Series 79 practice questionmediumAnti-Money Laundering in IB Context
During customer due diligence for a private placement, an investment bank notes that the client is a beneficial owner of multiple shell companies registered in high-risk jurisdictions. What is the firm’s primary regulatory obligation?
- AFile a Suspicious Activity Report (SAR) if red flags cannot be resolved✓ Correct answer
- BProceed with the transaction if documentation is provided
- CRely solely on the attorney’s certification of ownership
- DLimit the review to the immediate counterparty
Explanation
Why A — File a Suspicious Activity Report (SAR) if red flags cannot be resolved
If due diligence reveals unresolved red flags, filing a SAR is required. Sole reliance on documentation or partial review exposes the firm to regulatory risk.
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