The two red flags indicating potential engagement of a bank employee in money laundering are A. Lavish lifestyle that cannot be supported by an employee's salary, and E. Maintaining friendships with customers and going to restaurants, games, and other events. A bank employee who has a lifestyle that cannot be supported by their salary could be receiving money from illicit activities. Similarly, if the employee is maintaining friendships and going to social events with customers, they could be receiving money in exchange for providing special services. These behaviors should be monitored closely to ensure that the employee is not engaging in activities that could be linked to money laundering.

According to the Financial Action Task Force (FATF) 40 Recommendations, financial institutions should obtain senior management approval before establishing new correspondent banking relationships1. This is to ensure that the financial institution has assessed the money laundering and terrorist financing risks associated with the respondent institution and has applied appropriate due diligence measures. The FATF also requires financial institutions to gather sufficient information about the respondent institution, its business activities, its reputation, its supervision, and its anti-money laundering and counter-terrorist financing policies and procedures1. Additionally, the FATF recommends that financial institutions document the respective responsibilities of each institution and prevent the use of their accounts by shell banks1.
1: Guidance on Correspondent Banking Services, FATF, 2016
Reference: https://www.fatf-gafi.org/media/fatf/documents/recommendations/pdfs/FATF%
20Recommendations%202012.pdf (15)

Thereal estate sectoris a known avenue formoney laundering, and this scenario presents multiplered flags.
Option A (Correct):High-risk jurisdictionsare associated withcorruption and financial crime, making transactions involving their citizenshigher risk.
Option D (Correct):Selling assetsbelow market valueis a common tactic todisguise illicit funds or transfer value illicitly.
Option B (Incorrect):While cross-border legal representation may raise questions,it is not inherently suspicious.
Option C (Incorrect):Offshore companies are common intax planning, though they requirefurther scrutiny.
Reference:FATF Report on Money Laundering through Real Estate (2022), EU AMLD Directives, Wolfsberg Principles on High-Risk Transactions.

Compare customer and transaction records against periodically updated sanctions lists provided by governmental bodies. This is stated in the Certified Anti-Money Laundering Specialist (the 6th edition) manual on page 595, which states: "Sanctions screening requirements include that a financial institution should compare customer and transaction records against periodically updated sanctions lists provided by governmental bodies."

The primary consideration the institution should keep in mind when deciding whether to agree to the law enforcement request is whether the institution can continue to meet its regulatory obligations with the accounts open. This is because the institution has a duty to comply with the applicable laws and regulations, and to protect its reputation and integrity from being associated with money laundering or terrorist financing.
The institution should assess the risks and benefits of keeping the account open, and consult with its legal counsel and senior management before making a decision. The institution should also document itsdecision and the rationale behind it, and communicate it to the law enforcement agency12.
1:
CAMS Certification Package - 6th Edition | ACAMS, Chapter 7: Conducting or Supporting the Investigation Process, p. 143-144 2: FATF Guidance: Anti-Money Laundering and Terrorist Financing Measures and Financial Inclusion, February 2013, p. 50-51, http://www.fatf-gafi.org/media/fatf/documents/reports
/AML_CFT_Measures_and_Financial_Inclusion_2013.pdf