A large United States (U.S.) bank is performing due diligence on a non-U.S. bank. The non-U.S. bank has applied for a correspondent account at the U.S. bank.
Which two steps should the U.S. bank take under the USA PATRIOT Act? (Choose two.)
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A. B. C. D.CD
Under the USA PATRIOT Act, the U.S. bank must perform due diligence on any foreign bank that applies for a correspondent account. This includes verifying the identity of the foreign bank and its customers, assessing the risk of money laundering, and determining whether enhanced due diligence is necessary. The U.S. bank must also monitor the correspondent account on an ongoing basis to ensure that it is being used for legitimate purposes and is not being used to facilitate money laundering or other illicit activities.
Therefore, the two steps that the U.S. bank should take under the USA PATRIOT Act are:
A. Verify the identity of the customers of the foreign bank: The U.S. bank should verify the identity of the foreign bank's customers who will be using the correspondent account to ensure that they are legitimate and not involved in money laundering or other illicit activities. This can be done through a variety of methods, such as obtaining certified copies of identification documents, conducting background checks, or using third-party databases.
C. Assess the money laundering risk presented by the correspondent account: The U.S. bank should assess the money laundering risk presented by the correspondent account based on factors such as the types of transactions that will be conducted, the countries involved, and the nature of the foreign bank's business. Based on this assessment, the U.S. bank may determine that enhanced due diligence is necessary, which may involve obtaining additional information about the foreign bank and its customers, conducting more frequent monitoring of the correspondent account, or implementing other risk mitigation measures.
Option B (Determine whether enhanced due diligence is necessary) is closely related to option C (Assess the money laundering risk presented by the correspondent account) as the U.S. bank may determine that enhanced due diligence is necessary based on the money laundering risk assessment. Therefore, both options are correct, and the U.S. bank should take both steps to comply with the requirements of the USA PATRIOT Act.
Option D (Verify the identity of politically exposed persons in management positions at the non-U.S. bank) is not explicitly required by the USA PATRIOT Act. However, the U.S. bank may choose to verify the identity of politically exposed persons as part of its due diligence process if it determines that they present a higher risk of money laundering or other illicit activities.