Managing financial crime is a part of risk and compliance for many firms.

Financial Crime Risk Management

Managing financial crime requires implementingcontrols, monitoring, and reporting systemsto detect and prevent illegal activities.

Developing red flags and monitoring scenariosallows firms to detect suspicious transactions related tomoney laundering, fraud, and terrorist financing.

Why Answer C is Correct

PRMIA emphasizes thateffective risk management requires proactive monitoring of transactionsusing red flags, transaction patterns, and anomaly detection systems.

This is aligned with Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulatory requirements.

Why Other Answers Are Incorrect

Option

Explanation

A. Having the business be a cash-only business and not report any transactions.

Incorrect– Cash-only businesses withno reportingarehigh-riskfor financial crime.

B. The requirements to trace all transactions when they are entered into spreadsheets.

Incorrect– While transaction tracing is important,spreadsheets alone are not an effective control mechanismfor financial crime.

D. Local regulations that allow a bank to not report transactions by family members of the board.

Incorrect– This would violateAML and financial crime regulations, increasing corruption risk.

PRMIA Financial Crime and AML Risk Guidelines

Basel Committee on Financial Crime and Money Laundering

PRMIA References for Verification