Anti-Money Laundering and CFT Overview

Study Notes

Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT)

The Financial Action Task Force (FATF) is the main international body responsible for setting global standards for AML and CFT.
The key objective of AML regulations is to prevent financial system misuse by criminals, ensuring integrity in financial markets.
Proliferation financing refers specifically to funding that supports the development and spread of nuclear, chemical, or biological weapons.
Suspicious Activity Reports (SARs) play a crucial role in AML/CFT by notifying authorities of potential money laundering or terrorist financing activities.

Red Flags and Focus Areas

Transactions that raise red flags for money laundering often include large cash deposits broken into smaller amounts to avoid detection.
The focus of proliferation financing controls is on stopping the funding of weapons of mass destruction development and acquisition.

FATF Recommendations

The FATF 40 Recommendations outline measures for preventing, detecting, and combating terrorism financing and proliferation of weapons of mass destruction.
The primary purpose of the FATF’s 40 Recommendations is to establish international standards against money laundering and terrorist financing.
Areas not directly covered by the FATF's 40 Recommendations include international trade tariffs, ensuring the focus remains on AML/CFT strategies.
Recommendation 16 specifically addresses wire transfers, mandating the inclusion of originator and beneficiary information.

Financial Institutions' Role

Financial institutions must implement robust AML/CFT measures and report suspicious activities as part of their responsibility in combating money laundering and terrorist financing.
FATF Recommendation 1 emphasizes that countries should identify and assess their money laundering and terrorist financing risks to develop effective strategies.

Designated Non-Financial Businesses and Professions (DNFBP)

DNFBP stands for Designated Non-Financial Businesses and Professions, highlighting sectors that also play a critical role in AML/CFT frameworks.
FATF Recommendation 11 mandates that financial institutions maintain records of all transactions for a minimum of five years to ensure traceability.

Description

Explore the key concepts surrounding Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT). This quiz covers the role of the Financial Action Task Force (FATF) in setting global standards and the importance of preventing financial system misuse. Test your understanding of proliferation financing and its implications for national and global security.