What should a credit union conduct to believe a member has a legitimate business purpose for conducting transactions?

Conducting a risk-based analysis is essential for a credit union to assess the legitimacy of a member's business purpose for transactions. This type of analysis allows the institution to evaluate various factors, such as the member's profile, transaction history, and overall risk indicators associated with their activities. By tailoring their scrutiny based on the risk level identified, credit unions can ensure they adequately monitor and mitigate potential risks related to money laundering and other financial crimes.

A risk-based approach helps in distinguishing between legitimate and suspicious activity, enabling the credit union to focus its resources on higher-risk members or transactions. This method aligns with regulatory expectations outlined in the Bank Secrecy Act, which requires financial institutions to implement effective compliance programs to detect and prevent illicit activities.

Other options like conducting a standard interview or a yearly audit do not provide the comprehensive, ongoing risk assessment necessary to establish a member's legitimate business purpose. Similarly, random transaction assessments lack the structured approach needed to systematically address risk-related concerns. Therefore, the most effective strategy is to engage in a risk-based analysis.