TheAML supervisory authorityis responsible for overseeing financial institutions' compliance with

AML/CFT regulations.

Option D (Correct):AML supervisory authorities, such as theFinancial Conduct Authority (FCA) in the

UK,FinCEN in the US, orEuropean Central Bank (ECB) for EU institutions, conduct inspections, issue

reports, and enforce penalties when AML deficiencies are found.

Option A (Incorrect):Self-regulatory bodies provide guidelines butdo not have legal authorityto

withdraw banking licenses.

Option B (Incorrect):Law enforcement may investigate criminal conduct, butregulatory compliance

issuesfall under AML supervisory authorities.

Option C (Incorrect):FATF provides guidance and assessments but doesnot directly

enforcecompliance at individual financial institutions.

Reference:FATF Recommendation 26 (Regulation and Supervision of Financial Institutions), EU AMLD

Directives, FinCEN, FCA Regulatory Guidance.