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

What should compliance reports be submitted to if financial institutions fail to follow recommendations?

1. International organizations

2. Local authorities

3. Parent institution's regulatory authorities

4. No reports are necessary

The correct answer is: Parent institution's regulatory authorities

Compliance reports should be submitted to the parent institution's regulatory authorities when financial institutions fail to follow recommendations. This is crucial because these regulatory bodies are responsible for overseeing financial institutions and ensuring they adhere to applicable laws and regulations, including compliance standards. By reporting non-compliance issues to these authorities, the institutions can demonstrate their commitment to transparency and accountability, while regulators can assess the situation and take necessary actions to ensure compliance and prevent potential risks associated with money laundering and other financial crimes. The other options do not provide the same level of oversight or enforcement as the parent institution's regulatory authorities. Local authorities may not have the expertise or jurisdiction over financial institutions with broader operations, while international organizations typically focus on broader regulatory frameworks rather than individual compliance issues. Lastly, suggesting that no reports are necessary undermines the importance of maintaining compliance and the integrity of the financial system.