An existing customer at a bank has recently expanded its services to provide check cashing for its customers.
Which factor indicates the bank should terminate this relationship?
Click on the arrows to vote for the correct answer
A. B. C. D.A
In the context of the Certified Anti-Money Laundering Specialist (CAMS) exam, the question revolves around a bank's existing customer who has extended its services to include check cashing for its own customers. The question asks for the factor that indicates the bank should terminate its relationship with this customer. Let's analyze each answer choice to determine the correct response:
A. The bank has not updated its automated monitoring system: An automated monitoring system is crucial for detecting suspicious activities related to money laundering and other financial crimes. If the bank has not updated its system, it could indicate a failure to meet regulatory requirements and a lack of proper oversight. However, this answer choice does not directly indicate the need to terminate the relationship with the customer, as the bank could rectify the issue by updating its monitoring system.
B. The business has no previous experience with this service: This answer choice suggests that the business offering check cashing services has no prior experience in this field. While lack of experience might raise concerns about their ability to comply with anti-money laundering (AML) regulations, it does not necessarily indicate an immediate need to terminate the relationship. The bank could work with the customer to provide additional training or oversight to ensure compliance.
C. The business has not updated its anticipated activity with the bank: This answer choice suggests that the business has not provided the bank with updated information regarding its expected or anticipated activity related to check cashing services. Failure to update anticipated activity can be concerning as it hampers the bank's ability to properly monitor and assess any unusual or suspicious transactions. However, like the first answer choice, this factor alone may not necessarily lead to termination but would require further action from the bank, such as requesting the updated information.
D. The business is now a Money Service Business and has not registered with FinCEN: This answer choice stands out as the most compelling factor for terminating the relationship. A Money Service Business (MSB) is a regulated category of financial institutions that includes entities engaged in activities such as check cashing, money transmission, and currency exchange. MSBs are required by law to register with the Financial Crimes Enforcement Network (FinCEN) in the United States. Failure to register with FinCEN indicates a lack of compliance with legal and regulatory obligations. It raises significant concerns about the customer's commitment to anti-money laundering and counter-terrorist financing measures, which may warrant termination of the relationship.
Considering all the answer choices, the most appropriate response, indicating the bank should terminate the relationship, is:
D. The business is now a Money Service Business and has not registered with FinCEN.