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

According to FATF Recommendation 8, what should be the focus of financial institutions when dealing with non-face-to-face relationships?

1. Analyzing physical presence requirements

2. Mitigating risks associated with these types of relationships

3. Encouraging face-to-face interactions

4. Minimizing online transactions

The correct answer is: Mitigating risks associated with these types of relationships

The focus of financial institutions when dealing with non-face-to-face relationships, as outlined in FATF Recommendation 8, should be on mitigating risks associated with these types of relationships. This recommendation acknowledges that non-face-to-face transactions can present unique challenges and vulnerabilities for money laundering and terrorist financing. In a non-face-to-face context, financial institutions must adopt measures that're proportionate to the risks involved. This may involve implementing enhanced due diligence procedures, verifying identity through reliable and independent source documents, and using technology to monitor and track online transactions effectively. By concentrating on mitigating risks, financial institutions can better protect themselves and the financial system as a whole from potential abuses while still allowing access to financial services for legitimate customers who may not be able to engage in face-to-face interactions. This approach reflects a risk-based strategy, which is essential in today's increasingly digital banking environment where many customers might prefer online transactions for convenience.