Podcast
Questions and Answers
What is the primary purpose of conducting a risk assessment in an Anti-Money Laundering (AML) program?
What is the primary purpose of conducting a risk assessment in an Anti-Money Laundering (AML) program?
Which of the following is NOT a factor considered in conducting a risk assessment?
Which of the following is NOT a factor considered in conducting a risk assessment?
What is the purpose of Customer Due Diligence (CDD)?
What is the purpose of Customer Due Diligence (CDD)?
What is the primary purpose of Transaction Monitoring?
What is the primary purpose of Transaction Monitoring?
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Which of the following sanctions lists is NOT typically included in sanctions screening?
Which of the following sanctions lists is NOT typically included in sanctions screening?
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Which regulation in the EU is specifically focused on Anti-Money Laundering (AML)?
Which regulation in the EU is specifically focused on Anti-Money Laundering (AML)?
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What is the purpose of filing a Suspicious Activity Report (SAR)?
What is the purpose of filing a Suspicious Activity Report (SAR)?
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Which of the following is a key provision of the USA PATRIOT Act?
Which of the following is a key provision of the USA PATRIOT Act?
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What is the primary purpose of FinCEN?
What is the primary purpose of FinCEN?
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What is 'smurfing' in the context of money laundering?
What is 'smurfing' in the context of money laundering?
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Which of the following customer types would likely require Enhanced Due Diligence (EDD)?
Which of the following customer types would likely require Enhanced Due Diligence (EDD)?
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What is the primary purpose of rule-based transaction monitoring systems?
What is the primary purpose of rule-based transaction monitoring systems?
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Which of the following sanctions lists is typically updated in real-time?
Which of the following sanctions lists is typically updated in real-time?
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What is the primary goal of the Financial Action Task Force (FATF)?
What is the primary goal of the Financial Action Task Force (FATF)?
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Which of the following is a requirement for filing a Suspicious Activity Report (SAR)?
Which of the following is a requirement for filing a Suspicious Activity Report (SAR)?
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What is the primary purpose of the Bank Secrecy Act (BSA)?
What is the primary purpose of the Bank Secrecy Act (BSA)?
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Which of the following is a key provision of the USA PATRIOT Act?
Which of the following is a key provision of the USA PATRIOT Act?
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What is the primary purpose of FinTRAC?
What is the primary purpose of FinTRAC?
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What is the primary goal of 'smurfing' in money laundering?
What is the primary goal of 'smurfing' in money laundering?
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Which of the following is a key component of an AML program?
Which of the following is a key component of an AML program?
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Study Notes
Anti-Money Laundering (AML)
Risk Assessment
- Identifying and assessing the level of risk associated with a customer, product, or service
- Factors to consider: customer type, geographic location, product/service offered, and transaction volume
- Risk assessment helps to determine the level of due diligence required
Customer Due Diligence (CDD)
- Verifying customer identity and assessing their risk profile
- CDD involves:
- Identifying and verifying the customer's identity
- Understanding the customer's business and transaction patterns
- Ongoing monitoring of customer activity
Transaction Monitoring
- Ongoing monitoring of customer transactions to identify suspicious activity
- Transaction monitoring involves:
- Reviewing transactions against predefined rules and scenarios
- Identifying and reporting suspicious transactions
- Investigating and resolving alerts
Sanctions Screening
- Screening customers and transactions against sanctions lists
- Sanctions lists include:
- OFAC (Office of Foreign Assets Control) lists
- EU sanctions lists
- UN sanctions lists
- Screening helps to prevent transactions with sanctioned individuals or entities
Compliance Regulations
- AML regulations vary by country and region
- Key regulations include:
- US: Bank Secrecy Act (BSA) and USA PATRIOT Act
- EU: EU's 5th Anti-Money Laundering Directive (5AMLD)
- Global: Financial Action Task Force (FATF) recommendations
Suspicious Activity Report (SAR)
- A report filed with the Financial Crimes Enforcement Network (FinCEN) when a financial institution suspects suspicious activity
- SARs are used to identify and report potential money laundering or terrorist financing activity
USA PATRIOT Act
- Enacted in 2001 to prevent and detect terrorist financing and money laundering
- Key provisions include:
- Enhanced customer due diligence
- Increased information sharing between financial institutions
- Strengthened suspicious activity reporting
Bank Secrecy Act (BSA)
- Enacted in 1970 to prevent money laundering and terrorist financing
- Key provisions include:
- Customer identification and verification
- Reporting of cash transactions exceeding $10,000
- Maintenance of records and reporting of suspicious activity
FinCEN
- A bureau of the US Department of the Treasury responsible for collecting and analyzing financial data
- FinCEN provides guidance and regulation on AML/CFT issues
finTRAC
- A Canadian financial intelligence agency responsible for collecting and analyzing financial data
- finTRAC provides guidance and regulation on AML/CFT issues in Canada
Smurfing
- A type of money laundering technique where a large amount of money is broken into smaller transactions to avoid detection
- Smurfing involves:
- Structuring transactions to avoid reporting thresholds
