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

What is the required record retention period for customer identification data after a relationship ends, according to FATF Recommendation 10?

1. 1 year

2. 3 years

3. 5 years

4. 10 years

The correct answer is: 5 years

According to FATF Recommendation 10, the correct retention period for customer identification data after the conclusion of a business relationship is set at five years. This duration is established to ensure that financial institutions have sufficient records on hand that can assist in any potential investigations into past customer activity, particularly in relation to money laundering and terrorist financing. Retaining these records for five years allows authorities to trace transactions and activities that may need further examination, which is a critical aspect of effective anti-money laundering and counter-terrorism financing measures. The additional time frame beyond the end of the relationship is necessary because suspicious activities or transactions may not be immediately identifiable, and law enforcement may need access to information long after a customer has ceased their relationship with the institution.