A TCSP providing services should have policies and procedures in place to identify critical information of the signatory, as this is one of the key elements of the customer due diligence (CDD) process. The signatory is the person who has the authority to sign documents or contracts on behalf of the customer, such as a company, a trust, or a partnership. The signatory may also be the beneficial owner, the controller, or a nominee of the customer. The TCSP should verify the identity and the capacity of the signatory, as well as the source and origin of the funds or assets involved in the transaction or business relationship. The TCSP should also monitor the activities of the signatory and report any suspicious or unusual transactions or changes in the signatory's behaviour or profile.
ACAMS Study Guide for the CAMS Certification Examination - 6th Edition, Chapter 2: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), Section 2.2:
Customer Due Diligence (CDD), Subsection 2.2.1: CDD Process, pp. 51-52
RISK-BASED APPROACH GUIDANCE FOR TRUST AND COMPANY SERVICE PROVIDERS
(TCSPs), Section III - Guidance for TCSPs, Subsection III.1: Risk Assessment, pp. 23-24 SRA | Trust and Company Service Provider guidance | Solicitors Regulation Authority, Section: Definition, Paragraph 2 A Trust and Company Service Provider (TCSP) providing services should have policies and procedures in place to identify critical information of the:, Answer B

FATF and CAMS 6th Edition highlight certain third-party activities as red flags for money laundering in the life insurance sector:
* Payments are regularly received from third parties that have no apparent relationship with the policy holder (C):"Red flags include payments made by third parties, especially where there is no apparent connection between the third party and the policy holder."(FATF, Risk-Based Approach for Life Insurance Sector, Section IV: Red Flags; CAMS 6th Edition, Customer Due Diligence for Life Insurance)
* A customer names an apparently unrelated third party as a beneficiary (D):"Another warning sign is when beneficiaries have no apparent relation to the policyholder."(FATF, Ibid; CAMS 6th Edition, Life Insurance ML/TF Red Flags) Incorrect Options:
* A: Consulting an attorney is not, by itself, a red flag.
* B: Policy transfer may warrant review but is not specifically a red flag for third-party involvement.
References:
CAMS 6th Edition, Life Insurance ML/TF Risks
FATF, Guidance for a Risk-Based Approach for the Life Insurance Sector (October 2018)

Thethird line of defense (internal audit)providesindependent oversightof an institution'sAML/CFT compliance framework.
Option B (Correct):The internal audit function should report to the board's audit committeeto maintainindependence and objectivity.
Option A (Incorrect):While frequent audits are essential, AML audits should be risk-based rather than mandated at a strict 12-month interval.
Option C (Incorrect):Internal audit must assess remediation plansto ensure they adequatelyaddress AML deficiencies.
Option D (Incorrect):The third line of defense should not be involved in daily AML operationstoavoid conflicts of interest.
Three Lines of Defense in AML Risk Management:
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Best Practices for AML Audit Function:
Ensure complete independence from AML operations.
Conduct risk-based audits tailored to emerging threats.
Report audit findings to the board for effective oversight.
Reference:
Basel Committee's "Sound Management of ML/TF Risks"
FATF Recommendation 18 (AML Internal Controls & Oversight)
Wolfsberg Group AML Audit Guidelines

A suspicious transaction report (STR) is a document that financial institutions must file with the relevant authorities when they detect or suspect any activity that may be related to money laundering, terrorist financing, or other criminal offences. An STR should include the details of the customer, the transaction, the reason for suspicion, and any other relevant information.
One of the indicators of suspicious activity is the use of financial instruments, such as checks, money orders, or cashier's checks, that are drawn on other institutions and deposited in amounts under the currency reporting thresholds. This may suggest that the customer is trying to avoid the detection and reporting of large cash transactions, which is a technique known as structuring or smurfing. Structuring is illegal and may indicate that the customer is laundering money from illicit sources or evading taxes.
Another indicator of suspicious activity is the use of financial instruments that are sequentially numbered, meaning that they have consecutive serial numbers. This may suggest that the customer has obtained the instruments from the same source or issuer, and that they are using them to launder money or finance illegal activities. Sequentially numbered instruments may also indicate that the customer is involved in fraud, such as check kiting or counterfeit checks.
Therefore, if a bank conducts a quarterly review on a retail customer's account and finds that the customer has made a number of large deposits of financial instruments drawn on other institutions in amounts under the thresholds, and that the instruments were sequentially numbered, the bank will most likely file an STR. This is because this activity does not fit the customer's historical profile, and it raises a high level of suspicion that the customer is engaged in money laundering or other criminal activities.
CAMS Study Guide - 6th Edition, Chapter 4, Section 4.2, page 108
Answers to Frequently Asked Questions Regarding Suspicious Activity Reporting and Other Anti-Money Laundering Considerations, Question 5, page 7 Anti-money laundering - handling suspicious activity, Section 6.3, page 3 Tell us about suspicious activity that may be linked to money laundering, Section 3, page 1

According to the Basel Committee guidelines, banks should formulate a customer acceptance policy and a tiered customer identification programme that involves more extensive due diligence for higher risk customers12. The customer acceptance policy should be approved by senior management and include clear guidelines on the types of customers that are likely to pose a higher than average risk to the bank1. Senior management should also ensure that the bank has adequate resources and systems to effectively manage the risks associated with higher risk customers1. Therefore, senior management should determine whether or not to enter business relationships with higher risk customers, based on the bank's risk appetite, policies, and procedures.
References:
CAMS Study Guide (the 6th edition), page 1843
Customer due diligence for banks - Bank for International Settlements1
The Basel Committee: The Important Set Of International Banking Regulations2