Customer due diligence (CDD) is a key component of anti-money laundering (AML) and counter-terrorism financing (CTF) compliance. CDD helps financial institutions identify and verify their customers, assess their risk levels, and monitor their transactions for suspicious activity.
One of the main objectives of CDD is to understand the nature and purpose of customer relationships, which involves collecting and analyzing relevant information about the customer's business activities, expected transaction patterns, source and destination of funds, and beneficial ownership. This information helps financial institutions develop a customer risk profile, which is a tool to measure and manage the risk exposure of each customer.
A customer risk profile reflects the financial institution's risk appetite, which is the level and type of risk that the institution is willing and able to accept. By comparing the customer's risk profile with the institution's risk appetite, the institution can determine if the customer operates in line with the firm's expectations and requirements for a specific industry segment. For example, if the institution has a low risk appetite for customers involved in high-risk sectors such as gambling, cryptocurrency, or arms trade, it can use the customer risk profile to identify and mitigate any potential risks associated with such customers.
Therefore, to understand if the customer operates in line with the firm's risk appetite for a specific industry segment, a financial institution must obtain sufficient customer information to understand the nature and purpose of customer relationships for the purpose of developing a customer risk profile.
References:
A Guide to Customer Due Diligence for Financial Institutions
Customer Due Diligence Guide: Main Requirements, Best Practices & Checklist Financial Crimes Enforcement Network Issues New Frequently Asked Questions on Customer Due Diligence Requirements ACAMS CAMS Certification Study Guide 6th Edition

'https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/wolfsberg-standards/8.%20Wolfsberg- Correspondent-Banking-Principles-2014.pdf - page 6 Monitoring and Reporting of Suspicious Activities The institution shall implement bank-wide policies and procedures to detect and investigate unusual or suspicious activity and report any such activity as required by applicable law. These will include guidance on what is considered to be unusual or suspicious and give examples thereof. The policies and procedures shall include appropriate monitoring of the Correspondent Bank's activity, incorporating due diligence results such as customer risk rating and other factors considered meaningful in the assessment of transaction activity risk. In turn, the results of suspicious activity monitoring shall be factored into the periodic review of the client's file, particularly when the results of transaction monitoring indicate elevated risk levels.

Cross-borderAML investigationsrequire cooperation throughofficial channels, such as theEgmont Group.
Option D (Correct):TheEgmont Groupis an international network ofFIUs that facilitates secure information exchangein financial crime investigations.
Option A (Incorrect):While sovereignty applies,formal international cooperation mechanisms exist.
Option B (Incorrect):AML cooperation is allowed under legal frameworks(e.g.,MLATs, Egmont Secure Web).
Option C (Incorrect):Information-sharing is restrictedtoauthorized government agencies, not all organizations.
Reference:Egmont Group of FIUs, FATF Recommendation 40 (International Cooperation), Mutual Legal Assistance Treaties (MLATs).

The Basel Committee on Banking Supervision (BCBS) issued a paper in October 2001 titled Customer due diligence for banks, which outlined four essential elements of a sound Know Your Customer (KYC) programme. These elements are: customer acceptance policy, customer identification, on-going monitoring of higher risk accounts, and risk management. The paper also recommended that these standards should be applicable to all banks in all countries, regardless of their size, nature, or location. The paper stated that "KYC safeguards go beyond simple account opening and record-keeping and require banks to formulate a customer acceptance policy and a tiered customer identification programme that involves more extensive due diligence for higher risk accounts, and includes proactive account monitoring for suspicious activities."1 Customer due diligence for banks by the Basel Committee on Banking Supervision, October 2001.
Consolidated KYC Risk Management by the Basel Committee on Banking Supervision, October 2004.
Editorial The Basel Committee on Banking Supervision report on customer ... by Journal of Banking Regulation, 2002.

When a high volume of incoming wire transfers generates an alert about a client and the funds are immediately debited by cash withdrawals and outgoing wire transfers, the first information that should be reviewed to investigate this alert/case is the customer's account activity. This is because the account activity can reveal the origin, destination, purpose, frequency, and amount of the wire transfers, as well as any unusual or inconsistent patterns that may indicate money laundering or fraud. The account activity can also help to compare the wire transfers with the customer's profile, risk rating, expected behavior, and source of funds.
Reviewing the account activity can help to determine if the alert is a false positive or a true positive, and if further investigation or reporting is required.
References:
CAMS Study Guide, 6th Edition, Chapter 4, Section 4.3.2, p. 1251
Investigating Alert/Case of High Volume Wire Transfers | CAMS Exam Prep2 Wire Transfer Red Flags: Money Laundering & Fraud Risks - Alessa3