Which of the following are AML risks associated with onboarding a high-risk customer?

High-risk customers present elevated money laundering and terrorist financing risks, requiring careful consideration before onboarding. FATF guidance emphasizes that higher-risk relationships demand stronger controls due to their increased vulnerability to misuse.

One key risk is the greater potential for laundering illicit proceeds. High-risk customers may operate in sectors, jurisdictions, or business models that are frequently abused for financial crime, increasing the likelihood that illicit funds could pass through the institution.

Another significant risk is the increased likelihood of involvement in financial crimes, either directly or indirectly. This may include exposure to corruption, fraud, sanctions evasion, or organized crime networks.

Enhanced due diligence is not a risk but rather a risk-mitigating control imposed by regulators. Reduced regulatory scrutiny is incorrect, as high-risk customers are subject to greater—not lesser—oversight.