CAMS · Question #953
The compliance officer at an EU bank is investigating one of the customer accounts maintained with the bank for the last two years. According to bank records, the company's primary economic activity…
The correct answer is D. The EU bank received no originator or beneficiary information for the wire transfers. The absence of originator and beneficiary information on wire transfers is the most critical finding because it constitutes a direct violation of FATF Recommendation 16 and prevents the bank from conducting any meaningful due diligence on the flow of funds.
Question
The compliance officer at an EU bank is investigating one of the customer accounts maintained with the bank for the last two years. According to bank records, the company's primary economic activity is import and export of petrochemical products Over a period of one year, the account transactions have exceeded US$500 million with various high-value inward wire transfers received from suppliers in Yemen followed by outward wire transfers to counterparties in Azerbaijan. Which factor should give the compliance officer the greatest concern If observed in the investigation?
Options
- AMedia searches reveal a report that the customer was accused of misconduct three years ago.
- BThe EU bank considers the origin and destination countries Involved in the transactions to be
- CThe customer's activity includes multiple cross-border transactions involving various
- DThe EU bank received no originator or beneficiary information for the wire transfers.
- EThe customer specializes in the import and export of petrochemical products.
How the community answered
(27 responses)- A11% (3)
- B4% (1)
- C4% (1)
- D81% (22)
Why each option
The absence of originator and beneficiary information on wire transfers is the most critical finding because it constitutes a direct violation of FATF Recommendation 16 and prevents the bank from conducting any meaningful due diligence on the flow of funds.
A media report of alleged misconduct three years ago is a concern worth noting but is historical, unverified, and less actionable than a current, ongoing regulatory deficiency in active transactions.
High-risk geographic exposure to Yemen and Azerbaijan is a relevant risk factor, but country risk alone is subordinate to a concrete failure to obtain legally mandated transaction data.
Multiple cross-border transactions are consistent with a legitimate import/export business and do not on their own represent an anomaly requiring the greatest concern.
FATF Recommendation 16 (the Travel Rule) requires financial institutions to obtain, hold, and transmit complete originator and beneficiary information with all wire transfers. Receiving no such information means the bank cannot verify the parties involved, cannot screen against sanctions lists, and cannot assess whether the transfers are consistent with the customer's stated business activity - making this a regulatory violation and a direct enabler of potential money laundering or terrorist financing.
Petrochemical import/export is a higher-risk industry category, but the nature of the customer's business is a background risk factor rather than an acute compliance violation.
Concept tested: FATF Recommendation 16 Travel Rule wire transfer obligations
Source: https://www.fatf-gafi.org/en/publications/Fatfrecommendations/Fatf-recommendations.html
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