simplified due diligence (ch.7.9.10).
Statement (d) belongs to the low risk list, which is exactly why it is offered here.
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