CAMS · Question #530
An anti-money laundering consultant audits a bank's current anti-money laundering policies, procedures and controls. The bank serves high-income, high net-worth clients who include non- residents…
The correct answer is D. Revise the procedures to better assess ongoing customer activity. Internal controls, independent testing, designated compliance officer, and training. Internal controls are policies, procedures, and processes that help prevent, detect, and report money laundering and terrorist financing activities. One of the essential components of internal…
Question
An anti-money laundering consultant audits a bank's current anti-money laundering policies, procedures and controls. The bank serves high-income, high net-worth clients who include non- residents and offshore businesses. During a review of the custom list, the anti-money laundering consultant determines that he and the bank have mutual clients. The bank's written anti-money laundering program includes a process for the bank to establish the identity of the person with whom they conduct business, but does not address monitoring of customer account activity. The consultant should recommend the bank:
Options
- AContinue to follow the current written anti-money laundering program.
- BFocus on high-risk customer acceptance procedures.
- CReduce the risk rating on the mutual customers.
- DRevise the procedures to better assess ongoing customer activity.
How the community answered
(48 responses)- A6% (3)
- B15% (7)
- C4% (2)
- D75% (36)
Explanation
Internal controls, independent testing, designated compliance officer, and training. Internal controls are policies, procedures, and processes that help prevent, detect, and report money laundering and terrorist financing activities. One of the essential components of internal controls is customer due diligence (CDD), which involves identifying and verifying the customer, understanding the nature and purpose of the customer relationship, and conducting ongoing monitoring of customer transactions and risk profiles. Ongoing monitoring is crucial for detecting and reporting suspicious activities, updating customer information, and reassessing customer risk ratings. In this case, the bank's written AML program does not address monitoring of customer account activity, which is a significant gap in its internal controls. The bank serves high-income, high net-worth clients who include non-residents and offshore businesses, which are considered high-risk customers for AML purposes. The bank should have enhanced due diligence (EDD) measures for these customers, such as obtaining additional information, conducting more frequent reviews, and applying stricter transaction limits. The fact that the consultant and the bank have mutual clients does not affect the risk rating or the due diligence requirements of those customers. Therefore, the consultant should recommend the bank to revise its procedures to better assess ongoing customer activity and comply with the AML standards.
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