E-Money and Money Laundering Mitigation Quiz

A person who uses virtual currency (VC) to buy goods or services.

A business that exchanges VC for real currency, funds, or other virtual currency.

A business that issues VC and is responsible for redeeming it.

Restrictions placed on storing large amounts of virtual currency.

Monitoring systems that identify unusual activity suggestive of money laundering.

Identifying individuals with multiple virtual currency accounts or cards.

Using location data, device information, and IP addresses to verify user activity.

Collaborating with businesses that accept e-money to prevent money laundering.

A list of countries or jurisdictions identified by the Financial Action Task Force on Money Laundering (FATF) as having significant deficiencies in their anti-money laundering and counter-terrorist financing (AML/CFT) regimes.

A list of countries or jurisdictions identified by the FATF as having strategic deficiencies in their AML/CFT regimes but are actively working to improve them.

Countries or jurisdictions on the "Grey List" are required to take specific actions to address the identified deficiencies within a set timeframe.

The FATF considers a country or jurisdiction strategically important based on its economic size (like GDP), population, and its impact on the global financial system.

The FATF considers the level of adherence to financial sector standards and whether the country can contribute to enhancing the geographic balance of the FATF.

Numbered accounts should not be prohibited, but they should be subjected to the same rigorous Know Your Customer (KYC) procedures as other customer accounts.

Banks should implement controls related to risk analysis and governance, three lines of defense, customer due diligence and acceptance, transaction monitoring systems and ongoing monitoring, management of information, and reporting of suspicious transactions and asset freezing.

The four key elements of a KYC program are customer identification, risk management, customer acceptance policy, and ongoing monitoring.

The elements of a global approach to KYC should include risk management, customer acceptance and identification policies, and ongoing monitoring of higher-risk accounts.

The scope of the EU's Fourth Anti-Money Laundering Directive includes a broader definition of financial institutions, such as trust and company service providers, dealers trading in goods who trade in cash over 15,000 euros, and certain insurance intermediaries.

These are the various measures taken to identify and assess the risks associated with money laundering and terrorism financing across all areas of a bank's operations.

This concept emphasizes a layered approach with different departments working together to manage risk, with independent oversight.

This process aims to understand the customer's identity, financial activities, and potential risks.

These systems and processes are used to monitor transactions for suspicious patterns or activities that could indicate money laundering or terrorism financing.

FATF identifies countries or jurisdictions with weak AML/CFT regimes and issues country-specific reports, while the US evaluates certain domestic jurisdictions based on their location in high-risk areas like HIDTAs and HIFCAs.

Internal controls are vital for AML/CFT programs; they include management reports, automated review systems, multiple reviewers, and technology that helps identify potential outliers and deviations.

Management reports, automated review systems, and multiple reviewers are internal controls used to monitor AML/CFT programs.

Technology plays a crucial role in effective AML/CFT programs by enabling monitoring, analysis, and identification of potential financial crime.

The alert compliance department in a financial organization is responsible for identifying outlier activity that may require further review.

When a bank establishes a relationship with a customer, it should regularly assess the risk they pose. As the relationship evolves, the bank should review and update the customer's risk rating. Factors like changes in business activities, financial status, or geographic location can influence this evaluation.

Transactions involving private banking, anonymous transactions, and payments from unidentified individuals are considered high-risk as they increase the potential for money laundering or terrorist financing.

Unusual financial activities that trigger alerts or investigations, such as suspicious activity reports (SARs), law enforcement inquiries, violations of economic sanctions, or abnormal transaction volumes, are red flags for potential financial crimes.

High-risk countries are those identified as having weak anti-money laundering (AML) controls, a high level of corruption, or known connections to terrorism. Sources like Transparency International's Corruption Perceptions Index and the US State Department's International Narcotics Control Strategy Report can be used to identify these countries.

Countries with weak AML regulations, high levels of corruption, and known connections to terrorist activities are considered high risk because they offer opportunities for money laundering and terrorist financing.

EDD is required when there's a higher risk of money laundering or terrorist financing. It involves analyzing specific factors like customer behavior, geographic location, and transaction details.

Customer risk factors include analyzing the customer's source of funds, occupation, and financial history. This helps assess their likelihood of engaging in illicit activities.

Country or geographic risk factors assess the overall risk associated with a specific country or region based on its regulatory environment, political stability, and corruption levels. This helps organizations understand potential money laundering threats.

Product, service, transaction, and delivery channel risks focus on analyzing the specific products or services offered, the types of transactions involved, and the channels used for transactions. This helps identify potential loopholes for financial crime.

Information obtained during EDD can include details about the source of funds, the customer's occupation, and their financial statements. This information helps assess the customer's financial profile and uncover any inconsistencies.

Explaining changes in account activity helps understand the customer's financial behavior and identify any unusual patterns that might indicate money laundering. This involves analyzing transactions over time.

EDD is a crucial part of AML/CFT compliance. It helps identify and mitigate money laundering risks by collecting and analyzing relevant information about customers and their transactions.

EDD is a multi-faceted approach that involves analyzing various factors related to customers, transactions, and the overall operating environment. Its effectiveness hinges on a comprehensive understanding of potential risks and a robust system for gathering and analyzing relevant data.