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CAMS · Question #321

A profitable commercial customer who operates an import-export business has multiple accounts with the same institution at branches m different locations. The customer receives funds from a…

The correct answer is D. Develop a system to monitor all the activity. When a customer exhibits multiple elevated AML risk indicators - high-risk jurisdiction links, multiple accounts at separate branches, and frequent inter-account transfers - the appropriate institutional response is to implement consolidated monitoring across all accounts.

AML/CFT Compliance Programs

Question

A profitable commercial customer who operates an import-export business has multiple accounts with the same institution at branches m different locations. The customer receives funds from a jurisdiction perceived as highly corrupt according to Transparency International ratings. The customer makes frequent transfers among the accounts and prefers to manage the accounts separately. What should the institution do to mitigate the risk associated with these accounts?

Options

  • AFile a suspicious transaction report
  • BDiminish the importance of the subjective Transparency International rating
  • CConduct a trade-price manipulation analysis
  • DDevelop a system to monitor all the activity

How the community answered

(35 responses)
  • A
    14% (5)
  • B
    3% (1)
  • C
    6% (2)
  • D
    77% (27)

Why each option

When a customer exhibits multiple elevated AML risk indicators - high-risk jurisdiction links, multiple accounts at separate branches, and frequent inter-account transfers - the appropriate institutional response is to implement consolidated monitoring across all accounts.

AFile a suspicious transaction report

Filing an STR is premature at this stage; the scenario describes risk indicators that warrant enhanced monitoring and analysis, not an immediate report before activity has been reviewed.

BDiminish the importance of the subjective Transparency International rating

Minimizing the Transparency International corruption rating would be inappropriate, as it is an internationally recognized risk indicator that regulators and examiners expect institutions to incorporate into their risk assessments.

CConduct a trade-price manipulation analysis

Trade-price manipulation analysis addresses only one specific typology relevant to import-export businesses and does not provide the comprehensive risk mitigation needed across all the identified risk factors in this scenario.

DDevelop a system to monitor all the activityCorrect

Developing a monitoring system across all the customer's accounts gives the institution a consolidated view necessary to detect unusual patterns that might be obscured when accounts are managed separately at different branches. This approach satisfies the AML requirement for ongoing due diligence and enhanced monitoring of higher-risk customers, and positions the institution to make an informed STR filing decision if suspicious activity is identified.

Concept tested: AML risk mitigation through consolidated account monitoring

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

Topics

#transaction monitoring#geographic risk#multi-account monitoring#customer risk assessment

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