Financial institutionsmust close accounts that violate sanctions laws or pose a severe AML risk.
* Option C (Correct):Doing business with Specially Designated Nationals (SDNs) violates U.S.
OFAC and EU sanctions, requiring account closure.
* Option A (Incorrect):Multiple SARs do not always require account closure; the institution may continue monitoring the customer.
* Option B (Incorrect):Tuition payments are normal transactions and do not justify account closure.
* Option D (Incorrect):A civil subpoena does not imply financial crime and does not require closure.
Key Account Closure Triggers:
* Violation of OFAC, EU, or UN sanctions laws.
* Confirmed criminal activity (e.g., fraud, money laundering, terrorist financing).
* Regulatory directive or legal requirement to terminate the account.
Best Practices for Account Closure:
* Document the justification for closure (e.g., sanctions compliance, AML concerns).
* Notify the customer in a manner that does not constitute "tipping off."
* File SARs where required before closing high-risk accounts.
Reference:
OFAC Sanctions Compliance Guidelines
FATF Recommendation 6 (Targeted Financial Sanctions)
Wolfsberg Group AML Account Closure Best Practices

Economic sanctions are penalties imposed by one or more countries against another country, group, or individual for violatinginternational norms or threatening national interests1. The ultimate goal of economic sanctions is to protect national security by changing the behavior or policies of the target, or by weakening its capabilities or resources2. Sanctions can be used to advance various foreignpolicy objectives, such as counterterrorism, nonproliferation, democracy promotion, human rights protection, conflict resolution, and cybersecurity1. Sanctions can take different forms, such as travel bans, asset freezes, trade embargoes, arms restrictions, and aid reductions1. Sanctions can be applied unilaterally by one country, or multilaterally by a coalition of countries or an international organization, such as the United Nations or the European Union1.
:
1: What Are Economic Sanctions? | Council on Foreign Relatio
2: How Economic Sanctions Work - Investopedia
Reference: https://www.investopedia.com/articles/economics/10/economic-sanctions.asp

According to the ACAMS CAMS Certification Study Guide (6th edition), a financial institution (FI) should update its ML/TF risk assessment when there are changes in its business activities, customer base, or operating environment that may affect its exposure to ML/TF risks1 Some examples of such changes are:
* When new products, services or customer types are introduced: New products, services or customer types may introduce new or increased ML/TF risks that the FI may not have previously considered or addressed. For example, offering online banking, prepaid cards, or cross-border remittances may create new opportunities for money launderers or terrorist financiers to exploit the FI's systems and processes. Therefore, the FI should assess the ML/TF risks associated with the new products, services or customer types and implement appropriate controls to mitigate them12
* When the institution faces a merger or acquisition: A merger or acquisition may result in the FI inheriting the ML/TF risks of the other entity, as well as the potential liabilities and reputational damage that may arise from any ML/TF issues or violations. Therefore, the FI should conduct a due diligence on the other entity's ML/TF risk assessment, policies, procedures, and controls, and identify any gaps or weaknesses that need to be addressed. The FI should also integrate and harmonize the ML
/TF risk assessment and compliance programs of the merged or acquired entity with its own13: 1: ACAMS CAMS Certification Study Guide (6th edition), page 32. 2: Money laundering/terrorism financing risk assessment | AUSTRAC4 3: MONEY LAUNDERING & TERRORIST FINANCING (ML/TF) RISK ASSESSMENT METHODOLOGY5, page 4.
Reference: https://www.fatf-gafi.org/media/fatf/content/images/National_ML_TF_Risk_Assessment.pdf

Along-term, root cause-based approach ensures AML deficiencies are fully remediated.
* Option C (Correct):Addressing root causes ensures the institution remains compliant and prevents recurring violations.
* Option A (Incorrect):Consulting with an FIU is unnecessary for internal remediation plans.
* Option B (Incorrect):Short-term fixes do not resolve systemic AML issues.
* Option D (Incorrect):AML compliance improvements may require investment-cost-cutting should not compromise compliance.
Best Practices for AML Audit Remediation:
* Conduct root cause analysis before implementing corrective measures.
* Develop a long-term compliance improvement plan.
* Allocate sufficient resources for sustainable AML enhancements.
Reference:
FATF Recommendation 18 (AML Compliance & Internal Controls)
Wolfsberg Group Guidance on AML Audit Remediation
Basel Committee's AML Risk Management Guidelines

According to the Egmont Group of Financial Intelligence Units, which is a network of over 160 FIUs that promotes international cooperation and information exchange, FIUs should share information with foreign FIUs spontaneously, without prior request, when they have reasonable grounds to believe that the information is relevant for the receiving FIU1. This principle is also reflected in the FATF Recommendation 40, which states that FIUs should exchange information with other FIUs, especially when this information concerns money laundering, predicate offences, or terrorist financing2. Spontaneous information sharing can enhance the effectiveness of FIUs, as it can help to identify new leads, trends, patterns, or typologies, as well as to prevent or disrupt criminal activities1.
The other options are not consistent with the best practices of FIU information sharing. For example:
* In accordance with Wolfsberg guidelines, submit the information to the other FIU in written form. The Wolfsberg Group is an association of 13 global banks that issues guidance and standards on anti-money laundering and counter-terrorist financing. However, the Wolfsberg guidelines are not binding for FIUs, and they do not specify the format or channel of informationexchange between FIUs3. Moreover, submitting information in written form may not be the most efficient or secure way of communication, as it may cause delays, errors, or breaches of confidentiality.
* Take no action until contacted by the other FIU. This option contradicts the principle of spontaneous information sharing, as it implies that the FIU with the relevant information will wait for a formal request from the other FIU, instead of proactively sharing the information. This may result in missed opportunities, inefficiencies, or failures in detecting or preventing money laundering or terrorist financing.
* Request approval from the Egmont Group prior to sharing the information with the other FIU. This option is unnecessary and impractical, as the Egmont Group does not have the authority or the capacity to approve or deny individual information requests or exchanges between FIUs. The Egmont Group provides a platform and a framework for FIU cooperation, but it does not interfere with the operational autonomy or the bilateral relations of its members4.
:
FATF Recommendation 40: Other Forms of International Co-operation
Egmont Group of Financial Intelligence Units Principles for Information Exchange Between Financial Intelligence Units Wolfsberg Group Egmont Group