An investigator at a corporate bank is conducting transaction monitoring alerts clearance.

An investigator at a corporate bank is conducting transaction monitoring alerts clearance.

KYC profile background: An entity customer, doing business offshore in Hong Kong, established a banking business relationship with the bank in 2017 for deposit and loan purposes. It acts as an offshore investment holding company. The customer declared that the ongoing source of funds to this account comes from group-related companies.

• X is the UBO. and owns 97% shares of this entity customer;

• Y is the authorized signatory of this entity customer.

This entity customer was previously the subject of a SAR/STR.

KYC PROFILE

Customer Name: AAA International Company. Ltd

Customer ID: 123456

Account Opened: June 2017

Last KYC review date: 15 Nov 2020

Country and Year of Incorporation: The British Virgin Islands, May 2017

AML risk level: High

Account opening and purpose: Deposits, Loans and Trade Finance

Anticipated account activities: 1 to 5 transactions per year and around 1 million per transaction amount

During the investigation, the investigator reviewed remittance transactions activities for the period from Jul 2019 to Sep 2021 and noted the following transactions pattern:

TRANSACTION JOURNAL

Review dates: from July 2019 to Sept 2021 For Hong Kong Dollars (HKD) currency:

Incoming transactions: 2 inward remittances of around 1.88 million HKD in total from different third parties

Outgoing transactions: 24 outward remittances of around 9 4 million HKD in total to different third parties

For United States Dollars (USD) currency:

Incoming transactions: 13 inward remittances of around 3.3 million USD in total from different third parties

Outgoing transactions: 10 outward remittances of around 9.4 million USD in total to different third parties.

RFI Information and Supporting documents:

According to the RFI reply received on 26 May 2021, the customer provided the bank with the information below:

1) All incoming funds received in HKD & USD currencies were monies lent from non-customers of the bank. Copies of loan agreements had been provided as supporting documents. All of the loan agreements were in the same format and all the lenders are engaged in trading business.

2) Some loan agreements were signed among four parties, including among lenders. borrower (the bank’s customer), guarantor, and guardian with supplemental agreements, which stated that the customer, as a borrower, who failed to repay the loan

Based on the KYC profile and the transaction journal, the pattern of activity shows a deviation in:
A . expected vs. actual activity.
B . customer risk rating
C . product risk rating.
D . U.S. currency incoming vs. outgoing transaction rales.

View Answer

Answer: A

Explanation:

The correct answer is A because the expected account activities were 1 to 5 transactions per year and around 1 million per transaction amount, but the actual activity showed much more frequent and varied transactions in different currencies and amounts. This indicates a deviation from the customer’s profile and risk level.

Reference: Advanced CAMS-FCI Study Guide, page 16