Which behavior in opening an account or purchasing a product may indicate risk?

Which behavior in opening an account or purchasing a product may indicate risk?

• A. Opening account or purchasing a product without regard to losses, commissions or early cancellations
• B. The customer asks for more information about costs
• C. The customer diversifies across many products
• D. The customer consistently reviews past performance

Answer: (A)

In AML terms, a red flag is when someone opens an account or makes a purchase with little regard for potential losses, the costs involved, or the possibility of early cancellations. This behavior suggests a lack of risk awareness and may indicate an attempt to move funds quickly, avoid scrutiny, or bypass normal due diligence. Such disregard for consequences can be a tactic to hide the source of funds or evade monitoring, which is exactly the kind of activity AML controls are designed to detect. Asking for more information about costs shows a prudent, risk-aware approach and a willingness to understand the transaction—consistent with proper due diligence. Diversifying across many products can be a normal strategy and isn’t by itself suspicious, and consistently reviewing past performance signals proactive oversight and suitability.

In AML terms, a red flag is when someone opens an account or makes a purchase with little regard for potential losses, the costs involved, or the possibility of early cancellations. This behavior suggests a lack of risk awareness and may indicate an attempt to move funds quickly, avoid scrutiny, or bypass normal due diligence. Such disregard for consequences can be a tactic to hide the source of funds or evade monitoring, which is exactly the kind of activity AML controls are designed to detect.

Asking for more information about costs shows a prudent, risk-aware approach and a willingness to understand the transaction—consistent with proper due diligence. Diversifying across many products can be a normal strategy and isn’t by itself suspicious, and consistently reviewing past performance signals proactive oversight and suitability.