Which action should financial institutions with cross border correspondent banking activity be required to perform according to the Financial Action Task Force 40 Recommendations?

Question

Options

• AGather a list of their politically exposed customers
• BIdentify natural persons who own or control more than 5%
• CObtain senior management approval before establishing the relationship
• DObtain a third party independent review of the respondent's anti-money laundering program

• A
  3% (1)
• B
  9% (3)
• C
  72% (23)
• D
  16% (5)

Explanation

According to the Financial Action Task Force (FATF) 40 Recommendations, financial institutions should obtain senior management approval before establishing new correspondent banking relationships. This is to ensure that the financial institution has assessed the money laundering and terrorist financing risks associated with the respondent institution and has applied appropriate due diligence measures. The FATF also requires financial institutions to gather sufficient information about the respondent institution, its business activities, its reputation, its supervision, and its anti-money laundering and counter-terrorist financing policies and procedures. Additionally, the FATF recommends that financial institutions document the respective responsibilities of each institution and prevent the use of their accounts by shell banks.

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