Which risk classification is typically associated with a high compliance requirement?

The classification associated with a high compliance requirement is typically that of a bank. Banks are heavily regulated entities due to the nature of their operations, which involve handling large sums of money, safeguarding customer deposits, and ensuring the integrity of the financial system. Compliance regulations for banks are stringent and encompass various laws and guidelines aimed at preventing issues such as money laundering, fraud, and financial instability.

Banks must adhere to regulations such as the Bank Secrecy Act (BSA), the Dodd-Frank Act, and various anti-money laundering (AML) laws, all of which require comprehensive internal controls, reporting, and ongoing training for employees. These stringent requirements are designed to mitigate risks associated with financial transactions and protect customers and the economy.

In contrast, other options such as a mom and pop coffee shop, an advertising agency, and a software startup typically operate in industries with less regulatory scrutiny, meaning their compliance requirements are relatively lower. While they still need to adhere to local and industry-specific regulations, they do not face the same level of oversight and compliance obligations as banks do.