Explanation:
The correct answer is D.
The AML/CFT program should be tested by an independent party, not the chief AML/CFT officer. The role of internal audit, which is considered the third line of defense, is crucial in independently evaluating a bank's risk management and controls. The office conducting the audit should have sufficient independence to assess adherence to various policies and procedures without any compromise. In this case, since the chief risk officer, who also serves as the developer and advisor on AML and CFT matters, conducts the audit, there could be a potential conflict of interest. This is because they are assessing the same policies and procedures
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Q.3130 A large banking group has an AML compliance program that addresses procedures for filing Suspicious Transaction Reports and includes policies, procedures and internal controls for customer identification, information sharing, account monitoring, and identifying money laundering red flags. Each of the bank’s 12 branches undergoes mandatory AML/CFT trainings in April and November each year, all conducted as online conferences via a video link. The board does not take the Internet training. Instead, the chief risk officer organizes a luncheon at the head office where an outsider comes in and trains them. The program provides for the appointment of a chief AML/CFT officer, and twice a year the chief AML/CFT officer conducts an audit of the AML/CFT framework. In what respect does the program need improvement?
A
The AML program should be tested more than twice per year.
B
Employees should be trained in a classroom, not via the internet because physical training is better.
C
The group should consolidate the training sessions across its subsidiaries into a single event.
D
The AML/CFT program should be tested by an independent party, not the chief AML/CFT officer.
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