Answer: Require the bank's business units to screen potential employees as part of the first line of defense in managing ML/FT risk.

The correct answer is A. The bank should require its business units to screen potential employees as part of the first line of defense in managing money laundering and financial terrorism (ML/FT) risk. This is because the first line of defense is responsible for identifying, assessing, and controlling ML/FT risks, which includes having written policies and procedures in place, as well as providing employee training for managing these risks. Screening potential employees is a crucial part of this process to ensure that the bank's workforce is not compromised by individuals who may pose a risk to the bank's anti-money laundering and counter-terrorism financing efforts. Option B is incorrect because monitoring for ML/FT risk should not be limited to transactions above a certain threshold value. It should cover all accounts and transactions to ensure comprehensive risk management. Option C is incorrect because politically exposed persons (PEPs) actually pose a higher ML/FT risk due to the potential that some of their wealth may have been obtained through corruption. Therefore, they should not be excluded from screening for ML/FT risk. Option D is incorrect because while compliance and legal functions play a crucial role in managing ML/FT risk, it is recommended to appoint a chief ML/FT officer to lead the bank's efforts in this area. Ideally, ML/FT risk should be managed using a three lines of defense approach, which involves multiple business functions working together to ensure effective risk management.

Author: LeetQuiz Editorial Team