FIs must haveeffective sanctions screeningprocesses toprevent transactions involving designated persons or entities.
Option A (Correct):Automated screening systemshelp financial institutionsidentify sanctioned individuals, entities, and countries in real time.
Option B (Incorrect):If a customer islisted on a sanctions list, the FImust freeze the account, not simply mark it "high-risk" and continue transactions.
Option C (Incorrect):Prohibited entities should not undergo EDD-transactions with them must beblocked or reported.
Option D (Incorrect):Freezing sanctioned assetsdoes not require board approval; it must bedone immediatelyas per regulations.
Sanctions Compliance Requirements:
Sanctioning Body
Examples of Sanctions Lists
U).S. (OFAC)
Specially Designated Nationals (SDN) List
United Nations (UN)
UN Security Council Sanctions List
European Union (EU)
EU Consolidated Sanctions List
UK (OFSI)
UK Sanctions List
Why Sanctions Screening is Important:
Failing to comply can result in billions in fines (e.g., BNP Paribas paid $8.9 billion in OFAC fines).
Transactions involving sanctioned entities can be blocked, leading to regulatory scrutiny.
Automated screening tools (e.g., SWIFT, World-Check, LexisNexis) improve compliance efficiency.
Reference:
OFAC Sanctions Compliance Framework
EU Sanctions Regulations
FATF Recommendation 6 (Targeted Financial Sanctions)

According to the ACAMS study guide, one of the red flags for money laundering in crowdfunding platforms is "projects that are fully funded within a very short period of time, especially if the funding comes from a small number of donors or from a single donor" (p. 222). This could indicate that the project is a front for laundering illicit funds or financing terrorism. The other options are not necessarily indicative of money laundering risk, as they could be explained by legitimate factors such as the popularity, urgency, or ambition of the project.
ACAMS. (2020). Study Guide for the Certification Examination for Anti-Money Laundering Specialists (6th ed.). Miami, FL: ACAMS.
ESMA. (2015)Questions and Answers: Investment-based crowdfunding and money laundering/terrorist financing 1. Paris, France: ESMA.

The inherent level of anti-money laundering risk across the entire organization depends on various factors, such as the nature, size, complexity, and structure of the business, the customers, the products and services, and the countries or jurisdictions involved. Among the four options given, the transaction monitoring program and the customer due diligence program are not factors that determine the inherent risk, but rather measures that mitigate the risk. Therefore, they are not relevant for the compliance officer's purpose. The countries that the bank operates in and the products and services offered by the bank are important factors that affect the inherent risk, as they may expose the bank to different levels of money laundering threats, vulnerabilities, and regulatory requirements. For example, some countries or jurisdictions have high levels of corruption, unstable governments, or are known as money laundering havens1. They could also have inadequate AML/CFT regulatory and judicial frameworks, or be subject to economic sanctions2. Similarly, some products and services may pose higher risks thanothers, such as those that involve cash transactions, cross-border transfers, anonymous or non-face-to-face customers, or complex or innovative features34.
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1: AML risk-rating models | McKinsey
2: Money laundering and terrorist financing risks - Financial Action Task Force (FATF)
4: AML Red Flags - What are the Top 10 Indicators? - ComplyAdvantage
5: Anti Money Laundering Risk Assessment - Financial Crime Academy

According to the Anti-Money Laundering Specialist (the 6th edition) study guide, an effectiveanti-money laundering program should be subject to periodic independent testing by a qualified party, such as an internal or external auditor, a consultant, or a compliance professional1. This ensures that the program is compliant with the applicable laws and regulations, and that it meets the standards of sound risk management and internal controls2. The regulatory authorities, a member of senior management, or the anti-money laundering specialist may not have the necessary expertise, objectivity, or independence to conduct a thorough and unbiased evaluation of the program.
1: CAMS Study Guide, 6th Edition, Chapter 2, Section 2.3, page 51
2: CAMS Study Guide, 6th Edition, Chapter 2, Section 2.4, page 52