At a small community bank, the compliance officer identifies unusual activity on a customer, who with his personal and company accounts, is the bank's largest depositor. The customer's companies have significant balances on their outstanding loans. The compliance officer notices that there is a lot of unusual movements of money between the customer's individual and business accounts. After filing a suspicious transaction report (STR), the compliance officer gets a call from law enforcement indicating that they want the bank to keep the account open while they conduct an investigation into the customer.
How should the compliance officer escalate this information to the board of directors?
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A. B. C. D.B
In this scenario, the compliance officer at a small community bank has identified unusual activity on the largest depositor's personal and business accounts, and has filed an STR with the relevant regulatory authorities. The compliance officer has also received a request from law enforcement to keep the account open while they conduct an investigation into the customer.
When it comes to escalating this information to the board of directors, the compliance officer needs to provide them with sufficient information to make an informed decision while ensuring that confidentiality is maintained. The board of directors has a responsibility to oversee the bank's anti-money laundering (AML) program and ensure that the bank is complying with all relevant regulations.
Option A, which involves providing a copy of the STR to the board of directors, may not be appropriate as it could compromise the confidentiality of the investigation and potentially harm the bank's relationship with the customer. Similarly, option D, which involves providing a copy of the letter from law enforcement, could also compromise the confidentiality of the investigation.
Option B, which involves informing the regulator to bring it up with their next meeting with the board, is not the best course of action either. The board of directors has a responsibility to oversee the bank's AML program, and should be made aware of any significant AML-related issues as soon as possible.
Therefore, the best option is C, which involves providing a high level summary of the activity and the interactions with law enforcement. This summary should include enough detail to enable the board of directors to understand the situation and make an informed decision, without compromising the confidentiality of the investigation. The summary should also include any actions that the bank has taken or plans to take in response to the situation.
In summary, when escalating information regarding an STR and a request from law enforcement to keep an account open to the board of directors, the compliance officer should provide a high level summary of the activity and the interactions with law enforcement while maintaining the confidentiality of the investigation. Option C is the most appropriate answer in this scenario.