ACAMS Updated CAMS Exam Questions and Answers by obi

 the specialist should inform the bank’s senior legal advisor of the situation and seek guidance on how to handle the legal request and the internal memos. The specialistshould not take any action that could compromise the integrity of the legal request, the bank’s anti-money laundering program, or the specialist’s own professional obligations. The specialist should not place the memos in his personal files, as this could be seen as hiding or tampering with evidence. The specialist should not ask the bank president to document his instructions, as this could create a conflict of interest or a perception of undue influence. The specialist should not call the law enforcement agent and suggest he modify the legal request, as this could be seen as interfering with the investigation or tipping off the account holder.

According to the FFIEC BSA/AML Manual1, a U.S. bank should have policies, procedures, and processes to monitor and report suspicious activity associated with U.S. dollar drafts, which are bank drafts or checks denominated in U.S. dollars and made available at foreign financial institutions. These drafts are drawn on a U.S. correspondent account by a foreign financial institution and can be used to facilitate money laundering or terrorist financing. The manual states that "[t]he potential for facilitating money laundering or terrorist financing, OFAC violations, and other serious crimes increases when a U.S. bank is unable to identify and adequately understand the transactions of the ultimate users (all or most of whom are outside of the United States) of its account with a foreign correspondent."2 Therefore, the compliance officer should notify Foreign Bank A of the discovery and seek documentation supporting Foreign Bank A was collusive and a willing partner with Foreign Bank B in the activity, as this would indicate a breach of the correspondent banking agreement and a possible violation of U.S. laws and regulations. The compliance officer should also document the findings and actions taken, and escalate the matter to senior management and the board of directors as appropriate.

The other options are not the best steps for the compliance officer to take. Option A is not relevant, as the issue is not related to tax evasion, but to money laundering or terrorist financing. Option B is premature, as the compliance officer should first verify the nature and extent of the suspicious activity and the involvement of Foreign Bank A before deciding whether to terminate or restrict the correspondent relationship. Option D is not feasible, as the compliance officer does not have the authority or the means to notify other U.S. financial institutions who maintain U.S. dollar correspondent accounts forForeign Bank A and Foreign Bank B, and this could also interfere with ongoing investigations or law enforcement actions.

According to the Anti-Money Laundering Specialist (the 6th edition) study guide, when a financial institution receives a law enforcement request to keep an account open that may be associated with suspicious or criminal activity, it should take the following two steps:

Maintain account records for at least five years after the request expires. This is to ensure that the financial institution can provide evidence of its compliance with the law enforcement request and the applicable anti-money laundering regulations. The five-year retention period isbased on the international standard set by the Financial Action Task Force (FATF) and adopted by many jurisdictions12.

Ask for a written request from the law enforcement agency that defines the duration. This is to protect the financial institution from potential liability and to clarify the scope and purpose of the law enforcement request. The written request should specify the time period for which the account should remain open, the reason for the request, the contact information of the law enforcement officer, and the legal authority for the request34.

shell banks are banks that have no physical presence in any country and are not affiliated with any regulated financial institution. They are often used by money launderers and terrorist financiers to hide their illicit activities and evade regulatory oversight. The USA PATRIOT Act prohibits US financial institutions from opening or maintaining correspondent accounts with shell banks, and requires them to take reasonable steps to ensure that their foreign correspondent banks do not provide services to shell banks12. Therefore, the US does not have jurisdiction over shell banks operating in foreign jurisdictions, unless they are involved in transactions that violate US laws or sanctions.