How should a Financial Institution make this determination in the context of complex transactions?
A Financial institution should define those characteristics of complex structured financing that warrant subjecting such transactions to additional review in making the determinations referred to in Q1 above, namely, those transactions that are likely to pose a higher than average risk to a financial institution. It is understood that many transactions, e.g., credit card securitizations, may entail considerable complexity, yet be fundamentally transparent. Some complex structured financings may involve “special purpose vehicles” (“SPVs”), without affecting transparency. Such transactions are unlikely to pose higher than average risk. Additional review of less transparent transactions would be conducted by more senior levels of the relevant business unit and, when warranted, by a designated group of experts (including, for example, senior risk management, compliance, tax, accounting and legal experts, as well as business persons).
