Non-compliance with AML regulatory obligations can have severe consequences for financial institutions.
Among these, the most severe consequence is the loss of license. When a financial institution fails to meet AML requirements, regulators may revoke its license to operate. Losing the license effectively shuts down the institution's ability to conduct business, impacting its existence and operations significantly12.
References:
1. Unit21 AML: 8 AML Penalties, Fines, and Sanctions + Examples You Should Avoid
2. Financial Crime Academy: Ensuring Compliance: The Power Of AML Regulatory Reporting

According to the Wolfsberg Principles on Private Banking, the bank should apply additional diligence to customers who present a higher risk of money laundering or other financial crimes. Some of the indicators for defining such customers are:
* Persons residing in or having funds from countries with inadequate AML standards, sanctions, embargoes, or other measures that indicate a higher risk of money laundering or terrorist financing12.
* Persons engaged in business activities known to be susceptible to money laundering, such as cash- intensive businesses, gambling, arms trade, precious metals and stones, art and antiquities, etc13.
* Persons determined to be Politically Exposed Persons (PEPs), who are individuals who hold or have held positions of public trust or influence, or their family members or close associates, and who may pose a higher risk of corruption, bribery, or abuse of power14.
Persons who receive funds from a correspondent banking relationship are not necessarily required additional diligence, unless they fall under any of the above categories or other risk factors. Correspondent banking is a service provided by one bank to another bank to facilitate cross-border transactions, and it is subject to its own set of AML standards and due diligence measures5.
References:
* Wolfsberg Anti-Money Laundering Principles for Private Banking (2012) 1
* FATF High-Risk and Other Monitored Jurisdictions
* FATF Money Laundering and Terrorist Financing Vulnerabilities of Legal Professionals
* FATF Guidance on Politically Exposed Persons (Recommendations 12 and 22)
* FATF Guidance on Correspondent Banking Services

According to the Wolfsberg Anti-Money Laundering Principles for Private Banking, the beneficial owners of a private banking account are those who generally have ultimate control over the funds in the account and those who are the ultimate source of funds for the account and whose source of wealth should be subject to due diligence1. These two criteria are meant to ensure that the bank knows who is ultimately behind the account and where the funds come from, in order to prevent the use of the bank for money laundering or other criminal purposes. Authorized signers on the account or those who have legal title to a controlling share interest in the customer are not necessarily the beneficial owners, as they may act on behalf of others or have limited influence over the account.
References: 1: Wolfsberg Anti-Money Laundering Principles for Private Banking (2012), Section 1.3.1 and
1.3.2, 1
Reference: https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/wolfsberg-standards/10.%
20Wolfsberg-Private-Banking-Prinicples-May-2012.pdf (2)

Explanation
The primary purposes of Financial Action Task Force (FATF)-Style Regional Bodies are to promote effective implementation of FATF recommendations and to provide expertise and input in FATF policy-making.
(CAMS Manual, 6th Edition, Page 180)