E-Money and Money Laundering Mitigation Quiz

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Questions and Answers

Which control is LEAST likely to be implemented by e-money institutions to mitigate money laundering?

Using geolocation data to monitor for unusual activity

Setting limits on transaction values and turnover

Allowing unlimited access to multiple purses, accounts, and cards (correct)

Implementing systems to detect patterns indicative of money laundering

What is a primary function of transaction monitoring systems in e-money institutions?

To facilitate faster transactions and payments for users.

To maintain records of user location and device history.

To identify customers with multiple accounts for marketing purposes.

To detect patterns and deviations indicative of money laundering. (correct)

Cooperation with which of the following is most beneficial for e-money institutions in mitigating money laundering?

Competitors in the e-money market.

Social media influencers.

The Central Bank only.

Merchants who accept e-money, and the central bank. (correct)

What is the primary role of an 'Administrator' within the virtual currency (VC) ecosystem?

To issue VC for the users and redeem it. Signup and view all the answers

Which of the following best describes the role of an 'Exchanger' in the VC ecosystem?

They act as an intermediary for exchanging VC for real currency. Signup and view all the answers

A 'User' in the virtual currency ecosystem is best defined as an individual who:

Obtains virtual currency to purchase goods or services. Signup and view all the answers

Why is it important for e-money institutions to implement geographic restrictions on their e-money products?

To restrict the use of e-money to specific regions, potentially limiting money laundering risks. Signup and view all the answers

Which is NOT a method used by payment service providers to identify suspicious customer activity?

Checking user's email provider. Signup and view all the answers

According to the Basel Committee's January 2014 guidelines, which of the following is NOT a control banks should implement to manage risks related to money laundering and terrorist financing?

Implementation of advanced AI in fraud detection systems. Signup and view all the answers

What are the four key elements of a KYC program according to the Basel Committee's KYC guidance?

Customer identification, risk management, customer acceptance policy, and ongoing monitoring. Signup and view all the answers

According to the Basel Committee’s October 2004 paper, “Consolidated KYC Risk Management,” which of the following should be addressed in a global approach to KYC?

Risk management, customer acceptance and identification policies, and ongoing monitoring of higher-risk accounts. Signup and view all the answers

What is a key expansion introduced by the European Union's regulations regarding the definition of financial institution, according to the provided context?

It includes certain insurance intermediaries. Signup and view all the answers

What specific category is included under increased scrutiny?

Trust and company service providers. Signup and view all the answers

What cash transaction threshold for dealers in goods triggers expanded scrutiny under EU regulations?

15,000 euros. Signup and view all the answers

How did the European Union regulations impact the scope of financial institutions?

The scope expanded to include certain insurance intermediaries. Signup and view all the answers

The Basel Committee emphasizes the importance of ongoing monitoring. What is one area, in terms of accounts, that is specifically noted for increased scrutiny?

Higher risk accounts. Signup and view all the answers

What is the primary distinction between countries on the FATF 'black list' and 'grey list'?

Black listed countries have not cooperated with FATF, while grey listed are actively engaging to address deficiencies. Signup and view all the answers

What does it signify when a jurisdiction is placed under 'increased monitoring' by the FATF?

The jurisdiction has committed to resolving identified strategic AML/CFT deficiencies within an agreed timeline. Signup and view all the answers

Which of the following is a qualitative indicator that FATF takes under consideration when considering member applications?

The impact the jurisdiction has on the global financial system. Signup and view all the answers

What is the FATF's stance on numbered accounts?

They are acceptable, provided they adhere to the same KYC procedures as other accounts. Signup and view all the answers

In terms of AML/CFT, what does 'strategic deficiency' refer to?

Significant shortcomings in a jurisdiction's framework to counter money laundering, terrorist financing, and proliferation financing. Signup and view all the answers

Which of these are a reason why a place becomes a member if the FATF?

To enhance the FATF's geographic balance. Signup and view all the answers

What is a principal objective for a jurisdiction when under increased monitoring from FATF?

To quickly resolve the identified shortcomings in their AML/CFT framework. Signup and view all the answers

What is a characteristic of jurisdictions on the FATF 'grey list'?

They are actively working with FATF to fix their deficiencies. Signup and view all the answers

Which of the following is NOT a transaction history factor that would lead a financial organization to modify a customer's risk rating?

The customer has a long history of positive transactions with the organization. Signup and view all the answers

Which of the following is NOT considered a typical indicator of unusual activity?

The customer has a positive credit history. Signup and view all the answers

Which of the following is NOT a source for identifying high-risk countries?

The World Bank's ‘Doing Business’ report. Signup and view all the answers

Which of the following is NOT a type of risk factor associated with delivery channels?

Large deposits made by a single customer over a short period. Signup and view all the answers

When would a financial institution typically file a Suspicious Activity Report (SAR)?

When a customer has engaged in transactions that suggest potential money laundering or other financial crimes. Signup and view all the answers

What is the purpose of the FATF in relation to jurisdictions?

