CAMS · Question #87
CAMS Question #87: Real Exam Question with Answer & Explanation
The correct answer is A. The correspondent bank has opened branches in a country on the Office of Foreign Assets. The correspondent bank has engaged in a high-risk activity that could expose the primary bank to sanctions violations, reputational damage, and regulatory scrutiny. The Office of Foreign Assets Control (OFAC) administers and enforces economic and trade sanctions against targeted
Question
Options
- AThe correspondent bank has opened branches in a country on the Office of Foreign Assets
- BThe compliance officer at the correspondent bank is currently being investigated due to bribery
- CThe correspondent bank has recently exceeded acceptable limits in the primary banks' recently
- DThe primary institution has requested transactional details from the correspondent bank to aide in
Explanation
The correspondent bank has engaged in a high-risk activity that could expose the primary bank to sanctions violations, reputational damage, and regulatory scrutiny. The Office of Foreign Assets Control (OFAC) administers and enforces economic and trade sanctions against targeted foreign countries, regimes, terrorists, and other threats to the national security, foreign policy, or economy of the United States. Opening branches in a country on the OFAC list indicates that the correspondent bank is not complying with the sanctions requirements, and could be facilitating transactions for sanctioned entities or individuals. This would pose a serious risk for the primary bank, which is responsible for conducting due diligence and monitoring of its correspondent banking relationships. Therefore, the primary bank should terminate the relationship with the correspondent bank to avoid any potential liability or penalties.
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