An incoming urgent international wire transfer in U.S. dollars has been identified by the sanctions screening team. The transaction is a large rounded amount and the name of the beneficiary is 'North Korean Cigars Company' with an address in an industrial zone in Tianjin, China.
Which action should the sanctions team take?
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A. B. C. D.C
The sanctions team has identified an incoming urgent international wire transfer in U.S. dollars. The transaction is a large rounded amount, and the name of the beneficiary is North Korean Cigars Company with an address in an industrial zone in Tianjin, China. The sanctions team must take immediate action to comply with anti-money laundering (AML) and sanctions laws and regulations.
Option A suggests holding the transaction and investigating the company before releasing the funds. This is a reasonable action for the sanctions team to take as it would allow them to gather more information about the transaction and assess the potential risk of facilitating this transaction. The investigation may include verifying the legitimacy of the beneficiary, the source of funds, and the purpose of the transaction.
Option B suggests blocking the transaction immediately because it contains a reference to North Korea. This option is also reasonable because North Korea is subject to comprehensive sanctions from the United Nations, the United States, and many other countries. Transactions involving North Korea are prohibited in most cases, and facilitating such transactions could result in severe legal and reputational consequences for the institution. However, the sanctions team should verify if the name of the beneficiary and the address provided match any designated entities or individuals on relevant sanctions lists.
Option C suggests calling the correspondent bank and asking if it has performed due diligence on the originator. This option is also reasonable as the correspondent bank could provide valuable information about the transaction and the originator. The correspondent bank may have conducted its own sanctions screening and due diligence procedures, which could assist the sanctions team in making a decision about the transaction.
Option D suggests releasing the transaction so that the Chinese correspondent bank will not be negatively impacted. This option is not advisable because it could result in the institution facilitating a potentially high-risk transaction, which could lead to legal and reputational consequences. The institution must comply with AML and sanctions laws and regulations, and releasing the transaction without proper due diligence and sanctions screening is not an acceptable approach.
In summary, the most appropriate action for the sanctions team to take would be to hold the transaction and conduct further due diligence and sanctions screening on the beneficiary, the originator, and the transaction. The sanctions team should also verify if the name of the beneficiary and the address provided match any designated entities or individuals on relevant sanctions lists. Depending on the results of the investigation, the institution may need to file a suspicious activity report (SAR) with the appropriate regulatory authorities.