International Sanctions and Money Laundering Quiz

ICA International Advanced Certificate in Anti Money Laundering Course Manual

• The course manual is for the International Compliance Association (ICA) Advanced Certificate in Anti Money Laundering.
• The manual's edition is G208/15482.
• The manual's responsibility is to protect financial institutions from criminal activity.
• The manual's studies provide tools to deter, detect and prevent financial crime to protect lives.

Foreword

• The responsibility of daily roles is integral in protecting firms against criminals laundering money.
• The studies provide tools and competencies to deter, detect and prevent financial crime.

Preliminary

• The manual's authors and contributors are identified along with the series editor and the dates of editions.
• Publication details and publisher information are included.
• All rights are reserved.
• No part of the publication may be reproduced without prior permission from the ICA.
• All authors and ICA disclaim responsibility for errors in the manual.
• External links are provided as a convenience.
• ICA does not produce or maintain external websites or their content.
• Copyright information is given.

Contents

• The manual is divided into several units.
• Unit 1: Discusses money laundering and terrorist financing risks.
• Unit 2: Discusses international bodies and standard setters relating to AML and CFT.
• Unit 3: Discusses national legal and regulatory frameworks.
• Unit 4: Discusses the risk-based approach to AML/CFT and risk management.
• Unit 5: Discusses initial and ongoing customer due diligence (CDD).
• Unit 6: Discusses monitoring activity and transactions.
• Unit 7: Recognises and reports suspicions.
• Unit 8: Covers the vulnerabilities of specific financial services & products.

Unit 01: What Are The Money Laundering And Terrorist Financing Risks That Must Be Managed?

• Money laundering is the process of disguising illegal origins and ownership of criminal property to appear legitimate.
• Criminals launder money to avoid exposure by law enforcement.
• Money laundering uses financial services and products.
• Criminal activity generates revenue, which can be laundered through three stages: placement, layering, and integration.
• Modern money laundering involves using financial assets, real estate, and digital currencies.
• The traditional three-stage model is an oversimplification of modern money laundering.
• Money laundering is used to hide and disguise ownership and origin.
• Predicate offences are crimes that lead to monetary gains.
• Corruption is the abuse of power for personal gain.
• Corruption and money laundering are strongly linked.

Unit 02: The International Bodies and Standard Setters

• The International Monetary Fund (IMF) promotes global economic stability through international cooperation.
• The IMF provides guidance & technical assistance for AML/CFT frameworks.
• The IMF performs financial sector assessments to evaluate AML/CFT compliance.
• The IMF collaborates with other international bodies (like FATF) to strengthen AML/CFT standards.
• The IMF also performs analysis on financial sector developments (such as virtual currencies).
• The United Nations Global Programme against Money Laundering (GPML) aids member states to comply with UN Conventions and other instruments with regards to money laundering and terrorist financing.
• The Financial Action Task Force (FATF) sets international standards for AML, anti-terrorist financing, and the financing of proliferation of weapons of mass destruction (WMDs).
• The FATF 40-Recommendations help countries deter, detect, investigate, and prosecute financial crimes.
• The World Bank has a Financial Integrity unit that assists countries in their efforts to combat money laundering and terrorist financing by promoting transparency and inclusive systems.
• The Egmont Group is a global network of Financial Intelligence Units (FIUs) that helps coordinate AML/CFT efforts among countries.
• The Basel Committee on Banking Supervision provides guidelines for managing money laundering and terrorist financing risks in banks and other financial institutions.

Unit 03: National Legal and Regulatory Frameworks

• The Bank Secrecy Act (BSA) is US legislation to prevent money laundering.
• The USA PATRIOT Act (2001) enhanced US AML rules by adding new compliance obligations.
• The UK Bribery Act (2010) addresses bribery offenses, including those of foreign public officials.
• The Proceeds of Crime Act (2002) is the primary piece of financial legislation to criminalise the laundering of criminal property, and sets out predicate offences for the different aspects of money laundering.
• Jersey, a British Crown Dependency that has a vibrant international financial services industry, has comprehensive anti-money laundering and counter-terror finance (AML/CFT) frameworks.

Unit 04: Taking an AML/CFT Risk-Based Approach and Managing the Risks

• A risk-based approach (RBA) to AML means the firms assess, understand and mitigate money laundering and terrorist financing risks.
• Risk assessments must include product and service, delivery channel, geographic, and customer risk.
• Robust governance structures are vital for money laundering (ML) and counter-terror financing (CTF) prevention.
• Money laundering (ML) reporting officers (MLROs) face various difficulties requiring proper management.

Unit 05: Initial and 'Ongoing' Customer Due Diligence (CDD)

• Customer Due Diligence (CDD) is a process to evaluate customers to assess the acceptability of business relationships.
• It is a risk-based process.
• International and domestic standards for CDD are detailed.
• Simplified Due Diligence (SDD) and Enhanced Due Diligence (EDD) processes are described.

Unit 06: Monitoring Activity and Transactions

• Transaction and Activity monitoring procedures are important
• Key considerations concerning the monitoring and filtering framework include: transaction monitoring programs, accurate data capturing, rules-based parameters, effective data-filtering systems, and more.
• Sanctions screening is outlined.

Unit 07: Recognising and Reporting Suspicions

• Knowledge, suspicion and reasonable grounds to suspect are discussed.
• Effective internal reporting systems for financial crime incidents are designed and their features include reporting lines, written reports, and confirming reports to the relevant authority.

Unit 08: The Vulnerabilities of Specific Services and Products

• The manual identifies vulnerabilities in specific services and products such as retail banking, trust & corporate services, foreign exchange and more. Understanding vulnerabilities allows AML professionals to develop preventative strategies and better manage financial risks across various service areas.
• The gaming sector, including online and land-based casinos, and virtual assets, are explained and examined for money laundering risks.

Unit 09: Insurance

• Specific financial products for customer and company interests (like life and health cover) vulnerabilities are outlined.

Unit 10: The Gaming Industry

• There are vulnerabilities in the gaming industry.

Unit 11: Internet Payment Systems

• The use of Internet payment systems, such as e-wallets, prepaid cards, and peer-to-peer payment apps, are discussed for money laundering and terrorist financing risks.
• Types of financial transactions are described.

Unit 12: Virtual Assets and Virtual Asset Service Providers (VASPs)

• Virtual Assets can be used for money laundering and terrorist financing.
• The role of Virtual Asset Service Providers (VASPs) is outlined.
• Case studies of vulnerabilities in VASPs and virtual assets are described, showcasing their role and methods for money laundering, including fraudulent activities.