AML/CFT Compliance Quiz

<p>To ensure the AML/CFT program is functioning as intended and within predefined parameters (A)</p> Signup and view all the answers

<p>Internal controls and tools (A)</p> Signup and view all the answers

<p>Numerous small, incoming transfers via checks or money orders. (B)</p> Signup and view all the answers

<p>Reduced ability to identify potential check fraud due to decreased human review. (A)</p> Signup and view all the answers

<p>PTAs where subaccount holders have currency deposit and withdrawal privileges. (B)</p> Signup and view all the answers

<p>Funds transferred repetitively from the same person to or from different accounts. (C)</p> Signup and view all the answers

<p>A sudden influx of funds from an unidentifiable source with no stated reason. (D)</p> Signup and view all the answers

<p>Because these institutions often have relaxed bank supervision and licensing laws. (C)</p> Signup and view all the answers

<p>Payable Through Accounts (PTAs) where the correspondent bank does not apply CDD to their customers. (A)</p> Signup and view all the answers

<p>Because it lowers human involvement, making it harder to identify altered or duplicate checks (A)</p> Signup and view all the answers

<p>Determining if enhanced due diligence is necessary, evaluating the money laundering risk of the account, and applying risk-based controls for detecting and reporting suspicious activity (D)</p> Signup and view all the answers

<p>$15,000 USD (A)</p> Signup and view all the answers

<p>$3,000 USD (C)</p> Signup and view all the answers

<p>For any cash transaction of $15,000 USD or more (D)</p> Signup and view all the answers

<p>Financial organizations should report when they suspect or have reasonable grounds to suspect the proceeds of crime or terrorist financing. (C)</p> Signup and view all the answers

<p>They should be protected from liability for reporting and prohibited from disclosing that they have made a report. (B)</p> Signup and view all the answers

<p>Financial organizations must not disclose that such activity has been reported. (D)</p> Signup and view all the answers

<p>The individual financial organization (D)</p> Signup and view all the answers

<p>The organization's nature, size, complexity, regulatory environment, and associated risks. (A)</p> Signup and view all the answers

<p>Because each organization faces unique risks identified through risk assessments. (C)</p> Signup and view all the answers

<p>Effective written and verbal communication at all organizational levels. (D)</p> Signup and view all the answers

<p>To convey the significance of compliance matters effectively. (A)</p> Signup and view all the answers

<p>The number of clients served. (B)</p> Signup and view all the answers

<p>Each organization has different risks identified through risk assessments which require different solutions. (D)</p> Signup and view all the answers

<p>The ability to provide training to other members of staff. (B)</p> Signup and view all the answers

<p>Front-line associates, the CEO and board of directors. (A)</p> Signup and view all the answers

<p>Before establishing a banking relationship or carrying out any transactions (C)</p> Signup and view all the answers

<p>By implementing a global policy, and using training and monitoring to ensure compliance (B)</p> Signup and view all the answers

<p>The Specially Designated Nationals and Blocked Persons list (C)</p> Signup and view all the answers

<p>A financial institution only applies due diligence to customers in certain regions. (B)</p> Signup and view all the answers

<p>Through ongoing training and regular communications (B)</p> Signup and view all the answers

<p>To ensure consistent application of customer due diligence across all operations (C)</p> Signup and view all the answers

<p>Regular monitoring and testing (B)</p> Signup and view all the answers

<p>Decline to establish a banking relationship or perform any transactions (D)</p> Signup and view all the answers

<p>It is payable to the holder of the instrument upon presentation. (C)</p> Signup and view all the answers

<p>When the transaction exceeds a specific threshold. (D)</p> Signup and view all the answers

<p>To handle reports of suspicious transactions and disseminate intelligence. (B)</p> Signup and view all the answers

<p>Reports from people, entities, and financial organizations on transactions deemed suspicious. (D)</p> Signup and view all the answers

<p>To facilitate the fight against global money laundering operations. (B)</p> Signup and view all the answers

<p>Establishing international tax havens. (C)</p> Signup and view all the answers

<p>To monitor the implementation of its anti-money laundering recommendations among members. (A)</p> Signup and view all the answers

<p>Primarily global focusing on international implications of money laundering. (B)</p> Signup and view all the answers

A banking feature allowing customers to deposit checks electronically by scanning them and transmitting the images to their bank.

The risk that RDC technology can mask fraudulent activity due to reduced human oversight.

A banking arrangement where a bank (respondent) uses another bank's (correspondent) account to facilitate transactions on behalf of its clients.

Potential risks related to PTAs include weak regulatory oversight of foreign correspondent banks, insufficient due diligence on respondent bank's clients, and subaccount holders having access to cash deposits and withdrawals.

