What is an example of a legal risk a financial institution (FI) could face if it is sanctioned for failure to report suspected fraud activity?
A.
Foreign correspondents could terminate their relationships with the sanctioned bank.
B.
Clients of the bank might draw down the reserves of the bank and lead to liquidity issues.
C.
The bank could be forced to reimburse the victims of the fraudster for the losses suffered.
Most Votes
D.
The bank could see higher default rates on loans granted to companies owned by the fraudster.
Answer:
D
User Votes:
A 33 votes
50%
B 7 votes
50%
C 39 votes
50%
D 16 votes
50%
Discussions
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AnaA.
1 year, 8 months ago
A. Les correspondants étrangers pourraient mettre fin à leurs relations avec la banque sanctionnée.
AnaA.
1 year, 8 months ago
D. La banque pourrait constater des taux de défaut plus élevés sur les prêts accordés aux entreprises appartenant au fraudeur.
dionette_tayl
6 months, 1 week ago
C. The bank could be forced to reimburse the victims of the fraudster for the losses suffered.
alban_999
4 months, 3 weeks ago
Option C as it represents a direct financial liability resulting from legal action taken by the victims.
trinka5
2 weeks, 1 day ago
f a financial institution fails to report suspected fraud, and this failure leads to continued criminal activity causing harm to others, it may face legal action from affected parties (e.g., fraud victims). Courts may find the institution negligent in its duties under AML/CFT laws and could require it to:
Compensate victims, especially if the bank was found to have ignored red flags or breached statutory obligations.
This is a direct legal liability — hence, a legal risk.
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A. Les correspondants étrangers pourraient mettre fin à leurs relations avec la banque sanctionnée.
D. La banque pourrait constater des taux de défaut plus élevés sur les prêts accordés aux entreprises appartenant au fraudeur.
C. The bank could be forced to reimburse the victims of the fraudster for the losses suffered.
Option C as it represents a direct financial liability resulting from legal action taken by the victims.
f a financial institution fails to report suspected fraud, and this failure leads to continued criminal activity causing harm to others, it may face legal action from affected parties (e.g., fraud victims). Courts may find the institution negligent in its duties under AML/CFT laws and could require it to:
Compensate victims, especially if the bank was found to have ignored red flags or breached statutory obligations.
This is a direct legal liability — hence, a legal risk.