Explanation
According to the Certified Anti-Money Laundering Specialist (the 6th edition), the financial institution (Fl) should take the following actions:
Review the client's activity, determine if suspicious activity exists, and report accordingly. The Fl should assess the risk of the situation and determine if there is any suspicious activity that needs to be reported to the appropriate authorities. This would involve conducting a review of the client's account activity and transactions to determine if there are any indicators of money laundering or terrorist financing.
Inform local LEA and regulator of the request for awareness. The Fl should inform the local law enforcement agency and regulator of the request from the foreign jurisdiction to raise awareness of the situation and determine if any further actions need to be taken.

One of the main challenges of online banking is verifying the identity of customers who open accounts or conduct transactions remotely, without face-to-face interaction. This poses a higher risk of money laundering, as criminals may use false or stolen identities, or hide behind shell companies or nominees, to move illicit funds through online platforms. Therefore, online banking providers must implement robust and risk-based customer due diligence (CDD) measures, such as verifying identity documents, using biometric or digital verification methods, screening customers against sanctions and watchlists, and monitoring customer behavior and transactions for any red flags or anomalies.
References:
* ACAMS Study Guide for the CAMS Certification Examination, 6th Edition, Chapter 2: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), Section 2.2: Customer Due Diligence (CDD) and Know Your Customer (KYC), p. 32-35.
* eWallets: AML Risks & How to Comply1

The Basel Committee on Banking Supervision's Customer Due Diligence for Banks Paper recommends that banks should verify the bank has a physical presence in the country where it is incorporated and confirm the bank is subject to regulatory supervision with adequate anti-money laundering laws before opening a correspondent account. These steps are intended to prevent the establishment of relationships with shell banks, which are banks that have no physical presence in any country and are not affiliated with a regulated financial group. Shell banks pose a high risk of money laundering and terrorist financing, as they can be used to hide the identity and source of funds, evade regulatory oversight, and facilitate illicit transactions. Therefore, banks should conduct enhanced due diligence on correspondent banks that operate in offshore jurisdictions, where the regulatory standards and transparency may be lower or insufficient.
References:
* ACAMS CAMS Certification Study Guide, 6th Edition, Chapter 4, Section 4.3.1, p. 1091
* ACAMS CAMS Certification Exam Outline, 6th Edition, Domain 2, Task 2.2, p. 52
* Basel Committee on Banking Supervision, Customer Due Diligence for Banks, October 2001, p. 13-143