Suspicious activities involving foreign clients without clear justification, such as frequent small incoming transfers or deposits.

Suspicious activity involving checks or money orders, like frequent use to receive small transfers or make deposits, that might represent money laundering attempts.

Suspicious activity characterized by unexplained, repetitive, or unusual financial patterns, including payments or receipts without clear connection to legal activities.

Suspicious activity involving funds sent or received between a single person and different accounts, raising concerns about potential money laundering or hiding assets.

A bearer check is a type of negotiable instrument that is payable to the holder, not a specific payee. The financial institution is usually not required to verify the identity of the presenter.

Financial Intelligence Units (FIUs) are national agencies that handle intelligence on financial crimes. They receive reports of suspicious transactions, analyze them, and share intelligence with law enforcement and other FIUs to combat money laundering.

The FATF focuses on spreading awareness of anti-money laundering measures, monitoring implementation of its recommendations, and analyzing money laundering trends.

Internal controls are safeguards and mechanisms used within a financial institution to ensure its AML/CFT program is operating effectively and meeting predefined parameters.

Management reports, automated review systems, and multiple reviewers are examples of internal controls designed to monitor AML/CFT program effectiveness.

The compliance department plays a vital role in internal control by identifying potential deviations from normal policy and flagging unusual or suspicious activity.

FATF (Financial Action Task Force on Money Laundering) identifies jurisdictions with weak AML/CFT regimes and publishes country-specific reports to promote global AML standards.

In the US, certain regions are identified as higher-risk for money laundering and financial crimes, like HIDTAs (High-Intensity Drug Trafficking Areas) and HIFCAs (High-Intensity Financial Crime Areas).

Before starting a banking relationship or conducting transactions, a bank must confirm and verify the customer's identity using FATF Recommendation 10.

Financial organizations should apply their customer acceptance, ID verification, high-risk account monitoring, and risk management policies uniformly across their global operations.

The Specially Designated Nationals and Blocked Persons (SDN) list is a list of individuals and entities subject to sanctions by the Office of Foreign Assets Control (OFAC).

Under the USA PATRIOT Act, correspondent banks must have a program that includes determining when enhanced due diligence is needed, assessing money laundering risks associated with the correspondent account, and implementing risk-based procedures and controls to detect and report suspected money laundering.

Financial organizations should monitor activity beyond a certain threshold to identify potential money laundering. These thresholds vary depending on the customer type and the FATF recommendations suggest that organizations should pay close attention to transactions above US$15,000 for occasional customers, US$3,000 for casinos (including online casinos) and US$15,000 for precious metals dealers.

The FATF recommends that a financial organization must report suspicions of money laundering or terrorist financing to the appropriate FIU. This reporting is protected against liability and the financial organization cannot disclose that they have filed a report.

The USA PATRIOT Act requires correspondent banks to have a due diligence program that addresses three key measures:

A Correspondent Bank is a bank that provides banking services to another bank (the respondent bank). For example, a correspondent bank might process transactions on behalf of the respondent bank's customers or hold accounts for the respondent bank.

The FATF (Financial Action Task Force on Money Laundering) is an intergovernmental organization that sets international standards for combating money laundering and terrorist financing.

Enhanced Due Diligence (EDD) is a more rigorous process of customer due diligence that is applied when there are higher risks of money laundering or terrorist financing.

Money laundering refers to the process of disguising the source of illegally obtained funds to make them appear legitimate. This can involve various techniques such as layering (moving funds through multiple accounts), integration (investing the funds in legitimate businesses), and placement (putting the funds into the financial system).

The complexity of a compliance function depends on factors such as the organization's size, the industries in which it operates, the regulations it must comply with, and the specific risks associated with its products, services and customers.

The ability of the AML/CFT compliance officer to effectively communicate with both front-line staff and senior management is crucial for the success of an organization's AML/CFT program.

An organization's risk assessment helps identify and understand the specific risks associated with its activities, products, services and customers. This influences the tailoring of the compliance function to address these specific risks.

A compliance program should be tailored to the specific needs of the organization, factoring in its own unique risk profile, size, operations, and the regulatory environment it operates within.

Effective communication is essential for the AML/CFT compliance officer to successfully manage their program and ensure alignment across the organization, from front-line employees to senior management.

Every organization faces its own unique set of risks, which are identified through its risk assessment. Recognizing and addressing these specific risks is crucial for ensuring compliance.

The compliance officer must be able to explain complex compliance matters to both senior management and front-line employees, ensuring everyone understands their obligations and responsibilities.

The compliance function should be designed and developed to address the specific needs of the organization, effectively mitigating its unique risks and ensuring compliance with applicable regulations.