Understanding Politically Exposed Persons PEPs Risk Test Validation

Understanding Politically Exposed Persons (PEPs) Risk Test & Validation Session Name: …………………. . . Date: …………………. . . ………. ©Kaizen Compliance Solutions Ltd

PLEASE NOTE Instructions for answering the PEP Risk Assessment: The use of mobile phones or any other electronic devices is STRICTLY FORBIDDEN. Please read the requirements of the questions carefully and only select the number of responses specified in the question To answer the question, tick or circle the answer(s) that applies All questions in this multiple choice assessment are MANDATORY. Answer ALL questions Test & Validation Session -2 ©Kaizen Compliance Solutions Ltd - 2015

Question 1 Where can you find the universally accepted definition of a PEP? a. Under the JMLSG 2009, part 1. b. Under recommendations 12 -20 FATF. c. Under the AMLR 2007. d. There is no universally accepted definition of a PEP. Question 2 What risks do PEPs pose to an organisation? a. Reputational risk b. Loss of business interests c. Potential Financial Fines d. All of the above Question 3 Which one of these individuals is a PEP ? a. A mid ranking public servant in the Cambodian ministry of health. b. The son of the late Libyan dictator, Saif al-Islam Gaddafi. c. Mohammad Al-Fayed d. None of the above Question 4 Is Richard Branson a PEP? a. Yes, he fits the key characteristics. b. No, none of the key characteristics apply to him. c. He is a high net worth individual, but not a PEP. d. Yes, because of his association with people in positions of power. Question 5 What type of Due Diligence would you apply to a PEP client: a. ODD - Ordinary Due Diligence b. SDD - Simplified Due Diligence c. EDD - Enhanced Due Diligence d. All of the above. Test & Validation Session - 3 ©Kaizen Compliance Solutions Ltd - 2015

Question 6 Best practice standards for file review suggests: a. A file should be reviewed every one, three, and five years. b. A file should be reviewed every two, four and seven years. c. A file should be reviewed every four, six and eight years. d. None of the above. Question 7 What (or who) is a sleeper PEP? a. An individual that has been exposed to a lot of political activity. b. A high risk individual operating behind the scene. c. An individual that has the potential to become a PEP in the future. d. The President of the Russian Federation. Question 8 According to Best Practice how long is an individual considered to be a PEP? Select one or more correct answer. a. Once an individual has been deemed a PEP they will always have that status. b. 5 years after that individual has seized to satisfy the definition of a PEP. c. 2 years after an individual has seized to satisfy the definition of a PEP? d. 1 Year after the individual’s death Question 9 What do we mean when we talk about Risk Based Approach? a. Taking into account the level of risk associated with a client’s jurisdiction of origin. b. Taking into account the level of risk associated with the line of business of a client. c. The effectiveness of the legal and regulatory framework of a client’s jurisdiction. d. All of the above. Test & Validation Session - 4 ©Kaizen Compliance Solutions Ltd - 2015

Question 10 What does So. W stand for? a. Source of Water b. Source of Weapons c. Source of Wealth d. Source of War Question 11 Is there a difference between Source of Wealth and Source of Funds? a. Yes, Source of Funds determines the exact origin of the funds in question. Source of Wealth determines how the individual accumulated his/her current wealth over a period of time. b. No, they both treat the same issue, and achieve the same result. c. The difference depends on the client’s line of business. d. There is no difference, both terms are used to describe the same activity, determining the origin of a client’s wealth. Question 12 What principles can be used to manage PEP Risk Exposure? a. Applying a Risk Based Approach b. Conducting Enhanced Due Diligence c. Adopting best practice requirements for file re-view d. All of the above. Question 13 How important is it to determine the UBO (Ultimate Beneficial Owner) when dealing with a PEP file? a. Very important as PEP accounts are classified as High Risk in terms of Money Laundering and possible Terrorist Financing. b. It is important but not crucial, as it is not easy to contact PEP clients. c. It is not important as PEP clients are usually people in high positions and they are considered to be trustworthy. d. Establishing the UBO isn’t common practice when it comes to PEP clients. Test & Validation Session - 5 ©Kaizen Compliance Solutions Ltd - 2015

Question 14 What do we mean by ‘’PEP by association’’? Choose all correct answers. a. Any individual that is associated in any way with a PEP. b. A member of the PEP’s immediate family. c. A business associate that has a shared vested interest with the PEP. d. The PEP’s gardener Question 15 Which one of the below listed individuals is a high risk PEP? a) Her Majesty Queen Elisabeth. b) Kate Middleton c) Boris Johnson d) None of the above Question 16 Question 17 Question 18 Question 19 Question 20 END OF THE TEST Test & Validation Session - 6 ©Kaizen Compliance Solutions Ltd - 2015

ANSWERS 1. d 2. d 3. d 4. c 5. c 6. a 7. c 8. a 9. d 10. c 11. a 12. d 13. a 14. b 15. d 16. … 17. … 18. … 19. … 20. …. Test & Validation Session - 7 ©Kaizen Compliance Solutions Ltd - 2015