Exposures through a third party

1. An ADI must apply a risk weight of 150 per cent to credit exposures originated through a third party, where the ADI:
   1. does not undertake the credit assessment and approval of the underlying borrower under its own credit risk policies and processes;
   2. is unable to administer the workout or default processes; and
   3. does not have direct recourse to the third party or underlying borrower in the event of default.

The risk weight prescribed in this paragraph must be applied to all such arrangements irrespective of the characterisation of the third party or underlying borrower.