having an outdated and incomplete risk assessment could expose the financial institution to significant money laundering and terrorist financing risks that are not identified, measured, or mitigated. The risk assessment is a key component of an effective anti-money laundering program, and it should be updated regularly to reflect the changes in the business environment, customer profile, product offerings, delivery channels, and regulatory requirements12. A risk assessment that is several years old and does not cover all current products and services could fail to capture the emerging threats and vulnerabilities that the financial institution faces, and could result in inadequate or inappropriate controls, policies, and procedures. This could lead to the highest potential for unmitigated risk, as the financial institution could be exploited by money launderers and terrorist financiers, and face regulatory sanctions, reputational damage, and financial losses.
Anti-Money Laundering (AML) Risk Assessment | ACAMS1
Risk assess your business for money laundering supervision - GOV.UK2

When an existing customer becomes a politically exposed person (PEP), the KYC analyst should perform enhanced due diligence (EDD) for that customer. EDD involves gathering additional information about the customer, assessing the risk associated with their PEP status, and updating the KYC profile accordingly. The goal is to ensure compliance with regulations, verify customer identities, and mitigate the higher risk posed by PEPs. Regular monitoring and updates during the review/refresh period are essential to stay informed about any changes in the customer's status or risk profile1.
References:
PEP in KYC & KYB: Requirements and Steps for PEP Screening
Politically Exposed Persons (PEP): Definition and Risks | Okta
How to effectively screen PEPs to meet KYC requirements - Castellum.AI

According to the Financial Action Task Force (FATF) 40 Recommendations, simplified customer due diligence (CDD) or reduced measures could be acceptable for certain types of products or transactions that have a low risk of money laundering or terrorist financing, based on a reasonable assessment of the risk by countries or by financial institutions. These include:
* Life insurance policies where the annual premium is no more than USD/EUR 1,000 or a single premium of no more than USD/EUR 2,500. This is because the amount of money involved is relatively small and the payout is usually contingent on a specific event, such as death or disability, which reduces the likelihood of abuse by criminals.
* Insurance policies for pension schemes if there is no surrender clause and the policy cannot be used as collateral. This is because the beneficiaries of these policies are usually predetermined and the funds are locked in until retirement age, which limits the possibility of transferring or withdrawing the money for illicit purposes.
* A pension, superannuation or similar scheme that provides retirement benefits to employees, where contributions are made by way of deduction from wages and the scheme rules do not permit the assignment of a member's interest under the scheme. This is because the source of funds is known and verified by the employer and the scheme is regulated and supervised by competent authorities, which reduces the risk of money laundering or terrorist financing.
The other option, trusts where the settlor, trustee and beneficiaries are identified and the shares are in bearer form, is not eligible for simplified CDD or reduced measures, because the use of bearer shares poses a high risk of anonymity and concealment of beneficial ownership, which could facilitate money laundering or terrorist financing.
FATF 40 Recommendations, Recommendation 10 and Interpretive Note to Recommendation 10, paragraphs
17-18.

These designated nonfinancial businesses and professions (DNFBPs) include - casinos when customers engage in financial transactions equal to or above a designated threshold.......... - real estate agents when they are involved in transactions for clients concerning buying and selling properties; - dealers in precious metals and stones when they engage in any cash transaction with a customer at or above a designated threshold; - lawyers, notaries and independent legal professionals and accountants when they prepare or carry out transactions for clients concerning buying and selling real estate; .......; and - trust and company service providers when they prepare or carry out transactions for a client concerning certain activities ....

The customer activity that should trigger a suspicious transaction report is purchasing travelers checks (cheques) for trips to a Non-Cooperative Countries and Territories (NCCTs). This could indicate an attempt to evade currency reporting requirements, avoid sanctions or embargoes, or facilitate money laundering or terrorist financingthrough high-risk jurisdictions12. NCCTs are countries or territories that have been identified by the Financial Action Task Force (FATF) as having serious deficiencies in their anti-money laundering and counter-terrorist financing regimes, and that pose a threat to the international financial system3.
The other options are not necessarily grounds for a suspicious transaction report, although they may require further due diligence or monitoring depending on the customer profile and the nature of the transaction. For example:
* The increased activity is due to money order deposits. This could be a legitimate source of income for the customer's export business, or it could be a way of disguising the origin or destination of the funds. The anti-money laundering specialist should verify the identity and background of the customer and the issuers of the money orders, and check for any red flags or suspicious indicators4.
* Wire transfers are coming from a Financial Action Task Force member country. This could be a normal business practice, or it could be a sign of involvement in trade-based money laundering or other illicit activities. The anti-money laundering specialist should assess the customer's source of funds, business rationale, and market conditions, and monitor for any changes or inconsistencies.
* The client changed his address without advising the institution. This could be a simple oversight, or it could be a way of concealing the customer's true location or identity. The anti-money laundering specialist should update the customer's information, verify the new address, and check for any adverse media or sanctions.
ACAMS CAMS Certification Video Training Course - Exam-Labs3
Exam CAMS: Certified Anti-Money Laundering Specialist (the 6th edition)4 ACAMS Study Guide for the Certification Examination, 6th Edition, Chapter 1, page 11: https://www.acams.
org/wp-content/uploads/2019/08/ACAMS-Study-Guide-6th-Edition-Chapter-1.pdf ACAMS Study Guide for the Certification Examination, 6th Edition, Chapter 2, page 29: https://www.acams.
org/wp-content/uploads/2019/08/ACAMS-Study-Guide-6th-Edition-Chapter-2.pdf ACAMS Study Guide for the Certification Examination, 6th Edition, Chapter 4, page 77: https://www.acams.
org/wp-content/uploads/2019/08/ACAMS-Study-Guide-6th-Edition-Chapter-4.pdf ACAMS Study Guide for the Certification Examination, 6th Edition, Chapter 5, page 97: https://www.acams.
org/wp-content/uploads/2019/08/ACAMS-Study-Guide-6th-Edition-Chapter-5.pdf