Introduction to Money Laundering and CFT

<p>To move funds through multiple accounts and jurisdictions to obscure their origin. (D)</p> Signup and view all the answers

<p>Varying the amounts sent and keeping them relatively small. (B)</p> Signup and view all the answers

<p>To detect and trigger alerts for suspicious activities. (D)</p> Signup and view all the answers

<p>They are helpful but not perfect, and can sometimes be circumvented. (B)</p> Signup and view all the answers

<p>The Society for Worldwide Interbank Financial Telecommunication (SWIFT). (D)</p> Signup and view all the answers

<p>To discourage criminals by eliminating profits from crime and enforcing laws. (C)</p> Signup and view all the answers

<p>By having access to substantial illicit funds, allowing them to subsidize products. (A)</p> Signup and view all the answers

<p>Monetary and economic instability due to misallocated resources and artificial price distortions. (B)</p> Signup and view all the answers

<p>By negatively affecting the soundness of the financial sector and potentially leading to bank failures. (D)</p> Signup and view all the answers

<p>The establishment and maintenance of an effective AML/CFT program is usually part of their charter to operate. (D)</p> Signup and view all the answers

<p>The organization could face significant civil penalties and potentially lose its charter. (A)</p> Signup and view all the answers

<p>Because illicit funds result in artificial distortions in asset and commodity prices. (A)</p> Signup and view all the answers

<p>Money laundering provides a way to evade taxes, thus depriving the country of revenue. (D)</p> Signup and view all the answers

<p>To ensure that efforts to combat financial crime are effectively designed and implemented. (A)</p> Signup and view all the answers

<p>They must be risk-based and commensurate with the organization's own risk assessment and profile. (D)</p> Signup and view all the answers

<p>Ongoing analysis and testing of the AML/CFT models to assess the scenario logic, performance, model technology, assumptions, and model parameter settings. (D)</p> Signup and view all the answers

<p>End-to-end, pre- and post-model implementation testing. (C)</p> Signup and view all the answers

<p>The board of directors or senior officers of the regulated organizations. (B)</p> Signup and view all the answers

<p>Banks, trust companies, private bankers, savings banks, savings and loan associations chartered pursuant to the New York Banking Law as well as branches and agencies of foreign banking corporations licensed to conduct banking in New York, and certain nonbank financial organizations. (D)</p> Signup and view all the answers

<p>Check cashers and money transmitters. (A)</p> Signup and view all the answers

<p>They are personally accountable for any misconduct within the organization’s AML/CFT regime. (B)</p> Signup and view all the answers

<p>Funds transfers to a known high-risk geographic location consistent with the customer's historical business operations. (D)</p> Signup and view all the answers

<p>Potential money laundering. (B)</p> Signup and view all the answers

<p>Remote Deposit Capture (RDC) (A)</p> Signup and view all the answers

<p>It allows for the processing of checks without the need for the physical transfer of paper. (B)</p> Signup and view all the answers

<p>By arranging for others to set up accounts and then deposit checks through them using multiple devices. (B)</p> Signup and view all the answers

<p>A service by one bank to another bank. (C)</p> Signup and view all the answers

<p>Unexplained, repetitive, or unusual patterns. (A)</p> Signup and view all the answers

<p>It reduces the cost to process checks. (B)</p> Signup and view all the answers

<p>Correspondent banks rely on respondent banks' internal controls and do not directly know the respondent's customers. (B)</p> Signup and view all the answers

<p>The respondent bank's risk profile and the nature of the business relationship. (D)</p> Signup and view all the answers

<p>The correspondent banks technology infrastructure. (B)</p> Signup and view all the answers

<p>If the parent does not exercise substantial and effective control over the respondent bank. (D)</p> Signup and view all the answers

<p>A Correspondent Banking Due Diligence Questionnaire. (D)</p> Signup and view all the answers

<p>International funds transfers. (C)</p> Signup and view all the answers

<p>Correspondents do not always have data to enable transaction monitoring controls. (B)</p> Signup and view all the answers

<p>The correspondent may know the respondent's regulators, but not the degree of supervision they perform. (B)</p> Signup and view all the answers

<p>Diversification (A)</p> Signup and view all the answers

<p>They can be used to obscure the identity of the originator of funds (C)</p> Signup and view all the answers

<p>Breaking up large sums of money into smaller transactions to evade reporting thresholds (B)</p> Signup and view all the answers

<p>They can obscure the origin and destination of funds (C)</p> Signup and view all the answers

<p>To obscure the true ownership of assets and funds (A)</p> Signup and view all the answers

<p>It exploits the use of international trade transactions to move and conceal illicit funds (C)</p> Signup and view all the answers

<p>The Financial Action Task Force (FATF) (B)</p> Signup and view all the answers

<p>To facilitate cooperation and the exchange of information among FIUs worldwide (D)</p> Signup and view all the answers

<p>To strengthen US measures to prevent and combat money laundering and terrorist financing (B)</p> Signup and view all the answers

<p>Government grants (A)</p> Signup and view all the answers

<p>To hide the original source of the money through a series of transactions (A)</p> Signup and view all the answers

<p>An individual who holds or has held a prominent public position (C)</p> Signup and view all the answers

<p>Promoting best practices in banking regulation and supervision (A)</p> Signup and view all the answers

<p>It may involve high-net-worth individuals who are susceptible to corruption (D)</p> Signup and view all the answers

<p>Breaking up large sums of money into very small transactions, often below reporting thresholds (B)</p> Signup and view all the answers

Businesses that appear legitimate, but are controlled by criminals to mix illegal funds with legitimate ones, hiding the source of money.