To evaluate and identify jurisdictions with weak AML/CFT regimes Signup and view all the answers

Which geographical areas are considered higher-risk in the context of AML/CFT evaluations in the US?

High-intensity drug trafficking areas and high-intensity financial crime areas Signup and view all the answers

What role do automated review systems play in AML/CFT programs?

They assist in the identification of potential outliers and deviations Signup and view all the answers

Which of the following is NOT a component of internal controls in AML/CFT programs?

Customer satisfaction surveys Signup and view all the answers

What is a key function of the compliance department in AML/CFT programs?

Identifying potential outliers and deviations from normal policy Signup and view all the answers

What is the primary reason for conducting enhanced due diligence (EDD) on a customer?

When the risk of money laundering or terrorist financing is higher Signup and view all the answers

Which of the following is NOT considered a customer risk factor for EDD?

Customer’s favorite color Signup and view all the answers

What type of information is crucial when identifying individuals with control over an account during EDD?

Identifying information, such as signatories or guarantors Signup and view all the answers

Which aspect is an example of country or geographic risk factors that may necessitate EDD?

The crime rate in the customer's country Signup and view all the answers

When assessing business operations for a high-risk customer, which information is NOT typically included?

The customer's branding strategy Signup and view all the answers

What type of transactions could indicate a higher risk for a customer during EDD?

International transactions Signup and view all the answers

Which of the following information is NOT relevant to the customer's primary trade area?

Anticipated volume of international sales Signup and view all the answers

What information is essential to explain changes in account activity during EDD?

Clarifications of activities influencing the financial stability Signup and view all the answers

Study Notes

Certified Anti-Money Laundering Specialist Flashcards

ACAMS provides Certified Anti-Money Laundering Specialist flashcards for study.
Flashcards are designed for self-study and learning.
Instructions on how to assemble the flashcards are included.

Money Laundering Stages

Stage 1 (Placement): Criminal proceeds are disguised through transactions like cash deposits, currency exchange, and loans.
Stage 2 (Layering): Funds are moved through complex transactions and financial instruments to conceal their source. This includes electronic transfers, converting cash, investing in legitimate businesses, and using shell companies.
Stage 3 (Integration): Illicit money is reintegrated into the legitimate economy in the form of luxury items, real estate, or investments, obscuring its illegal origin.

Key Terms

Politically Exposed Person (PEP): A person holding or having held a prominent public office domestically or internationally. Their associates are also considered PEPs.
Structuring: Dividing large cash sums into smaller amounts to avoid currency transaction reporting requirements.
Money Laundering: The process of disguising the source of illicit funds to make them appear legitimate.
Remote Deposit Capture (RDC): A bank product that allows customers to scan checks electronically and transmit them for deposit.
Payable Through Account (PTA): An account used to facilitate transactions for foreign entities or other parties, thus potentially increasing money laundering risks.
Concentration Account: An internal account used in financial institutions to consolidate multiple transactions, increasing the risk for money laundering if not properly monitored.

Additional Information

Yates Memo: Prosecutors should focus on individuals involved in corporate misconduct, even if the case is settled on the corporate level. Individual perpetrators cannot gain protection from criminal or civil liabilities.
Money Laundering Risks in the Securities Industry: The industry's inherent nature (international transactions, ease of converting assets, and its use as a nominee), and lack of direct customer oversight makes it vulnerable to money laundering.
Money Laundering Risks in Money Services Businesses (MSBs): The highly transactional, cash-intensive nature of these businesses can make them susceptible to money laundering, as criminals can easily use them to move money between jurisdictions.
Money Laundering Risks in Third-Party Payment Processors (TPPPs): Multiple financial organization relationships, suspicious activity of the customer/s, and high return rates from unauthorized transactions.
Money Laundering Risks in Real Estate: Easy to hide ownership and value can be increased through renovations creating relatively stable reliable investment, making it attractive for money laundering.
Money Laundering and Casinos/Gambling: Casino credit, chip transactions, loans; financial services, unusual gaming activity.
Money Laundering in the Investment Industry: Multiple transfers to accounts in offshore accounts; investments in assets that will make it appear as normal.

Other Risks

Bearer Checks: Checks payable to whoever holds them, avoiding identification requirements.
Black Market Peso Exchange (BMPE): A scheme for laundering money using peso brokers to convert funds illegally gained in the US into legitimate currency in another country.
Prepaid Bank Cards: Vulnerable to money laundering due to anonymity and lack of customer oversight.

Reporting and Compliance

Financial Intelligence Units (FIUs): Agencies receiving and analyzing suspicious transaction reports to combat money laundering.
Indicators of Money Laundering: Unusual transaction patterns, frequent transfers to offshore accounts, unusual volumes of cash transactions, unexplained transactions.

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Description

Test your knowledge on the roles and functions of e-money institutions in the context of money laundering prevention. This quiz covers transaction monitoring systems, user roles, and KYC elements essential for compliance. See how well you understand the regulatory landscape affecting electronic money today.