Which should a financial institution implement in order to identify and investigate money laundering activity...

According to the ACAMS CAMS Study Guide, 6th Edition, Chapter 3, Section 3.2, the financial institution should implement the following measures in order to identify and investigate money laundering activity from their clients:

Adverse news screening: This is a process of checking the clients’ names and related parties against various sources of negative or adverse information, such as media reports, sanctions lists, watch lists, law enforcement databases, etc. Adverse news screening can help the financial institution to detect any potential red flags or indicators of money laundering or other criminal activities involving their clients, and to take appropriate actions, such as conducting enhanced due diligence, filing suspicious activity reports, or terminating the relationship.

Transaction monitoring: This is a process of reviewing and analyzing the clients’ transactions and activities, such as deposits, withdrawals, transfers, payments, etc., to identify any unusual or suspicious patterns or behaviors that deviate from their normal or expected profile. Transaction monitoring can help the financial institution to detect any possible signs of money laundering orother financial crimes, such as structuring, layering, integration, fraud, tax evasion, etc., and to investigate and report them accordingly.

The other options are not measures that the financial institution should implement in order to identify and investigate money laundering activity from their clients, although they may be part of the overall AML program or compliance culture:

Integrity policy: This is a document that outlines the ethical principles and values that guide the conduct and behavior of the financial institution and its employees. An integrity policy can help the financial institution to promote a culture of honesty, transparency, and accountability, and to prevent or deter any misconduct or corruption. However, an integrity policy alone is not sufficient or specific enough to identify and investigate money laundering activity from their clients.

Whistleblower hotline: This is a mechanism that allows the employees or other stakeholders of the financial institution to report any suspected or observed violations of the AML policies, procedures, or regulations, or any other wrongdoing or malpractice, without fear of retaliation or reprisal. A whistleblower hotline can help the financial institution to encourage and facilitate the reporting of any potential or actual money laundering activity from their clients or within the organization, and to protect the rights and interests of the whistleblowers. However, a whistleblower hotline is not a measure that the financial institution implements to identify and investigate money laundering activity from their clients, but rather a tool that supports the AML program and compliance function.

Code of conduct: This is a document that defines the standards and expectations of the financial institution and its employees regarding their professional and ethical behavior, responsibilities, and obligations. A code of conduct can help the financial institution to establish and maintain a culture of compliance and integrity, and to prevent or address any conflicts of interest, misconduct, or abuse of power. However, a code of conduct is not a measure that the financial institution implements to identify and investigate money laundering activity from their clients, but rather a framework that governs the AML program and compliance function.