Which best explains why the auditor rates the audit finding on sanction screening severity high?

Which best explains why the auditor rates the audit finding on sanction screening severity high?
A . The efficiency of the sanction screening tool is not properly tuned due to the wrong sanctions lists.
B . The finding is on a different audit topic than the KYC related findings.
C . The tool might miss potential sanction violations given the long intervals before the sanctions lists are updated.
D . The organization might have reported a sanction breach that is not a current sanction violation.

Answer: C

Explanation:

Severity Justification:

Infrequent updates of sanction lists create significant risks of missing sanctioned entities, increasing legal, financial, and reputational risks for the institution.

FATF Recommendations emphasize the need for timely and accurate sanctions screening to prevent facilitation of sanctioned transactions.

Critical Evidence:

A delayed update to sanction lists is cited as a key failure point in regulatory penalties and compliance audits.