Which of the following is commonly identified as a high risk customer category in Enhanced Due Diligence practice?

• A. Cash intensive businesses
• B. Public libraries
• C. Public schools
• D. Local hardware stores with cash receipts

Answer: (A)

The main idea here is understanding why certain customers trigger higher scrutiny in Enhanced Due Diligence. Cash-intensive businesses are flagged as high risk because they move a lot of cash, which can be harder to trace to legitimate sources. The sheer volume of cash and the potential for rapid, less-documentable transactions create opportunities for money laundering or the concealment of illicit funds. Because of that, institutions apply stronger due diligence, closer ongoing monitoring, and more robust verification of source of funds for these customers.

Public libraries and public schools typically have more predictable funding streams and less reliance on cash transactions, so they’re generally viewed as lower risk in standard EDD practices. A hardware store that takes cash can involve cash handling, but unless it operates at a scale that makes cash a dominant part of its revenue, it isn’t as consistently categorized as high risk as cash-intensive businesses.