What does the 3rd EU Directive on Money Laundering dictate regarding existing customers?

• A. Specific requirements for risk assessment only
• B. Ongoing monitoring based on risk sensitivity
• C. Immediate classification of all past transactions
• D. Mandatory closure of non-compliant accounts

Answer: (B)

The 3rd EU Directive on Money Laundering emphasizes the necessity of ongoing monitoring of existing customers based on a risk-sensitive approach. This involves continuously assessing and managing the risk of money laundering and terrorist financing associated with customer relationships. Financial institutions are required to have measures in place to ensure that they are vigilant in their monitoring activities, adapting their processes according to the level of risk each customer presents.

This ongoing monitoring allows institutions to detect any unusual or suspicious activity promptly, which can then be investigated further. It also supports the overall goal of the directive to enhance due diligence and risk management in the fight against money laundering and terrorist financing.

The other choices do not capture the essential requirement of ongoing monitoring. There is no stipulation in the directive for specific requirements solely focused on risk assessment without the context of monitoring. Additionally, the classification of past transactions is not required immediately, as the focus is on current relationships and their risks. Lastly, while addressing non-compliance is a concern, mandatory account closures are not a prescribed action within the framework of the directive unless certain critical compliance failures occur. Thus, the directive's core requirement focuses on the ongoing, risk-sensitive monitoring of existing customers.