ACAMS - Association of Certified Anti-Money Laundering Specialists AML in Correspondent Banking Questions and Answers

Question 1

A correspondent bank in a low-risk jurisdiction offers a "Payable Through Account" (PTA) to a respondent bank in a high-risk jurisdiction.
What is the PRIMARY money laundering risk associated with this type of account?

Accepted Answer

The respondent bank's customers have direct access to the correspondent account, often without being subject to the correspondent bank's AML controls.

Answer

The fees generated from the PTA are excessively high, indicating potential collusion.

Answer

The PTA can only be denominated in the local currency of the respondent bank.

Answer

The correspondent bank is required to file a SAR for every transaction passing through the PTA.

Question 2

According to international standards like the USA PATRIOT Act and FATF Recommendations, under which circumstance may a financial institution maintain a correspondent account for a shell bank?

Accepted Answer

Under no circumstances; financial institutions are absolutely prohibited from dealing with unaffiliated shell banks.

Answer

If the shell bank is licensed in a FATF-member country.

Answer

If the shell bank is an affiliated and supervised entity within a regulated financial group.

Answer

If the correspondent relationship is subject to annual enhanced due diligence and board approval.

Question 3

A large bank is establishing a new correspondent relationship with a foreign financial institution. Which of the following is a critical first step in conducting due diligence on the respondent bank?

Accepted Answer

Assessing the respondent bank's AML/CFT policies and controls to determine their adequacy and effectiveness.

Answer

Obtaining a list of the respondent bank's high-net-worth individual clients.

Answer

Verifying the physical address of every branch operated by the respondent bank.

Answer

Requiring the respondent bank to conduct all transactions in the correspondent bank's home currency.

Question 4

Bank A is a correspondent bank for Bank B. During a review, Bank A discovers that a significant volume of transactions for Bank B are on behalf of Bank C, a smaller financial institution in another country that is a customer of Bank B. This arrangement is best described as:

Accepted Answer

A nested or downstream correspondent banking relationship.

Answer

A standard Payable Through Account (PTA).

Answer

A prohibited shell bank activity.

Answer

An acceptable risk if Bank C is in a low-risk jurisdiction.

Question 5

When a financial institution is conducting a risk assessment of a potential respondent bank for a new correspondent relationship, which of the following factors is LEAST likely to be a primary driver of the inherent AML risk rating?

Accepted Answer

The respondent bank's most recently published annual marketing budget.

Answer

The respondent bank's customer base and the geographic markets it serves.

Answer

The quality and effectiveness of banking supervision in the respondent bank's home country.

Answer

The purpose of the account and the anticipated types and volume of transactions.

Question 6

Enhanced Due Diligence (EDD) for a correspondent banking relationship would be most appropriate when the respondent bank:

Accepted Answer

is located in a jurisdiction known for high levels of corruption and weak AML/CFT supervision.

Answer

has been in operation for less than five years.

Answer

is a large, publicly traded institution in a major financial center.

Answer

requests to open an account denominated in a foreign currency.

A correspondent bank in a low-risk jurisdiction offers a "Payable Through Account" (PTA) to a respondent bank in a high-risk jurisdiction.What is the PRIMARY money laundering risk associated with this type of account?

A correspondent bank in a low-risk jurisdiction offers a "Payable Through Account" (PTA) to a respondent bank in a high-risk jurisdiction.
What is the PRIMARY money laundering risk associated with this type of account?