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

What does FATF SR Four require from financial institutions?

1. Perform background checks on all customers

2. Report suspicious transactions related to terrorism

3. Reduce transaction limits for international transfers

4. Enhance security measures in banking systems

The correct answer is: Report suspicious transactions related to terrorism

FATF Special Recommendation (SR) Four emphasizes the importance of financial institutions in combating the financing of terrorism. It specifically requires these institutions to report any suspicious transactions that may be related to terrorism, recognizing that timely reporting can be critical for authorities to prevent potential terrorist activities. Financial institutions play a vital role in monitoring transactions for any indicators of illicit activity, and reporting suspicious transactions ensures that law enforcement agencies can investigate and take necessary action. This requirement enhances the overall security framework against terrorism financing, aligning with global efforts to safeguard the financial system. The other choices, while important aspects of financial institutions' operations, do not specifically align with the requirements of FATF SR Four. Background checks are generally important for customer due diligence but are not the focus of this particular recommendation. Adjusting transaction limits may be part of broader risk management strategies but does not directly address reporting tasks related to terrorism. Enhancing security measures in banking systems is a key element of overall financial integrity but does not specifically pertain to the obligations outlined in SR Four regarding suspicious transaction reporting.