The compliance department receives an internal referral that appears to indicate terrorist financing. What is the first step that should be taken in the investigation process?
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A. B. C. D.A
When an internal referral suggesting terrorist financing is received, the first step in the investigation process should be to gather background and transaction information (answer B).
The purpose of gathering background and transaction information is to determine if the referral is credible, and if the account or transaction in question is indeed linked to terrorism. This may involve conducting additional research, reviewing account activity, and verifying the identity of account holders and other parties involved in the transaction.
It is important to note that while it is crucial to act quickly in cases of suspected terrorist financing, immediately filing a Suspicious Activity Report (SAR) or Suspicious Transaction Report (STR) (answer C) without conducting due diligence can lead to false positives and may be counterproductive.
Exiting the relationship (answer A) may be a necessary step in certain cases, but it should not be the first step in the investigation process. The decision to exit a relationship should be based on a thorough investigation and risk assessment, and should be made in consultation with senior management and legal counsel.
Notifying the Board of Directors (answer D) is an important step in the investigation process, but it should not be the first step. The compliance department should conduct an initial investigation and provide a report to the Board of Directors or senior management, who can then decide on the appropriate course of action.
In summary, the first step in the investigation process for suspected terrorist financing is to gather background and transaction information to determine the credibility of the referral and assess the level of risk.