AML/CFT/KYC Overview

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson
Download our mobile app to listen on the go
Get App

Questions and Answers

What are the three main components of AML/CFT/KYC?

  • Anti-Money Laundering, Combating the Financing of Terrorism, Know Your Company
  • Anti-Money Laundering, Combating the Financing of Terrorism, Know Your Customer (correct)
  • Anti-Money Laundering, Combating the Financing of Terrorism, Know Your Business
  • Anti-Money Laundering, Combating the Financing of Terrorism, Know Your Client

Which of these are considered 'Legal Sources' of terrorist financing?

  • Donations from Non-Profit Organizations
  • Both A and B (correct)
  • Proceeds of criminal activities by the Terrorists
  • Donations from Profit Making Organizations

What is the primary purpose of 'Know Your Customer' (KYC) policies?

  • To create a detailed profile of customers for social media campaigns
  • To increase the bank's customer base by attracting high-risk individuals
  • To ensure the bank is operating within legal compliance and prevent fraudulent activities (correct)
  • To collect personal information from customers for marketing purposes

What are the three critical stages of money laundering?

<p>Placement, Layering, and Integration</p> Signup and view all the answers

The '3-Tiered KYC Approach' introduced by CBN in 2013 was designed to strictly enforce consistent KYC requirements for all customers, regardless of the value of their transactions.

<p>False (B)</p> Signup and view all the answers

What is the difference between 'Customer Due Diligence' (CDD) and 'Enhanced Due Diligence'?

<p>Enhanced due diligence is a more rigorous form of CDD specifically applied to high-risk customers, transaction types, or business relationships.</p> Signup and view all the answers

Which of the following is NOT a red flag that may indicate potential money laundering activity?

<p>A customer asking for financial advice on investment opportunities (B)</p> Signup and view all the answers

What is the primary responsibility of the Compliance Officer in a financial institution?

<p>To monitor financial transactions and ensure compliance with KYC/AML regulations (D)</p> Signup and view all the answers

What is the primary goal of the Financial Intelligence Unit (NFIU)?

<p>To collect, analyze, and disseminate financial intelligence to prevent and combat money laundering and terrorist financing.</p> Signup and view all the answers

Which of the following is a crucial element of effective risk management in KYC/AML?

<p>Proactively identifying and mitigating potential risks associated with customer relationships (B)</p> Signup and view all the answers

What is the primary purpose of implementing a 'Terrorism Prevention Act'?

<p>To prevent the financing of terrorist activities and disrupt their operations (C)</p> Signup and view all the answers

The NDLEA Act 1995 has been amended over the years to include more stringent measures against money laundering and terrorist financing.

<p>True (A)</p> Signup and view all the answers

Give one example of a red flag that may indicate potential money laundering activity.

<p>A customer conducting a high-value transaction in cash without providing a reasonable explanation for the source of funds.</p> Signup and view all the answers

Banks are legally obligated to disclose suspicious transactions to authorities, even if they risk breaching confidentiality rules.

<p>True (A)</p> Signup and view all the answers

Signup and view all the answers

Flashcards

Know Your Customer (KYC)

The process of verifying a client's identity by a business, including banks, to prevent fraud and illegal activities.

Know Your Customer's Business (KYCB)

The process of understanding a client's business activities to identify and manage potential risks associated with money laundering and terrorist financing.

Anti-Money Laundering (AML)

A set of laws and regulations designed to prevent criminals from disguising the origin of illegal money.

Money Laundering (ML)

The process of hiding the source of illegal funds to make them appear legitimate, often involving a series of transactions.

Signup and view all the flashcards

Combating the Financing of Terrorism (CFT)

Actions taken to investigate, prevent, and deter sources of funding for terrorist activities.

Signup and view all the flashcards

Placement Stage

The initial step in money laundering where illegal funds are introduced into the financial system.

Signup and view all the flashcards

Layering Stage

The second stage of money laundering where the money is disguised through a series of transactions.

Signup and view all the flashcards

Integration Stage

The final stage of money laundering where the money is re-integrated into the legitimate economy.

Signup and view all the flashcards

Politically Exposed Persons (PEPs)

Individuals entrusted with prominent public functions who may be more susceptible to bribery or corruption.

Signup and view all the flashcards

Suspicious Transactions

Transactions that raise suspicions of money laundering or terrorist financing.

Signup and view all the flashcards

Suspicious Transaction Reports (STRs)

Reports filed by financial institutions to regulatory authorities when suspicious transactions are detected.

Signup and view all the flashcards

Three-Tiered KYC Approach

A three-tiered approach to KYC requirements based on account value and transaction frequency.

Signup and view all the flashcards

Level One Account

The first tier of the three-tiered KYC approach, for low-value accounts with limited transactions.

Signup and view all the flashcards

Level Two Account

The second tier of the three-tiered KYC approach, for medium-value accounts with moderate transaction limits.

