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Banking Regulations: Opening a Personal Current Account

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Banking Regulations: Opening a Personal Current Account

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Questions and Answers

What is one of the risks that a bank faces when dealing with a prospective customer?

The prospective customer may be a foreign national

The prospective customer may be a minor

The prospective customer may have assumed a false name (correct)

The prospective customer may be involved in money laundering

What measure is recommended in the text to verify a prospective customer's identity?

Requesting a DNA sample

Requesting a background check from a private investigator

Requesting a fingerprint scan

Requesting proof of identification bearing a photograph (correct)

In the case of Ladbroke v Todd (1914), what was the bank found negligent for?

Failing to make inquiries or ask for references about the prospective customer (correct)

Failing to conduct a credit check on the customer

Failing to verify the customer's employment status

Failing to report the suspicious transaction to the authorities

In the case of Guardians of St John's Hampstead v Barclays Bank Limited (1923), what mistake did the bank make?

The bank failed to verify the standing or identity of the reference provided by the customer Signup and view all the answers

Based on the cases mentioned in the text, what can be inferred about the duty of banks regarding customer identification?

Banks have a duty to strictly follow customer identification procedures to prevent fraud Signup and view all the answers

What is the purpose of verifying a prospective customer's previous banking relationship, as mentioned in the text?

To verify the customer's identity by obtaining a reference from their previous bank Signup and view all the answers

Why is it important for proof of identification to bear a photograph?

To ensure that the customer's appearance matches the identification document Signup and view all the answers

In the case of Guardians of St John's Hampstead v Barclays Bank Limited (1923), what did the rogue customer do?

Both A and C Signup and view all the answers

Based on the information provided in the text, which of the following statements is true regarding a bank's duty of care?

Banks have a duty to exercise reasonable care in verifying the identity of prospective customers Signup and view all the answers

What is one potential risk that a bank faces if it fails to properly verify a prospective customer's identity?

All of the above Signup and view all the answers