FRM Part II · FRM Exam Part II · Sound Management of Risks Related to Money Laundering and Financing of Terrorism
An ordering bank processes a cross-border wire transfer of USD 25,000. Under Basel guidance aligned with FATF standards, which approach to originator information is most appropriate?
The ordering bank should include accurate originator and required beneficiary information in the payment message and keep it with the transfer through the chain. This supports screening and tracing of funds; omitting or replacing the originator's details undermines those controls.
- AInclude accurate originator and required beneficiary information in the payment message throughout the payment chainCorrect
- BOmit originator details to speed up processing, since the beneficiary bank will perform its own checks
- CInclude originator information only if the amount exceeds USD 1 million
- DReplace the originator's name with the bank's name to protect customer confidentiality
Explanation
Wire transfer rules require accurate originator and beneficiary information to travel with the payment so that authorities and intermediaries can screen and trace it. Stripping or substituting details defeats traceability, and an arbitrary high threshold is not the standard approach.
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