Certified Anti-Money Laundering Specialist Certification (CAMS) Practice Exam

According to FATF Recommendation 14, what protection do financial institutions have concerning suspicious activity reporting?

1. Complete anonymity

2. Safe harbor provisions

3. Immunity from audits

4. Guaranteed confidentiality in all cases

The correct answer is: Safe harbor provisions

FATF Recommendation 14 provides safe harbor provisions to financial institutions regarding suspicious activity reporting (SAR). This means that when these institutions file a SAR in good faith, they are protected from legal liability or repercussions that may arise from reporting the suspicious activity. This protection encourages the reporting of potentially illicit activities without fear of negative consequences, thus promoting compliance with anti-money laundering regulations. Safe harbor provisions are critical in maintaining an environment where financial institutions can report suspicious transactions without hesitation. They facilitate the sharing of vital information necessary for combating money laundering and terrorist financing, supporting the overall integrity of the financial system. In contrast, complete anonymity, while desirable, is not typically provided under these recommendations. Institutions may need to provide relevant information to regulators or law enforcement when necessary. Immunity from audits is also not a provision of Recommendation 14, as institutions must still adhere to regulatory oversight and can be audited based on other compliance requirements. Guaranteed confidentiality is not assured in all cases, particularly when investigations may require the disclosure of information, and there may be situations where authorities must disclose certain data as part of their investigations, especially if it pertains to public safety or national security.