What should a bank do when it receives a request from a customer to transfer funds to an individual in Iraq?
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A. B. C. D.B
When a bank receives a request from a customer to transfer funds to an individual in Iraq, the bank needs to take certain precautions in order to comply with legal requirements related to anti-money laundering (AML) and countering the financing of terrorism (CFT).
One of the main tools that the United States government uses to prevent the flow of funds to sanctioned individuals and entities is the Specially Designated Nationals and Blocked Persons List (SDN List). The SDN List is maintained by the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury, and it includes the names of individuals and organizations that are subject to economic sanctions and other restrictions.
Therefore, the correct answer to this question is B: Conduct the transfer if the individual and the financial institution are not on the SDN list.
Before processing the transfer, the bank should first verify the identity of the customer and the recipient, and conduct a risk assessment to determine whether the transaction raises any red flags. If the individual and the financial institution are not on the SDN List, and the transaction is not otherwise suspicious, the bank may proceed with the transfer as requested.
However, if the individual or the financial institution is on the SDN List, or if the transaction is otherwise suspicious, the bank should take additional steps to mitigate the risk. This may include blocking the transaction, filing a suspicious activity report (SAR), and notifying OFAC immediately.
It's important to note that Iraq is a high-risk jurisdiction for AML/CFT purposes, and transactions involving Iraq require enhanced due diligence and additional scrutiny. Therefore, banks should have robust compliance programs in place to ensure that they are meeting their regulatory obligations and mitigating the risk of financial crime.