CAMS-FCI practice question 24 of 25

SAR/STR NARRATIVE A SAR/STR has been submitted on five transactions conducted on the correspondent banking relationship with ABC Bank. Client…

Full set: 101 questions
SAR/STR NARRATIVE A SAR/STR has been submitted on five transactions conducted on the correspondent banking relationship with ABC Bank. Client Information: Remitter information: DEF Oil Resource Ltd. is the oldest member of the DEF Group. It was founded in 1977 as a general trading business with a primary focus on exports from Africa and North Americ a. The group has business activities that span the entire energy value chain. Their core field of endeavor is centered within the oil and gas industry and its associated sub-sectors. Beneficiary Information: As per the response received from ABC Bank, it was determined that the beneficiaries are related to DEF Oil Resource Ltd. These were created by DEF Oil Resource Ltd. to purchase property in a foreign country on behalf of their senior management as part of a bonus scheme. The purpose behind this payment was for purchase of property in another country. Payment Reference: ABCXXXXX31PZFG2H ABCXXXXXX51PQGEH ABCXXXXXX214QWVG ABCXXXXXX41PSXA2 ABCXXXXXX815QWS3 Concerns: • We are unsure about the country of incorporation of the beneficiaries. • We are concerned about the transactional activity since the payment made towards entities (conducted on behalf of individuals) appears to be possible tax evasion. • There appears to be an attempt to conceal the identity of individuals (senior management), which again raises concerns about the source of funds. • Referring to the response received from ABC Bank, we are unclear about the ultimate beneficiary of funds. • The remitter is involved in a high-risk business, (i.e., oil and crude products trading), and the beneficiary is involved in a real estate business which again poses a higher risk. The monitoring system of the correspondent institution flags the transaction as suspicious activity. The correspondent bank needs to send a request for information to the respondent bank. Which elements should be included in the request? (Select Three.)
Answer options
A: Details of DEF Oil Resource Ltd parent company and the name(s) of the beneficial owner(s) Correct answer
B: Full transaction history of the correspondent bank's customer
C: The account profile of the customer and their KYC data Correct answer
D: The respondent bank's customer's senior management bonus plan
E: The contract pertaining to the purchase of property in another country Correct answer
F: The last 6 months of transactional history
Correct Answer:
A. Details of DEF Oil Resource Ltd parent company and the name(s) of the beneficial owner(s); C. The account profile of the customer and their KYC data; E. The contract pertaining to the purchase of property in another country
Explanation

When a correspondent bank identifies suspicious activity, its Request for Information (RFI) to the respondent must be targeted to resolve the specific concerns. The concerns here are the concealment of individuals, potential tax evasion, and the legitimacy of the transaction. Therefore, the RFI should seek to identify the ultimate beneficial owners (A), understand the due diligence performed by the respondent bank (C), and verify the transaction's stated purpose with supporting documentation like a contract (E). These elements directly address the identified red flags.

Why Incorrect

B. Full transaction history of the correspondent bank's customer: The correspondent's customer is the respondent bank (ABC Bank); the correspondent already has this data.
D. The respondent bank's customer's senior management bonus plan: This is an internal corporate document that is likely confidential, overly broad, and not necessary to verify the transaction's purpose.
F. The last 6 months of transactional history: This request is too broad and not specifically targeted at the five suspicious transactions in question.

References

1. The Wolfsberg Group. (2020). Correspondent Banking Due Diligence Questionnaire (CBDDQ). (See Section 2: "Ownership & Management" and Section 5: "AML, CTF & Sanctions Programme," which establish the expectation of transparency regarding beneficial ownership and KYC processes that a respondent bank must provide).

2. ACAMS. (2023). CAMS Certification Study Guide. Chapter 2: The International AML/CFT Framework. The section on correspondent banking risks emphasizes the need for enhanced due diligence, including understanding the respondent bank's customer base and its AML controls ("know your customer's customer").

3. Financial Action Task Force (FATF). (2016). Guidance on Correspondent Banking Services. FATF, Paris, France. (See paragraphs 38-41, which detail the information a correspondent bank should obtain, including the nature of the respondent's customer base and the quality of its AML/CFT supervision).

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