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?

1. AFile a Suspicious Activity Report (SAR) if red flags cannot be resolved✓ Correct answer
2. BProceed with the transaction if documentation is provided
3. CRely solely on the attorney’s certification of ownership
4. DLimit the review to the immediate counterparty

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