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FRM Part II · FRM Exam Part II · Sound Management of Risks Related to Money Laundering and Financing of Terrorism

Under the Basel guidelines, how should supervisors of a cross-border banking group cooperate on ML/FT matters?

Supervisors should cooperate by exchanging relevant information and coordinating, notably between home and host authorities and through supervisory colleges where useful. Acting in isolation, delegating to internal audit, or sharing only after sanctions would not provide effective oversight of cross-border ML/FT risk.

  1. AExchange relevant information and coordinate, including through home-host contact and, where useful, supervisory collegesCorrect
  2. BAct independently and avoid contact to protect confidentiality
  3. CDelegate all ML/FT supervision to the bank's internal audit
  4. DShare information only after a bank has been sanctioned

Explanation

The guidelines encourage domestic and international cooperation among supervisors, including with financial intelligence units and law enforcement, and information exchange between home and host supervisors. Independent action or waiting until sanctions undermines effective consolidated oversight.

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