Explanation/Reference: http://www.menafatf.org/sites/default/files/Newsletter/PEPs_in_relat_on_to_AMLCFT.pdf

According to the Financial Action Task Force (FATF) Special Recommendation IV, if financial institutions, or other businesses or entities subject to anti-money laundering obligations, suspect or have reasonable grounds to suspect that funds are linked or related to, or are to be used for terrorism, terrorist acts or by terrorist organisations, they should be required to report promptly their suspicions to the competent authorities1. This is consistent with the FATF Recommendation 20, which requires the same reporting obligation for money laundering and the financing of proliferation of weapons of mass destruction2.
Reporting suspicious transactions related to terrorism is a key measure to detect, prevent and suppress the financing of terrorism and terrorist acts, and to facilitate international cooperation and information exchange.
References:
* 1: The FATF Recommendations - Financial Action Task Force
* 2: IX Special Recommendations - Financial Action Task Force

The Patriot Act, enacted in 2001, introduced several provisions to enhance the anti-money laundering and counter-terrorist financing (AML/CFT) measures for U.S. banks and their foreign correspondent relationships.
Some of the potential issues for foreign financial institutions (FFIs) maintaining correspondent accounts with
U.S. banks under the Patriot Act are:
* Cancellation of correspondent banking relationships: The Patriot Act requires U.S. banks to conduct due diligence and enhanced due diligence on their foreign correspondent accounts, and to terminate any account that poses a significant risk of money laundering or terrorist financing. This may result in the cancellation of correspondent banking relationships with FFIs that do not meet the U.S. standards or cooperate with the U.S. authorities. The loss of correspondent banking relationships may affect the FFIs' ability to access the U.S. financial system and provide services to their customers.
* Forfeiture of funds in a U.S. interbank account: The Patriot Act authorizes the U.S. government to seize and forfeit any funds in a U.S. interbank account that are involved in or traceable to money laundering or terrorist financing activities. This means that FFIs may face the risk of losing their funds in a U.S.
interbank account if they or their customers are suspected or accused of engaging in illicit activities. The forfeiture of funds may have significant financial and reputational consequences for the FFIs and their customers.
* Prohibition of correspondent accounts for shell banks: The Patriot Act prohibits U.S. banks from establishing or maintaining correspondent accounts for shell banks, which are banks that have no physical presence in any country and are not affiliated with a regulated financial group. This means that FFIs that are shell banks or have relationships with shell banks cannot access the U.S. financial system through correspondent accounts. The prohibition of correspondent accounts for shell banks aims to prevent the use of shell banks as vehicles for money laundering and terrorist financing.
References:
* CAMS Study Guide, 6th Edition, Chapter 4: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), pp. 81-841
* USA PATRIOT Act, Title III: International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, Sections 312, 319, and 3132
* Wolfsberg Anti-Money Laundering Principles for Correspondent Banking, October 2014, pp. 3-43 Reference: http://www.ffiec.gov/bsa_aml_infobase/pages_manual/olm_027.htm

Explanation
The Certified Anti-Money Laundering Specialist (the 6th edition) Study Guide states that financial institutions should address all requests from law enforcement agencies completely and in a timely manner (Page 83).
Disregarding requests when there is a justifiable reason for doing so is not recommended, as this could impede the investigation. Sharing information about the investigation with analysts is not recommended, as this could compromise the investigation. Delaying responses by informing senior management of requests is also not recommended, as this could result in a delay in the investigation.