Certified Anti-Money Laundering Specialist Certification (CAMS) Practice Exam 2025 - Free CAMS Practice Questions and Study Guide

'Know Your Customer's customer' (KYC's customer) specifically refers to the process of identifying and understanding the account holders of a respondent bank. This practice is crucial for enhancing due diligence and understanding the risk profile associated with customers that a financial institution serves indirectly through a correspondent or respondent banking relationship.

By knowing the customers of its customers, a bank can better assess potential risks related to money laundering or terrorist financing that might be introduced through those relationships. It creates a layered understanding of the clientele, which is essential for compliance with anti-money laundering (AML) regulations. This approach enables a bank to identify any suspicious activities associated with those indirect customers, ensuring that risks are effectively managed at every level of the banking relationship.

The other choices focus on aspects of customer verification, financial assessments, or regulatory understanding, which do not specifically address the core concept of understanding the clients served by the bank's direct customers.