What are two requirements of United States financial institutions when conducting business with an international financial institution as a result of the USA
PATRIOT Act? (Choose two.)
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A. B. C. D.AD
Under the USA PATRIOT Act, US financial institutions are required to implement a range of measures to prevent money laundering and terrorist financing, including when conducting business with international financial institutions. Two specific requirements that US financial institutions must follow when conducting business with international financial institutions are:
Performing Enhanced Due Diligence on Shell Banks: The first requirement is that US financial institutions must perform enhanced due diligence when conducting business with international financial institutions that use or rely on shell banks. A shell bank is defined as a bank with no physical presence in any country, and it is considered high-risk due to its potential for money laundering and terrorist financing. The enhanced due diligence measures should enable the US financial institution to identify and verify the identity of the customers of the international financial institution and assess the risks associated with the correspondent banking relationship.
Performing Due Diligence on Correspondent Accounts: The second requirement is that US financial institutions must conduct due diligence on correspondent accounts maintained for the international financial institution. Correspondent banking involves the provision of banking services by one financial institution (the correspondent bank) to another financial institution (the respondent bank). US financial institutions must assess the risks associated with correspondent banking and conduct due diligence on the correspondent accounts, including identifying and verifying the identity of the respondent bank's customers, and monitoring the transactions that flow through the correspondent accounts.
C. Visiting the head office of the international financial institution and D. Complying with Special Measures issued under the USA PATRIOT Act are incorrect answers as they are not specific requirements under the USA PATRIOT Act for US financial institutions when conducting business with international financial institutions.