IT expanded the definition of criminal activity to all serious crimes. The first EU Directive on Money Laundering, adopted in 1990, was the first major international agreement to combat money laundering. It expanded the definition of criminal activity to all serious crimes and established drug trafficking as a predicate offense of money laundering. The Directive also extended the scope of money laundering beyond drug-related crimes, making it applicable to all serious crimes. This was a major step forward in the fight against money laundering, as it made it easier for law enforcement to investigate and prosecute money laundering cases.

Sanctions screening and transaction monitoring rules are two of the most common controls that FIs use to identify suspicious money-laundering activity. Sanctions screening is the process of checking customers, transactions, and counterparties against various lists of sanctioned individuals, entities, and countries issued by national and international authorities. Sanctions screening helps FIs to avoid doing business with or facilitating the activities of those who are involved in terrorism, proliferation, human rights violations, or other criminal activities. Transaction monitoring rules are the criteria or scenarios that FIs use to detect unusual or potentially suspicious patterns of transactions or behaviors of customers or accounts. Transaction monitoring rules help FIs to identify transactions that deviate from the expected norms, such as large cash deposits, frequent wire transfers, or transactions with high-risk jurisdictions. Transaction monitoring rules also help FIs to comply with their reporting obligations, such as filing Suspicious Activity Reports (SARs) or Currency Transaction Reports (CTRs).
= ACAMS CAMS Certification Video Training Course, Chapter 4: Developing an Effective Anti-Money Laundering Program, Section 4.2: Customer Identification Program (CIP) and Customer Due Diligence (CDD); Money laundering and terrorist financing, Section: Anti Money Laundering (AML) regulations; The Three Stages Of Money Laundering And How Money Laundering Works, Section: How to Prevent Money Laundering.

When dealing with correspondent banking clients, banks must evaluate the ownership and management structure of the client in order to assess the risks associated with the relationship. The status of the entity as a state, publicly, or privately held entity, as well as the transparency of the ownership structure, are important factors to consider when assessing these risks. Banks should also take into account the size of the management structure, the regularity of board meetings, and the length of time since the last Wolfsberg Group review in order to determine the risk associated with the correspondent banking relationship.

The Basel Committee's AML guidelines emphasize risk-based customer due diligence (CDD) and beneficial ownership transparency.
Option A (Correct): CDD policies must be risk-based to apply enhanced due diligence (EDD) for high-risk customers and simplified due diligence (SDD) for low-risk customers.
Option C (Correct): Banks must verify the identity of customers and beneficial owners to prevent financial crime risks.
Why Other Options Are Incorrect:
Option B (Incorrect): Numbered accounts are not strictly prohibited but require strict transparency and due diligence measures.
Option D (Incorrect): CDD procedures must be risk-based, not uniform across all customers.
Option E (Incorrect): Transactions should not be processed until full due diligence is completed, except in rare cases where regulatory exceptions apply.
Best Practices for Risk-Based Customer Due Diligence:
Apply EDD for high-risk entities (e.g., PEPs, offshore companies).
Ensure full beneficial ownership transparency.
Implement ongoing transaction monitoring for risk assessment.
Reference:
Basel Committee's "Sound Management of ML/TF Risks"
FATF Recommendation 10 (Customer Due Diligence)
6th EU AML Directive (6AMLD) on Beneficial Ownership Transparency