Which of the following measures is one that the FATF recommends that Financial Institutions and Designated Non-Financial Businesses and Professions (DNFBP) take to mitigate risks arising from business relationships with foreign politically exposed persons (PEPs)?

While subscribing to commercial databases can aid in identifying PEPs, this action alone does not provide a comprehensive understanding of the risks associated with their wealth sources or transaction behaviors. Merely detecting PEPs without further investigation does not mitigate risks effectively.

Requiring regulatory approval may be a part of compliance measures, but it does not directly address how institutions should understand the financial activities of PEPs. This measure alone does not provide insight into the source of wealth and funds, which is critical for risk assessment.

Increasing monitoring thresholds may help manage the volume of transactions flagged for review, but it risks overlooking suspicious activities by PEPs. This approach could inadvertently reduce scrutiny on high-risk transactions, which is counterproductive to effective risk mitigation.