FRM Part II · FRM Exam Part II · Sound Management of Risks Related to Money Laundering and Financing of Terrorism
A group compliance officer at a bank receives an unusual-activity alert on a customer at one subsidiary. The same customer holds accounts at two other group entities in different jurisdictions. Which action is most consistent with the BCBS guidelines?
The officer should share relevant customer and alert information with group compliance and the other entities as needed to manage ML/FT risk, subject to legal, confidentiality and tipping-off safeguards. Ignoring the cross-entity exposure or alerting the customer would undermine the group-wide approach.
- AShare relevant information on the customer and the alert with group-level compliance and other entities as needed to manage ML/FT risk, within legal and tipping-off safeguardsCorrect
- BTake no action because each entity is a separate legal person
- CInform the customer of the alert so the other entities can verify the details
- DDelete the alert to avoid breaching confidentiality rules
Explanation
Group-wide programmes should enable sharing of information on higher-risk customers and suspicious activity within the group, with safeguards on confidentiality and against tipping-off. Telling the customer would be tipping-off, and doing nothing leaves the group blind to cross-entity risk.
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