CAMS · Question #479
A company service provider in Country A sets up a corporate structure for a client from Country B, which is known for corruption. The corporate structure includes a holding company in Country A with…
The correct answer is A. The substantial growth in wealth during a short period of time. C. The client is a family member of a politically exposed person from a country known for corruption. According to the Financial Action Task Force (FATF), substantial growth in wealth during a short period of time is a red flag for money laundering or terrorist financing. Additionally, when a client is a family member of a politically exposed person (PEP) from a country known…
Question
A company service provider in Country A sets up a corporate structure for a client from Country B, which is known for corruption. The corporate structure includes a holding company in Country A with a bank account in one of the international banks located there. During on-boarding, the client's wealth was estimated at 7.52 million USD. Shortly thereafter, the client's father became president of Country B During a routine client review two years later, it was identified that the client's wealth had grown to 510 million USD. Which are two red flags that indicate money laundering or financial terrorism? (Select Two.)
Options
- AThe substantial growth in wealth during a short period of time.
- BThe client is from a country known for corruption.
- CThe client is a family member of a politically exposed person from a country known for corruption.
- DThe holding company is in Country A with a bank account in one of the international banks.
- EThe clients account has not been reviewed for 2 years.
How the community answered
(30 responses)- A70% (21)
- B3% (1)
- D7% (2)
- E20% (6)
Explanation
According to the Financial Action Task Force (FATF), substantial growth in wealth during a short period of time is a red flag for money laundering or terrorist financing. Additionally, when a client is a family member of a politically exposed person (PEP) from a country known for corruption, it raises concerns about the potential for corruption, bribery, or influence peddling. In this case, the client's father became the president of Country B, which makes him a PEP.
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