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 tradesanctions against targeted foreign countries, regimes, terrorists, and other threats to the national security, foreign policy, or economy of the United States1. 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 relationships2. Therefore, the primary bank should terminate the relationship with the correspondent bank to avoid any potential liability or penalties.
The other options are not as compelling as A, because they do not necessarily indicate that the correspondent bank is violating any laws or regulations, or that the primary bank is exposed to significant risks. Option B could be a cause for concern, but it does not imply that the correspondent bank is involved in any wrongdoing, or that the compliance officer has any influence over the correspondent banking activities.
Option C could suggest that the correspondent bank is engaging in unusual or suspicious transactions, but it does not mean that the primary bank should terminate the relationship immediately, as it could also be a result of changes in the correspondent bank's business profile, customer base, or market conditions. Option D is a normal and expected part of the correspondent banking relationship, as the primary bank has the right and obligation to request transactional details from the correspondent bank to verify the legitimacy and source of funds, and to identify any red flags or anomalies3.
:
1: OFAC website
2: ACAMS Study Guide for the CAMS Certification Examination, 6th Edition, Chapter 5, page 178
3: ACAMS CAMS Certification Video Training Course, Module 5, Lesson 4
4: ACAMS CAMS Certification Practice Exam, Question 93
5 https://home.treasury.gov/policy-issues/office-of-foreign-assets-control-sanctions-programs-and-information
6 https://www.acams.org/en/cams-certification-package-6th-edition
7 https://www.exam-labs.com/video-training/acams-cams
8 https://vceplus.io/exam-cams/

The Basel Committee on Banking Supervision (BCBS) is an international body that sets standards and guidelines for the prudential regulation of banks. One of its key publications is the Customer Due Diligence for Banks, which outlines the essential elements of Know Your Customer (KYC) standards for banks.
According to this document, customer acceptance, customer due diligence, and record-keeping policies and procedures should be changed as necessary to address variations in risk among each line of business within the organization. This means that banks should adopt a risk-based approach to KYC, taking into account the different types, levels, and sources of risk associated with different customers, products, services, transactions, and delivery channels. By doing so, banks can allocate their resources more efficiently and effectively, and mitigate the potential for money laundering, terrorist financing, and other financial crimes.
References:
Customer Due Diligence for Banks, BCBS, October 2001, p. 5, 14-15.
The Basel Committee: The Important Set Of International Banking Regulations, Financial Crime Academy, November 2023.

Ongoing Due Diligence: FATF emphasizes the importance of continuous monitoring of business relationships and transactions. This involves regularly assessing the risk associated with a customer and ensuring that the information remains up-to-date. It includes monitoring transactions for any suspicious activity or red flags.
Beneficial Owners: Identifying beneficial owners is crucial, but it must be done with verification of their true identity. This is part of the initial due diligence process.
Risk Assessment: Conducting risk assessments is essential, but it is not specific to customer due diligence.
Risk assessment applies broadly to anti-money laundering (AML) programs.
Products and Services Suitability: While understanding the suitability of products and services is relevant, it is not a direct measure within customer due diligence.
References:
Anti-Money Laundering Specialist (the 6th edition) resources.
FATF 40 Recommendations (Recommendation 10: Customer Due Diligence).1
CFATF Technical Articles (Customer Due Diligence Measures).2

The General Data Protection Regulation (GDPR) is a regulation issued by the European Union (EU) that sets out requirements for the processing and protection of personal data. It applies to any company that processes personal data of individuals in the EU, and requires organizations to take appropriate measures to protect the personal data of individuals, such as implementing appropriate security measures, limiting the amount of data collected and stored, and providing clear explanations of how the data will be used. In the context of financial crime investigations, the GDPR requires organizations to ensure the security and confidentiality of personal data that they collect and process, and to take measures to ensure that the data is used only for the purpose of the investigation and not for any other purpose.

According to the ACAMS study guide, one of the red flags for money laundering in cash-intensive businesses is "the presence of privately-owned ATMs on the premises" (p. 222). This could indicate that the business is using the ATM to deposit or withdraw large amounts of cash from illicit sources, or to facilitate the movement of funds across borders. The other options are not necessarily indicative of money laundering risk, as they could be explained by legitimate factors such as the change in customer preferences, the economic situation, or the expansion of the business.
:
ACAMS. (2020). Study Guide for the Certification Examination for Anti-Money Laundering Specialists (6th ed.). Miami, FL: ACAMS.
CFI. (2023)Money Laundering - Overview, How It Works, Example 1. Retrieved from
https://corporatefinanceinstitute.com
CALERT. (2016)How Do Criminals Launder Money Through a Restaurant? 2. Retrieved from https://calert.
info