- Using multiple accounts or individuals to disguise the source of funds
Anti-Money Laundering (AML)
Risk Assessment
- Identifies and assesses the level of risk associated with a customer, product, or service
- Factors to consider: customer type, geographic location, product/service offered, and transaction volume
- Risk assessment determines the level of due diligence required
Customer Due Diligence (CDD)
- Verifies customer identity and assesses their risk profile
- CDD involves identifying and verifying the customer's identity
- CDD involves understanding the customer's business and transaction patterns
- CDD involves ongoing monitoring of customer activity
Transaction Monitoring
- Ongoing monitoring of customer transactions to identify suspicious activity
- Transaction monitoring involves reviewing transactions against predefined rules and scenarios
- Transaction monitoring involves identifying and reporting suspicious transactions
- Transaction monitoring involves investigating and resolving alerts
Sanctions Screening
- Screens customers and transactions against sanctions lists
- Sanctions lists include OFAC, EU, and UN sanctions lists
- Screening helps to prevent transactions with sanctioned individuals or entities
Compliance Regulations
- AML regulations vary by country and region
- Key regulations include US: Bank Secrecy Act (BSA) and USA PATRIOT Act
- Key regulations include EU: EU's 5th Anti-Money Laundering Directive (5AMLD)
- Key regulations include Global: Financial Action Task Force (FATF) recommendations
Suspicious Activity Report (SAR)
- A report filed with the Financial Crimes Enforcement Network (FinCEN) when a financial institution suspects suspicious activity
- SARs are used to identify and report potential money laundering or terrorist financing activity
USA PATRIOT Act
- Enacted in 2001 to prevent and detect terrorist financing and money laundering
- Key provisions include enhanced customer due diligence
- Key provisions include increased information sharing between financial institutions
- Key provisions include strengthened suspicious activity reporting
Bank Secrecy Act (BSA)
- Enacted in 1970 to prevent money laundering and terrorist financing
- Key provisions include customer identification and verification
- Key provisions include reporting of cash transactions exceeding $10,000
- Key provisions include maintenance of records and reporting of suspicious activity
FinCEN
- A bureau of the US Department of the Treasury responsible for collecting and analyzing financial data
- FinCEN provides guidance and regulation on AML/CFT issues
FinTRAC
- A Canadian financial intelligence agency responsible for collecting and analyzing financial data
- FinTRAC provides guidance and regulation on AML/CFT issues in Canada
Smurfing
- A type of money laundering technique where a large amount of money is broken into smaller transactions to avoid detection
- Smurfing involves structuring transactions to avoid reporting thresholds
- Smurfing involves using multiple accounts or individuals to disguise the source of funds
Anti-Money Laundering (AML)
Customer Due Diligence (CDD)
- Crucial aspect of AML, involving identification and verification of customers' identities
- Involves gathering information on customers' risk profiles, business activities, and sources of wealth
- Helps assess the risk of money laundering and terrorist financing
- CDD requirements vary depending on customer's risk level, with:
- Simplified Due Diligence (SDD) for low-risk customers
- Enhanced Due Diligence (EDD) for high-risk customers
Transaction Monitoring
- Ongoing monitoring of customer transactions to detect and report suspicious activity
- Uses software and algorithms to identify patterns and anomalies in transaction data
- Helps identify potential money laundering and terrorist financing activities
- Transaction monitoring systems can be rule-based or AI-powered
Sanctions Screening
- Process of checking customers, transactions, and counterparties against sanctions lists
- Lists include OFAC, EU, UN, and other sanctions lists
- Helps prevent transactions with individuals or entities subject to economic sanctions
- Sanctions screening is a critical component of AML compliance
Compliance Regulations
- AML regulations vary by country and region, but share common goals:
- Prevention of money laundering and terrorist financing
- Detection and reporting of suspicious activity
- Key regulations include:
- USA PATRIOT Act
- Bank Secrecy Act (BSA)
- EU's 5th Anti-Money Laundering Directive (5AMLD)
- Financial Action Task Force (FATF) recommendations
Suspicious Activity Report (SAR)
- Report filed with FinCEN when a financial institution suspects a customer is engaged in suspicious activity
- SARs are confidential and can lead to further investigation and potential prosecution
- Filing a SAR does not imply wrongdoing, but rather a suspicion of potential wrongdoing
USA PATRIOT Act
- Enacted in 2001 to prevent the use of the US financial system for money laundering and terrorist financing
- Requires financial institutions to implement AML programs, including CDD, transaction monitoring, and sanctions screening
- Expanded the scope of BSA to include additional financial institutions and activities
Bank Secrecy Act (BSA)
- Enacted in 1970 to require financial institutions to maintain records and report certain transactions
- Requires financial institutions to implement AML programs, including CDD, transaction monitoring, and sanctions screening
- Regulated by FinCEN, which is responsible for enforcing BSA and its implementing regulations
FinTRAC
- Financial Transactions and Reports Analysis Centre of Canada, responsible for AML/CTF regulation in Canada
- Receives and analyzes reports of suspicious transactions and other information
- Works with law enforcement agencies to investigate and prosecute money laundering and terrorist financing
Smurfing
- Money laundering technique involving the breakup of large transactions into smaller, less conspicuous transactions
- Used to avoid detection by AML systems and reporting requirements
- Can be detected through transaction monitoring and other AML measures
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Description
Assess the risk of money laundering and understand customer due diligence requirements. Learn how to identify and verify customer identity and determine the level of risk associated with a customer, product, or service.
