In accordance with FATF standards, when the minimum AML requirements of the host country where a FI operates are less strict than those of the FI's home country, the FI:
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A. B. C. D.C
According to the Financial Action Task Force (FATF) standards, financial institutions (FIs) that operate across multiple countries are required to adhere to the anti-money laundering (AML) and countering the financing of terrorism (CFT) standards of both their home country and the host countries in which they operate. However, there may be situations where the minimum AML/CFT requirements of the host country are less strict than those of the FI's home country. In such cases, the FI is expected to take appropriate measures to manage the risk of money laundering and terrorist financing overseas.
Option A suggests that the FI should impose more strict requirements on host country branches, disregarding if host country laws and regulation permit such action. This option is incorrect because it is not advisable for FIs to impose their own standards on host countries without taking into account local laws and regulations. Such an approach may be seen as intrusive and could lead to conflicts with local regulators.
Option B suggests that the FI should close down its operations in the host countries where minimum AML/CFT requirements are less strict than those of the home country. This option is also incorrect because it is not practical for FIs to shut down their operations in every host country that does not meet the minimum AML/CFT requirements of their home country. It would be more appropriate for FIs to take measures to mitigate the risks associated with operating in such countries.
Option C suggests that FIs should always apply additional measures on their branches and majority-owned subsidiaries in host countries to manage the money laundering and terrorist financing risk overseas. This option is partially correct. While it is true that FIs should take additional measures to manage the risks associated with operating in host countries with less strict AML/CFT requirements, the extent of the additional measures will depend on the specific risks in each host country.
Option D is the correct answer. It suggests that the FI is required to ensure that their branches and majority-owned subsidiaries in host countries implement the requirements of the home country, to the extent that host country laws and regulations permit. This means that FIs should implement their home country's AML/CFT standards in their host country branches, provided that local laws and regulations permit such implementation. In cases where local laws and regulations do not permit the implementation of the home country's standards, FIs should take additional measures to manage the risks associated with operating in such countries.