CAMS · Question #417
A customer opens a corporate account with a broker-dealer on behalf of several beneficial owners, with a stated long-term investment goal. The customer deposits $25.5 million into the account and…
The correct answer is B. A corporate account is opened on behalf of several beneficial owners D. The customer's stated investment goal is not reflective of account activity. A corporate account opened on behalf of several beneficial owners is a red flag because it may indicate an attempt to conceal the identity or source of funds of the ultimate beneficiaries. The customer's stated investment goal of long-term investment is not reflective of the…
Question
A customer opens a corporate account with a broker-dealer on behalf of several beneficial owners, with a stated long-term investment goal. The customer deposits $25.5 million into the account and three days later transfers $5 million to an overseas bank. Shortly thereafter, the customer begins making numerous purchases of pesos. The compliance officer receives a query regarding the movement of funds. Within a month of account opening, the customer depletes the account. Which two red flags should prompt the firm's compliance officer to take action? (Choose two.)
Options
- AThe new account deposit is $25.5 million
- BA corporate account is opened on behalf of several beneficial owners
- CThe compliance officer receives the query regarding the movement of funds
- DThe customer's stated investment goal is not reflective of account activity
How the community answered
(34 responses)- A9% (3)
- B74% (25)
- C18% (6)
Explanation
A corporate account opened on behalf of several beneficial owners is a red flag because it may indicate an attempt to conceal the identity or source of funds of the ultimate beneficiaries. The customer's stated investment goal of long-term investment is not reflective of the account activity, which involves frequent and large transfers, currency exchanges, and account depletion within a short period of time. This discrepancy may suggest that the customer is using the account for money laundering or other illicit purposes.
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