Section 313 of the USA PATRIOT Act prohibits U.S. financial institutions from establishing, maintaining, administrating or managing correspondent accounts for foreign shell banks. A foreign shell bank is a foreign bank that does not have a physical presence in any country. To ensure compliance with this prohibition, U.S.
financial institutions must obtain from each foreign bank that maintains a correspondent account the identity of each owner of the foreign bank and the nature and extent of each owner's ownership interest. This information must be updated within 30 days of any change.
References:
USA PATRIOT Act | FinCEN.gov, Section 313
US PATRIOT ACT | State Street

After filing a suspicious activity report (SAR), an investigator should prepare a summary for senior management recommending client off-boarding. This is because client off-boarding is a risk-based decision that requires senior management approval and may involve legal considerations. Informing other local financial institutions about the client, restraining or blocking the client's account(s), or contacting law enforcement directly are not appropriate actions for an investigator to take after filing a SAR, as they may compromise the confidentiality of the SAR, violate privacy laws, or interfere with ongoing investigations.

According to the Basel Committee's Customer Due Diligence for Banks paper, one of the essential elements of a sound KYC programme is customer identification. This includes obtaining sufficient information to understand the nature and purpose of the customer relationship, the source of funds, and the beneficial ownership and control structure of the customer1. For corporate business entities, this means that a bank needs to have an understanding of the structure of the company, such as its legal form, its ownership, its directors, its line of business, and its geographical locations2. This will help the bank to assess the risk profile of the customer, to verify its identity and legitimacy, and to monitor its transactions for any suspicious activities.
References:
1: Customer due diligence for banks, Basel Committee on Banking Supervision, October 2001, Section III.2 2:
General Guide to Account Opening and Customer Identification, Basel Committee on Banking Supervision, February 2003, Section 2.2.1 Reference: https://www.bis.org/publ/bcbs77.pdf

According to the Wolfsberg Anti-Money Laundering Principles for Correspondent Banking, the risk of a correspondent bank customer depends on various factors, such as the nature of the customer's business, the customer's location, the products and services offered, the customer's ownership and management structure, and the customer's customer base1. Among these factors, two that should increase the risk and require additional due diligence are:
The customer is located in a Financial Action Task Force (FATF) member country and the bank's head of information security is a politically exposed person (PEP). A PEP is an individual who is or has been entrusted with a prominent public function, such as a senior government official, a judicial or military officer, a senior executive of a state-owned corporation, or a political party leader2. PEPs pose a higher risk of money laundering, corruption, or bribery due to their influence and access to public funds3. Therefore, a correspondent bank customer that has a PEP in a key position should be subject to enhanced due diligence, such as verifying the source of funds, the purpose of the relationship, and the PEP's reputation and integrity4.
The customer is located in a non-FATF member country and services mostly commercial customers who engage in international trade. A non-FATF member country is a country that is not part of the FATF, an inter-governmental body that sets standards and promotes effective implementation of legal, regulatory, and operational measures for combating money laundering, terrorist financing, and other related threats to the integrity of the international financial system5. Non-FATF member countries may have weaker or less consistent anti-money laundering and counter-terrorist financing regimes, and may pose a higher risk of financial crime or sanctions evasion6. Moreover, a correspondent bank customer that services mostly commercial customers who engage in international trade may be exposed to trade-based money laundering, which is the process of disguising the proceeds of crime and moving value through the use of trade transactions7. Therefore, a correspondent bank customer that operates in a non-FATF member country and deals with international trade should be subject to enhanced due diligence, such as obtaining information on the nature and volume of the trade transactions, the origin and destination of the goods, and the identity and reputation of the trade counterparties8.
The other options are not correct because they do not necessarily increase the risk of a correspondent bank customer or require additional due diligence. A customer that is located in a FATF member country and provides services primarily to a local individual customer may pose a lower risk of money laundering or terrorist financing, as the customer's activities are subject to the FATF standards and recommendations, and the customer's customer base is less likely to involve complex or cross-border transactions. A customer that is located in a FATF member country and provides services to other correspondent banks in neighboring countries may also pose a lower risk of money laundering or terrorist financing, as the customer's activities are subject to the FATF standards and recommendations, and the customer's customer base is composed of regulated financial institutions that are subject to their own anti-money laundering and counter-terrorist financing obligations.
nswer: BD
According to the Wolfsberg Anti-Money Laundering Principles for Correspondent Banking, the risk of a correspondent bank customer depends on various factors, such as the nature of the customer's business, the customer's location, the products and services offered, the customer's ownership and management structure, and the customer's customer base1. Among these factors, two that should increase the risk and require additional due diligence are:
The customer is located in a Financial Action Task Force (FATF) member country and the bank's head of information security is a politically exposed person (PEP). A PEP is an individual who is or has been entrusted with a prominent public function, such as a senior government official, a judicial or military officer, a senior executive of a state-owned corporation, or a political party leader2. PEPs pose a higher risk of money laundering, corruption, or bribery due to their influence and access to public funds3. Therefore, a correspondent bank customer that has a PEP in a key position should be subject to enhanced due diligence, such as verifying the source of funds, the purpose of the relationship, and the PEP's reputation and integrity4.
The customer is located in a non-FATF member country and services mostly commercial customers who engage in international trade. A non-FATF member country is a country that is not part of the FATF, an inter-governmental body that sets standards and promotes effective implementation of legal, regulatory, and operational measures for combating money laundering, terrorist financing, and other related threats to the integrity of the international financial system5. Non-FATF member countries may have weaker or less consistent anti-money laundering and counter-terrorist financing regimes, and may pose a higher risk of financial crime or sanctions evasion6. Moreover, a correspondent bank customer that services mostly commercial customers who engage in international trade may be exposed to trade-based money laundering, which is the process of disguising the proceeds of crime and moving value through the use of trade transactions7. Therefore, a correspondent bank customer that operates in a non-FATF member country and deals with international trade should be subject to enhanced due diligence, such as obtaining information on the nature and volume of the trade transactions, the origin and destination of the goods, and the identity and reputation of the trade counterparties8.

When investigating an AML event, the following techniques would be used to investigate suspected mule accounts:
A: Determine if the suspected accounts are being accessed by a common person, telephone number, or device. This can help identify if the accounts are controlled by the same person or group, or if they are part of a larger network of mules. It can also help detect if the accounts are opened using synthetic identities or stolen credentials12.
B: Reconcile the stated purpose of the account with actual transaction history and compare with peer groups. This can help assess if the account activity is consistent with the customer profile, risk rating, and expected behavior. It can also help identify anomalies, such as sudden changes in transaction patterns, large or frequent transfers, or transactions with high-risk jurisdictions or entities12.
E: Establish the frequency with which the funds are moved in and out of the accounts. This can help measure the velocity and volume of the funds flowing through the accounts, which can indicate if the accounts are used for layering or integration of illicit funds. It can also help detect if the accounts are used for smurfing, which is a technique of breaking down large amounts of cash into smaller deposits to avoid detection or reporting thresholds13.
References:
CAMS Study Guide (the 6th edition), page 1841
Mule accounts: how to track them down - Linkurious2
Money Mules - FBI3