// IFF606 — Correspondent banking and wire chains
$CATEGORY: VERITAS/IFF606

::IFF606-Q1::A vostro account is best described as\: {
    ~A bank's own account held with a foreign correspondent#Incorrect. Vostro means 'yours' — the account a foreign bank holds on the domestic bank's books, mirroring the same relationship the domestic bank calls its 'nostro' abroad.
    =A foreign correspondent's account held on the domestic bank's own books#Vostro means 'yours' — the account a foreign bank holds on the domestic bank's books, mirroring the same relationship the domestic bank calls its 'nostro' abroad.
    ~A sanctioned-entity holding account#Incorrect. Vostro means 'yours' — the account a foreign bank holds on the domestic bank's books, mirroring the same relationship the domestic bank calls its 'nostro' abroad.
    ~A crypto exchange's fiat settlement account#Incorrect. Vostro means 'yours' — the account a foreign bank holds on the domestic bank's books, mirroring the same relationship the domestic bank calls its 'nostro' abroad.
}

::IFF606-Q2::Nesting in correspondent banking primarily defeats which control? {
    ~Currency transaction reporting#Incorrect. Nesting hides the true originating respondent from the ultimate clearer's screening system by substituting the intermediate correspondent's own details.
    =Sanctions and AML screening at the ultimate clearer#Nesting hides the true originating respondent from the ultimate clearer's screening system by substituting the intermediate correspondent's own details.
    ~Beneficial-ownership registry filing#Incorrect. Nesting hides the true originating respondent from the ultimate clearer's screening system by substituting the intermediate correspondent's own details.
    ~Capital adequacy reporting#Incorrect. Nesting hides the true originating respondent from the ultimate clearer's screening system by substituting the intermediate correspondent's own details.
}

::IFF606-Q3::The BNP Paribas 2014 settlement was significant because it established that\: {
    =Wire stripping is treated as an affirmative sanctions-evasion act#US regulators treated deliberate deletion of payment data as wilful evasion, resulting in an approximately USD 8.9bn settlement.
    ~Correspondent banking fees must be disclosed#Incorrect. US regulators treated deliberate deletion of payment data as wilful evasion, resulting in an approximately USD 8.9bn settlement.
    ~SWIFT logs cannot be subpoenaed#Incorrect. US regulators treated deliberate deletion of payment data as wilful evasion, resulting in an approximately USD 8.9bn settlement.
    ~Nostro accounts must be denominated only in USD#Incorrect. US regulators treated deliberate deletion of payment data as wilful evasion, resulting in an approximately USD 8.9bn settlement.
}

::IFF606-Q4::The February 2025 FATF revision to Recommendation 16 primarily addresses\: {
    ~Beneficial ownership registries#Incorrect. R.16 governs payment-message transparency requirements and was revised to align wire and virtual-asset transfer data standards.
    =Payment transparency, including virtual-asset transfer coverage#R.16 governs payment-message transparency requirements and was revised to align wire and virtual-asset transfer data standards.
    ~Casino customer due diligence#Incorrect. R.16 governs payment-message transparency requirements and was revised to align wire and virtual-asset transfer data standards.
    ~Trust and company service provider licensing#Incorrect. R.16 governs payment-message transparency requirements and was revised to align wire and virtual-asset transfer data standards.
}

::IFF606-Q5::Regulation (EU) 2023/1113 (the Transfer of Funds Regulation) is notable for\: {
    ~Capping crypto-asset transfer coverage at EUR 1,000#Incorrect. The recast TFR applies to crypto-asset transfers of any value, stricter than several other G20 jurisdictions' travel-rule thresholds.
    =Extending wire-transparency rules to crypto-asset transfers with no minimum threshold#The recast TFR applies to crypto-asset transfers of any value, stricter than several other G20 jurisdictions' travel-rule thresholds.
    ~Abolishing correspondent banking within the EU#Incorrect. The recast TFR applies to crypto-asset transfers of any value, stricter than several other G20 jurisdictions' travel-rule thresholds.
    ~Replacing SWIFT with a EU-only messaging network#Incorrect. The recast TFR applies to crypto-asset transfers of any value, stricter than several other G20 jurisdictions' travel-rule thresholds.
}

::IFF606-Q6::ISO 20022 (pacs.008) messages differ from legacy MT103 primarily because they\: {
    ~Cannot carry originator data at all#Incorrect. ISO 20022 replaces MT free-text conventions with structured, machine-parseable tagged data fields.
    =Use structured, tagged fields including an explicit ultimate debtor/creditor concept#ISO 20022 replaces MT free-text conventions with structured, machine-parseable tagged data fields.
    ~Are only used for domestic payments#Incorrect. ISO 20022 replaces MT free-text conventions with structured, machine-parseable tagged data fields.
    ~Eliminate the need for correspondent banks#Incorrect. ISO 20022 replaces MT free-text conventions with structured, machine-parseable tagged data fields.
}

::IFF606-Q7::Correspondent de-risking is best described as\: {
    ~Individual client risk-based account closure#Incorrect. De-risking is a commercial exit decision driven by the ratio of fixed compliance cost to thin revenue, not individualised risk assessment.
    =Wholesale withdrawal of relationships from a region or client category to avoid fixed compliance cost#De-risking is a commercial exit decision driven by the ratio of fixed compliance cost to thin revenue, not individualised risk assessment.
    ~A FATF-mandated sanction#Incorrect. De-risking is a commercial exit decision driven by the ratio of fixed compliance cost to thin revenue, not individualised risk assessment.
    ~A crypto-specific phenomenon only#Incorrect. De-risking is a commercial exit decision driven by the ratio of fixed compliance cost to thin revenue, not individualised risk assessment.
}

::IFF606-Q8::The most likely consequence of correspondent de-risking documented by the IMF and World Bank is\: {
    ~Elimination of the underlying demand for cross-border transfer#Incorrect. Displacement to informal value-transfer systems, which carry weaker audit trails, is the documented consequence in successive IMF/World Bank surveys.
    =Displacement of flow into informal, less-traceable channels#Displacement to informal value-transfer systems, which carry weaker audit trails, is the documented consequence in successive IMF/World Bank surveys.
    ~Immediate adoption of central bank digital currency#Incorrect. Displacement to informal value-transfer systems, which carry weaker audit trails, is the documented consequence in successive IMF/World Bank surveys.
    ~No measurable effect on remittance volumes#Incorrect. Displacement to informal value-transfer systems, which carry weaker audit trails, is the documented consequence in successive IMF/World Bank surveys.
}