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CAMS · Question #170

An audit completed the previous week revealed that a private banking customer submitted incomplete documents when establishing an account earlier in the year. The customer received weekly electronic f

The correct answer is D. Postpone the follow-up on the audit finding.. When multiple AML red flags converge simultaneously, the officer must sequence actions to avoid inadvertently tipping off connected parties before an investigation is properly established.

Conducting and Responding to Investigations

Question

An audit completed the previous week revealed that a private banking customer submitted incomplete documents when establishing an account earlier in the year. The customer received weekly electronic fund transfers from a narcotic-producing jurisdiction. While the Relationship Manager who opened the account is on leave for 5 weeks, the customer requests that the institution remit a substantial sum to a country that represents a high risk of money laundering. The Relationship Manager is a friend of the anti-money laundering specialist. Which of the following should the anti-money laundering officer do first?

Options

  • AFile a suspicious transaction report with the competent authority.
  • BInvestigate the transfer of funds.
  • CSuspend the transfer until the relationship manager returns.
  • DPostpone the follow-up on the audit finding.

How the community answered

(28 responses)
  • A
    4% (1)
  • C
    11% (3)
  • D
    86% (24)

Why each option

When multiple AML red flags converge simultaneously, the officer must sequence actions to avoid inadvertently tipping off connected parties before an investigation is properly established.

AFile a suspicious transaction report with the competent authority.

Filing an STR is an appropriate eventual action but is premature before gathering sufficient evidence through investigation to substantiate the suspicion with required specificity.

BInvestigate the transfer of funds.

Investigating the transfer is necessary, but the most immediate first step is ensuring that the audit follow-up does not inadvertently alert connected parties and compromise the confidentiality of the process.

CSuspend the transfer until the relationship manager returns.

Suspending the transfer for five weeks until the RM returns is not a compliant or proportionate AML response and improperly substitutes a personal scheduling matter for a required compliance decision.

DPostpone the follow-up on the audit finding.Correct

The AML officer should first postpone the audit follow-up because immediately contacting the customer or parties connected to the account about the incomplete documents could constitute a 'tipping off' breach, alerting the customer or the RM (who has a personal relationship with the AML specialist) to the investigation. Preserving the confidentiality of the investigation takes procedural priority before any audit contact or formal reporting step is initiated.

Concept tested: AML officer action sequencing and tipping off avoidance

Source: https://www.fatf-gafi.org/en/publications/Fatfrecommendations/The-forty-recommendations.html

Topics

#private banking#incomplete documentation#high-risk transfers#audit findings

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