Cryptoasset Anti-Financial Crime Specialist (CCAS) Certification Practice Test

What is a significant reputational risk outcome for a bank fined for an ineffective AML program?

1. Staffing the bank could be difficult.

2. The bank could lose its charter.

3. Customers and investors may leave the bank.

4. The bank could become insolvent.

The correct answer is: Customers and investors may leave the bank.

A bank fined for an ineffective Anti-Money Laundering (AML) program faces significant reputational risk, which directly impacts its relationships with customers and investors. When a bank is penalized, it raises concerns about the institution's credibility and trustworthiness in managing financial transactions. This can lead to a loss of confidence among customers, who may worry about the safety and integrity of their funds, prompting them to seek alternatives. Similarly, investors may perceive the fine as a sign of mismanagement or riskiness, which can result in them withdrawing their support or choosing not to invest in the bank. The other potential outcomes—difficulty in staffing, losing its charter, or becoming insolvent—are consequences that could arise from various financial or operational failures. While they may be serious issues in their own right, the immediate reputational damage stemming from an AML violation primarily influences customer and investor behavior. Thus, the loss of customers and investors is the most direct and significant reputational risk outcome following a fine for ineffective AML practices.