Which suspicious activity should the investigator identify during the review of the loan agreements?

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 since 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 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:

1J 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 a loan

Which suspicious activity should the investigator identify during the review of the loan agreements?
A . AAA International Company Ltd.’s account has transactions in HKD and USD.
B . Y is the authorized signatory on the beneficial ownership form.
C . Online information found that X is the chairman of a business group of companies.
D . Y signed on behalf of the lenders.

View Answer

Answer: D

Explanation:

The correct answer is D because it is a suspicious activity that Y, who is the authorized signatory of the customer, also signed on behalf of the lenders. This indicates a possible conflict of interest, collusion, or fraud. The other options are not suspicious activities based on the information given.

Reference: [Advanced CAMS-FCI Study Guide], page 17-18