A bank compliance officer discovers cash deposit activity inconsistent with the expected and historical cash activity within the personal accounts of the chairman of the board. The cash activity appears structured to avoid the local legal filing requirements for large cash transactions, and a suspicious transaction report (STR) was filed.
How should the compliance officer report the filing of the STR to the board of directors without revealing the existence of the filing to the subject?
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A. B. C. D.A
In this scenario, the bank compliance officer has discovered cash deposit activity in the personal accounts of the chairman of the board that is inconsistent with the expected and historical cash activity, and appears to be structured to avoid local legal filing requirements for large cash transactions. This raises concerns about potential money laundering or other illegal activity, and the compliance officer has filed a suspicious transaction report (STR) in accordance with the bank's policies and regulatory requirements.
Now the question is how the compliance officer should report the filing of the STR to the board of directors without revealing the existence of the filing to the subject (i.e., the chairman).
Answer A, "Inform the legal counsel of the bank," may be a valid option in some cases, particularly if the legal counsel has a role in overseeing compliance and reporting to the board. However, it may not be sufficient on its own to address the concerns raised by the suspicious activity and the filing of the STR. Additionally, it may not be appropriate to involve legal counsel if they have a potential conflict of interest or if the subject of the STR is a member of the legal team.
Answer C, "Notify the financial institution's regulator to disclose the activity," may also be a valid option in some cases, particularly if the activity is particularly egregious or if the bank's policies or procedures are inadequate to address the concerns raised by the activity. However, it may not be necessary or appropriate to involve regulators in every case, and there may be risks associated with disclosing the filing of the STR to the subject.
Answer D, "The compliance officer and the chief executive officer should jointly interview the chairman," is not the best option in this case. It may be appropriate to involve the CEO or other senior leaders in addressing the concerns raised by the suspicious activity, but it is not appropriate to interview the subject of the STR as this could compromise the investigation and potentially tip off the subject.
Answer B, "Follow the financial institution's established STR reporting policy," is the best answer in this case. The compliance officer should follow the bank's established policies and procedures for filing and reporting suspicious transactions, including any requirements for reporting to the board or senior leadership. This may involve providing a summary of the suspicious activity and the filing of the STR to the board without disclosing the identity of the subject, or seeking guidance from senior leaders on how to address the concerns raised by the activity. It is important to follow the bank's established policies and procedures to ensure that the investigation is conducted in a thorough and objective manner, and to minimize the risk of tipping off the subject or violating any legal or regulatory requirements.