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

Which of the following best describes a respondent bank?

1. A bank receiving services from a correspondent bank

2. A bank providing account management services

3. A bank that manages funds for clients

4. A central authority for banking regulations

The correct answer is: A bank receiving services from a correspondent bank

The best description of a respondent bank is indeed that it is a bank receiving services from a correspondent bank. In the context of banking relationships, a correspondent bank provides services to the respondent bank, typically in the form of facilitating international transactions, offering access to foreign markets, or providing liquidity and foreign currency. This relationship is crucial for smaller banks or banks in markets without extensive networks, enabling them to offer services such as international wire transfers, trade finance, and foreign currency accounts to their customers. This definition highlights the nature of the relationship where the respondent bank relies on the correspondent bank for support in areas they might not be equipped to handle independently. The other options do not accurately capture the role of a respondent bank; instead, they pertain to different banking functions or institutions, like account management or regulatory roles, which are not specifically related to the definition of a respondent bank.