Are Non Resident Aliens considered high risk customers under Enhanced Due Diligence?

• A. Yes
• B. No
• C. Only if they are from high risk jurisdictions
• D. Only if they conduct cash transactions

Answer: (A)

In AML, a risk-based approach means that certain groups of customers automatically warrant deeper scrutiny. Non-resident aliens are seen as higher risk because their ties to the local financial system may be less established, and their funds can originate from cross-border sources that are harder to verify. To manage that risk, institutions apply Enhanced Due Diligence to NRAs. This means going beyond standard identity checks to confirm residency status, trace the source of funds and wealth more thoroughly, understand the purpose and expected nature of their transactions, and monitor activity more closely on an ongoing basis. This heightened scrutiny helps detect and deter illicit activity early. While other factors like coming from a high-risk jurisdiction or using cash can raise risk, the baseline expectation in many programs is that non-resident aliens are a high-risk category that requires EDD.