The Office of Foreign Assets Control (OFAC) is a US agency that administers and enforces economic and trade sanctions based on US foreign policy and national security goals1. OFAC has a list of sanctions programs and country information for various regions and topics, such as Russia, Iran, North Korea, Cuba, and more2. If a charity is headquartered in a country on the OFAC list, it means that the US government has imposed restrictions or prohibitions on transactions or dealings with that country, its government, entities, or individuals. This poses a high risk of violating the sanctions regulations and exposing the bank to legal, regulatory, or reputational consequences. Therefore, the bank may decide to terminate the banking relationship with the charity to avoid such risks.
The other options are not sufficient reasons to terminate the banking relationship, as they may not indicate illegal or suspicious activities by the charity. A high turnover rate of official positions may be due to various factors, such as organizational changes, staff turnover, or personal reasons. It does not necessarily imply that the charity is involved in money laundering or terrorist financing. However, the bank should verify the identity and authority of the new officials and update the customer due diligence information accordingly. The charity may have several incoming international funds transfers because it receives donations or grants from different sources or countries. This is not unusual for an international charity, as long as the funds are consistent with its stated purpose and activities. The bank should monitor the transactions and report any anomalies or red flags to the relevant authorities. The flow of funds both in and out may be complex and hard to trace because the charity operates in multiple jurisdictions or sectors, or has a decentralized or layered structure. This may increase the risk of money laundering or terrorist financing, but it does not necessarily mean that the charity is engaged in such activities. The bank should conduct enhanced due diligence and ongoing monitoring of the charity's transactions and beneficiaries, and apply a risk-based approach to mitigate the potential risks.
1: Sanctions List Search Tool | Office of Foreign Assets Control 2: Sanctions Programs and Country Information | U.S. Department of the Treasury

Cryptocurrency is a digital or virtual currency that uses cryptography to secure and verify transactions.
Cryptocurrencies are decentralized and operate outside the control of any central authority, such as a government or a bank. This makes them attractive for money launderers, who can use them to transfer funds anonymously, quickly, and globally, without leaving a trace or being subject to regulation. Cryptocurrencies pose more risk of money laundering than other sources of money, such as wire transfers, credit cards, or money service businesses, which are subject to more oversight, verification, and reporting requirements.
CAMS Study Guide, 6th Edition, Chapter 1, Section 1.9, page 37
CAMS eLearning Course, Module 1, Lesson 9
ACAMS Crypto Hub
Reference: https://complyadvantage.com/knowledgebase/money-laundering-crypto-exchanges/

Nonprofit organizations (NPOs) and charities are at risk of being exploited for terrorist financing due to their access to large sums of money and their operational reach into high-risk areas. FATF'sRecommendation
8specifically recognizes that terrorist organizations may misuse NPOs to raise and move funds, provide logistical support, or conceal the diversion of funds for illicit purposes.
* Option A (Correct):Many charities operate internationally, especially in areas with humanitarian crises.
These regions often overlap with locations where terrorist organizations are active, making them vulnerable to abuse.
* Option D (Correct):Charities handle large volumes of cash and enjoy public trust, which makes it easier for illicit actors to integrate illicit funds without raising immediate suspicion.
* Option B (Incorrect):While charities are generally legitimate, the concern is that they can be exploited, not that they necessarily intend to misuse funds.
* Option C (Incorrect):Although collecting donations is a legitimate practice, it does not directly contribute to their vulnerability to terrorist financing.
Reference:FATF Recommendation 8 (R8) on Nonprofit Organizations; FATF Reports on Terrorist Financing Risks in NPOs (2014, 2019).

According to the Basel Committee on Banking Supervisionprinciples, one of the core principles for effective banking supervision is that the supervisor determines that banks have adequate policies and processes for identifying, assessing and managing the risk and impact of exposures to and transactions with related parties, and that these policies and processes are effectively implemented1. Failure to conduct proper due diligence on a close relative of a senior manager who requests to open an account posesthe highest operational risk, as it could result in conflicts of interest, reputational damage, legal liability, or financial losses for the bank. The other options are not necessarily the highest operational risk, as they depend on the nature and extent of the relationship, the type and size of the account, and the regulatory and legal framework of the jurisdiction.
1 Core principles for effective banking supervision, Principle 20.