According to the ACAMS Study Guide 6th Edition, Chapter 2, page 37, one of the red flags of money laundering or terrorist financing is the use of nominees, trusts, or third parties to hide the identity, ownership, or control of the funds or assets involved in the transaction. Nominees are individuals or entities that act on behalf of the actual or beneficial owners of a company, trust, or account, and may be used to conceal the source, destination, or purpose of the funds or assets. Nominees may also be used to evade taxes, sanctions, or regulatory requirements.
In this case, the compliance officer is unable to verify the identity of the beneficial owners of the company, and only information on the nominee owners was provided. This raises the suspicion that the company may be involved in money laundering or terrorist financing activities, and that the nominee owners may be acting as fronts or intermediaries for the actual or beneficial owners. The compliance officer should conduct further due diligence on the company, the nominee owners, and the beneficial owners, and report any suspicious or unusual activity to the relevant authorities.
ACAMS Study Guide 6th Edition, Chapter 2, page 37
Beneficial Ownership Meaning and Regulation - Investopedia
What is a nominee shareholder? | LawBite

The FATF 40 Recommendations outline global AML/CFT standards, including risk-based compliance and beneficial ownership transparency.
Option B (Correct): FATF requires nations to implement financial sanctions in coordination with the UN Security Council.
Option C (Correct): FATF emphasizes a risk-based approach (RBA) to prevent ML/TF.
Option E (Correct): FATF mandates transparency in beneficial ownership to prevent shell company misuse.
Why Other Options Are Incorrect:
Option A (Incorrect): FATF does not require institutions to avoid high-risk customers but to apply appropriate risk-based controls.
Option D (Incorrect): Governments do not need identical crime investigation frameworks but should ensure effective cooperation.
Best Practices for FATF Compliance:
Apply risk-based due diligence on high-risk customers.
Enhance beneficial ownership transparency measures.
Implement targeted financial sanctions in coordination with global authorities.
Reference:
FATF Recommendation 1 (Risk-Based Approach to AML)
FATF Recommendation 10 (Beneficial Ownership Transparency)
FATF Recommendation 6 (Sanctions & UN Coordination)

The FATF 40 Recommendations are the international standards for combating money laundering, terrorist financing, and proliferation financing. They provide a comprehensive and consistent framework of measures that countries should implement in their national systems. Recommendation 5 of the FATF 40 Recommendations states that countries should criminalize the financing of terrorism, terrorist acts and terrorist organizations. This means that countries should adopt laws that make it an offence to provide or collect funds or other assets with the intention or knowledge that they will be used to carry out terrorist acts or support terrorist organizations. Countries should also ensure that such offences are punishable by effective, proportionate and dissuasive sanctions. Furthermore, countries should ensure that terrorist financing offences extend to any person who wilfully provides or collects funds or other assets by any means, directly or indirectly, with the unlawful intention that they should be used or in the knowledge that they are to be used, in full or in part, in order to carry out terrorist acts or support terrorist organizations. Therefore, the correct answer is D. Criminalize, as this is the action that countries should take related to the financing of terrorist acts in accordance with the FATF 40 Recommendations.
FATF website
FATF 40 Recommendations - February 2012
FATF Recommendation 5 - Criminalisation of Terrorist Financing
Reference:https://www.fatf-gafi.org/publications/methodsandtrends/documents/fatf-action-against- terroristfinancing- feb-2019.html

According to the Anti-Money Laundering Specialist (the 6th edition) resources, the institution should develop a system to monitor all the activity of the customer's accounts to mitigate the risk associated with these accounts. This is because the customer's behavior and profile may indicate some red flags of money laundering, such as:
* Operating an import-export business, which is a common sector for trade-based money laundering, where trade transactions are used to disguise the movement of illicit funds, either by over- or under- invoicing, misrepresenting the quantity or quality of goods, or falsifying documents1.
* Receiving funds from a jurisdiction perceived as highly corrupt, which may increase the risk of the funds being derived from bribery, embezzlement, fraud, or other predicate offences2. Transparency International is a global civil society organization that publishes an annual CorruptionPerceptions Index, which ranks countries by their perceived levels of public sector corruption based on expert assessments and surveys3.
* Making frequent transfers among the accounts, which may indicate a layering technique, where funds are moved through multiple accounts, institutions, or jurisdictions to obscure the audit trail and the source and ownership of the funds4.
* Preferring to manage the accounts separately, which may indicate a lack of transparency or an attempt to avoid detection or reporting by the institution.
By developing a system to monitor all the activity of the customer's accounts, the institution can:
* Identify and verify the identity and beneficial ownership of the customer and the parties involved in the transactions.
* Obtain and verify information on the nature and purpose of the business relationship and the source and destination of the funds.
* Conduct a risk assessment of the customer and the transactions based on the customer's profile, behavior, and geographic locations.
* Apply enhanced due diligence and ongoing monitoring measures for higher-risk customers and transactions, such as obtaining additional information, documentation, or approval, or conducting more frequent or in-depth reviews.
* Detect and report any suspicious or unusual transactions or activities to the relevant authorities.
The other three options are incorrect because:
* File a suspicious transaction report is not the best answer, as it is a reactive measure that should be taken after the institution has identified or suspected money laundering or terrorist financing activity, not before. The institution should first conduct due diligence and monitoring of the customer and the transactions, and then file a report if there are reasonable grounds to believe that the activity is suspicious or unusual.
* Diminish the importance of the subjective Transparency International rating is not the best answer, as it is a complacent and irresponsible attitude that may expose the institution to legal, regulatory, reputational, or operational risks. The Transparency International rating is not subjective, but based on credible sources and methodologies, and it is widely used as a reference by governments, businesses, civil society, and the public to assess the level of corruption in different countries3. The institution should not ignore or downplay the rating, but rather use it as one of the factors to evaluate the risk of the customer and the transactions.
* Conduct a trade-price manipulation analysis is not the best answer, as it is a specific and technical measure that may not be sufficient or appropriate to mitigate the risk associated with these accounts. A trade-price manipulation analysis is a method of detecting trade-based money laundering by comparing the prices of goods or services in a transaction with the market prices or other benchmarks, and identifying any significant discrepancies or anomalies. However, this measure may not be feasible or effective if the institution does not have access to reliable and comparable data, or if the goods or services are not standardized or homogeneous. Moreover, this measure may not address other aspects of the risk, such as the identity, ownership, or behavior of the customer and the parties involved in the transactions.
1: ACAMS, CAMS Study Guide, 6th Edition, Chapter 5, p. 108 2: ACAMS, CAMS Study Guide, 6th Edition, Chapter 5, p. 107 3: Transparency International, Corruption Perceptions Index, 3 4: ACAMS, CAMS Study Guide, 6th Edition, Chapter 5, p. 106 : ACAMS, CAMS Study Guide, 6th Edition, Chapter 5, p. 103 :
ACAMS, CAMS Study Guide, 6th Edition, Chapter 5, p. 103 : ACAMS, CAMS Study Guide, 6th Edition, Chapter 5, p. 104 : ACAMS, CAMS Study Guide, 6th Edition, Chapter 5, p. 105 : ACAMS, CAMS Study Guide, 6th Edition, Chapter 5, p. 105 : ACAMS, CAMS Study Guide, 6th Edition, Chapter 5, p. 109

https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/wolfsbergstandards/10.%20Wolfsberg- Private-Banking-Prinicples-May-2012.pdf
2.4 Senior Management Approval
The bank's internal policies should indicate whether, for any one or more among these categories, Senior Management must approve entering into new relationships.
Relationships with Politically Exposed Persons may only be entered into with the approval of Senior Management.