Signup and view all the flashcards

Level Three Account

The third tier of the three-tiered KYC approach, for high-value accounts with significant transactions requiring extensive due diligence.

Signup and view all the flashcards

Customer Due Diligence (CDD)

The process of collecting and verifying information about a customer's business activities to assess and manage risks associated with money laundering and terrorist financing.

Signup and view all the flashcards

Compliance Officer Roles

The responsibilities of a bank's compliance officer in preventing money laundering and terrorist financing.

Signup and view all the flashcards

Red Flags

Activities that indicate potential money laundering, terrorist financing, or fraud.

Signup and view all the flashcards

Risks of Non-Compliance

The potential consequences for a bank or financial institution failing to comply with AML/CFT laws.

Signup and view all the flashcards

Nigeria AML/CFT Initiatives

The legal framework and initiatives designed to prevent money laundering and combat terrorist financing in Nigeria.

Signup and view all the flashcards

Terrorism Prevention Act 2011

A legal framework designed to prohibit acts of financing terrorism in Nigeria.

Signup and view all the flashcards

The primary objective of AML/CFT laws is to

The primary objective of AML/CFT laws is to

Signup and view all the flashcards

A significant impact of ML and FT on society is

A significant impact of ML and FT on society is

Signup and view all the flashcards

The Canadian Police Research suggests

The Canadian Police Research suggests

Signup and view all the flashcards

An example of a high-risk customer category is

An example of a high-risk customer category is

Signup and view all the flashcards

A major challenge in implementing AML/CFT measures is

A major challenge in implementing AML/CFT measures is

Signup and view all the flashcards

The key role of financial institutions in AML/CFT efforts is to

The key role of financial institutions in AML/CFT efforts is to

Signup and view all the flashcards

A significant impact of ML and FT on financial institutions is

A significant impact of ML and FT on financial institutions is

Signup and view all the flashcards

Study Notes

AML/CFT/KYC Overview

  • AML stands for Anti-Money Laundering
  • CFT stands for Combating the Financing of Terrorism
  • KYC stands for Know Your Customer
  • The aim of these concepts is to prevent and combat money laundering and terrorist financing.

Course Objectives

  • Trainees will understand AML, CFT, and KYC concepts
  • They'll learn about the destructive nature of money laundering and terrorist financing
  • Trainees will understand "Know Your Customer" (KYC) / Business (KYCB)
  • Global and local initiatives to fight ML and CFT
  • Statutory obligations of Banks
  • The need for compliance and the implications for non-compliance

Presentation Sections

  • Introduction to AML/CFT/KYC
  • Money Laundering Process/Impacts
  • Know Your Customer / Business (KYC/KYCB)
  • Global and Nigerian Initiatives
  • Roles of Operations Units in Banks
  • Case Studies

Section 1 Outline

  • General definition of Money Laundering
  • Anti Money Laundering (AML)
  • UN Definition of Money Laundering
  • Combating the Financing of Terrorism (CFT)
  • Know Your Customers (KYC) and Know Your Customer's Business (KYCB)
  • Money Laundering (ML) Offences
  • Financing of Terrorism(FT) Offences
  • Big Money Laundering Players / Big Terrorist Players

Section 2: Money Laundering Process and Impacts

  • Criminal Activities Leading to Money Laundering
  • Critical Stages of Money Laundering with Illustration
  • Popular Banks and Non-Bank Products Used for Money Laundering
  • Global Scale of Money Laundering Problem
  • Characteristics of Fertile Countries for Money Laundering
  • Profiles of High Risk Countries/Customers/Channels
  • Impacts of ML and FT on Society, Economic Development, & Financial Institutions.

Section 3: Know Your Customer / Business (KYC/KYCB)

  • Introduction to KYC/KYCB
  • Objectives of KYC Guidelines
  • KYC Policy Roles and its Elements
  • Customer Definition and Classifications
  • Establishing Customer Identity
  • Evidence of Customer Identity
  • Monitoring Customer Transactions
  • Customer Risk Categories
  • Politically Exposed Persons (PEPs)
  • General Challenges of KYC/KYCB
  • Risk Management

Section 4: AML/CFT Initiatives

  • Global Bodies & Initiatives
  • Nigeria Initiatives
  • Description of FATF (Financial Action Task Force)
  • Nigeria's Relevant Initiatives (NDLEA etc)
  • FATF Recommendations

Section 5: Roles of Banking Operations Units

  • Summary of Roles of Operations Unit Staff & Compliance Officers
  • Operations Unit Staff Caution
  • Transaction Reporting Threshold(s)

Section 6: Customer Due Diligence

  • Monitoring of Transactions - Customer Due Diligence(CDD)
  • Higher Risk Categories of Customers
  • Politically Exposed Persons (PEPs)
  • Suspicious Transaction Reporting

Appendix

  • Case Studies (Money Laundering, Relationship Dilemmas, etc.)

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Related Documents

AML/CFT/KYC Students Manual PDF

More Like This

Use Quizgecko on...
Browser
Open
Browser
Browser