Risk Assessment & Management Flashcards

Which SWIFT tool provides real-time tracking of payment status and improves transparency in correspondent banking chains?

Answer: SWIFT gpi Tracker

The SWIFT gpi Tracker gives all banks in a payment chain end-to-end visibility of payment status, fees, and FX rates in real time.

A bank's risk team identifies that a respondent bank processes high volumes of transactions from jurisdictions on the FATF blacklist. This is an example of which risk?

Answer: Nested correspondent banking risk

Nested correspondent banking occurs when a respondent bank processes transactions on behalf of other banks, obscuring the ultimate originator and raising AML risk.

Which SWIFT CSP advisory control is considered an advanced practice for detecting anomalous messaging patterns?

Answer: Payment controls software (anomaly detection)

Payment controls software that flags unusual transaction patterns is listed as an advisory (recommended but not mandatory) control in the CSP framework.

Under Wolfsberg Correspondent Banking Principles, what due diligence is required before establishing a new correspondent relationship?

Answer: Comprehensive KYC/AML due diligence on the respondent bank

The Wolfsberg Principles require thorough KYC/AML due diligence covering ownership, business model, AML controls, and jurisdiction risk before opening accounts.

What does the SWIFT Compliance Analytics tool (formerly called Transaction Pattern Analysis) primarily help institutions do?

Answer: Benchmark their transaction patterns against peers to identify anomalies

SWIFT Compliance Analytics lets banks compare their traffic patterns against community norms to spot suspicious flows that may indicate AML risk.

A fraudster gains access to an operator's SWIFT credentials and sends unauthorized MT 202 COV messages. Which control layer would most directly prevent message transmission?

Answer: Four-eyes principle (dual authorization) on payment release

A dual-authorization (four-eyes) requirement means no single operator can release a payment alone, directly blocking unauthorized single-person transmission.

Which settlement risk concept describes the danger that one party delivers assets but the counterparty defaults before delivering its side in a foreign exchange transaction?

Answer: Herstatt risk (principal risk)

Herstatt risk (principal risk) occurs in FX when one leg of the trade is settled but the counterparty fails before completing the other, named after Bankhaus Herstatt's 1974 collapse.