The practice of criminals using front companies to create an unfair advantage in the market by subsidizing products at below-market prices.

The negative impact of money laundering on economic stability due to the misuse of resources caused by manipulated prices.

The practice of using front companies and investments in legitimate businesses to gain control over entire industries or sectors of a nation's economy.

Avoiding paying taxes by using money laundering techniques, depriving a country of crucial revenue.

The harmful impact of money laundering and terrorist financing on the stability of financial institutions like banks, securities firms, and insurance companies.

The potential loss of a financial organization's license to operate due to non-compliance with AML/CFT regulations.

The importance of establishing and maintaining effective AML/CFT programs for financial organizations to safeguard their operations and stability.

Any form of money transfer initiated electronically, such as through internet banking, ACH, ATMs, mobile apps, etc.

A network used by banks to send large volumes of money electronically, often used for international transactions.

The process of moving illicit funds through a series of transactions to obscure their origin.

Using small amounts of money in multiple transactions to avoid detection by systems designed to catch large suspicious transactions.

Sending funds from one bank account to another, either within the same country or across borders.

A type of electronic funds transfer used by banks for routine transactions like bill payments and direct deposits.

The process of converting illegally obtained money into seemingly legitimate funds to conceal its origin.

Software programs designed to identify suspicious financial transactions that could indicate money laundering.

Fund transfers to or from a country with known financial secrecy or high risk of money laundering, without a clear business reason or matching the customer's normal activity.

Large sums received for a foreign client with minimal or no explanation, seeming unusual for the customer's profile.

Multiple small deposits made using checks or money orders, with subsequent immediate transfers to another account in a different location.

Financial activities lacking a clear explanation, showing repeating patterns or unusual behavior.

Payments or income without clear links to legitimate contracts, goods, or services.

Transfers involving the same person, but to or from different accounts.

A banking service that allows customers to scan checks and submit electronic images for deposit, avoiding physical bank visits.

The potential for abuse of RDC due to the ease of moving checks through accounts and allowing multiple devices or individuals to process them, facilitating money laundering activities.

A bank that provides services to other banks, allowing them to access financial markets and conduct transactions globally.

A bank that uses the services of a correspondent bank to access global financial markets and conduct transactions.

The process of verifying the identity, reputation, and operations of a correspondent bank before establishing a business relationship.

The risk that a respondent bank may engage in money laundering or other financial crimes, putting the correspondent bank at risk.

The practice of knowing the customers of your customers, which is crucial for correspondent banks to identify potential financial crime risks.

The ability of a correspondent bank to monitor the transactions of a respondent bank to identify suspicious activity.

The level of oversight and control exercised by a respondent bank's ultimate parent company.

A questionnaire used by the Wolfsberg Group to perform due diligence on respondent banks, providing standardized questions.

A senior manager, such as an MLRO, who is responsible for ensuring that a financial institution's anti-money laundering (AML) program is effectively designed and implemented.

The process of analyzing and monitoring transactions after they occur to detect suspicious activity and prevent illegal transactions.

A set of rules and procedures designed to detect and prevent money laundering and terrorist financing.

The process of evaluating the effectiveness of a financial organization's AML/CFT program through regular analysis and testing.

Testing the entire AML/CFT system from beginning to end to ensure accuracy and effectiveness.

The requirement for financial institutions to tailor their AML/CFT program to their unique risks and vulnerabilities.

The process of legally obtaining money or assets that were derived from illegal activities, making them appear legitimate.

The initial step in the money laundering process, where illegally obtained funds are introduced into the financial system. This can involve cash deposits, wire transfers, or even the purchase of assets.

The second stage of money laundering, where the origin of the funds is obscured by moving them through a series of transactions. This can involve layering funds through different accounts or using complex financial instruments.

The final stage of money laundering, where the funds are integrated back into the legitimate economy, often through investments, purchases, or other seemingly legitimate activities.

The process of making multiple smaller transactions to avoid triggering reporting requirements. It involves breaking up large amounts of cash into smaller amounts to evade detection.

A financial institution that provides banking services to other financial institutions. They facilitate international transactions by acting as intermediaries between banks.

A system used by banks to handle large volumes of transactions more efficiently. It involves creating a central account where multiple client accounts are bundled together for processing.

A type of banking service offered to high-net-worth individuals and families. It involves personalized financial advice, investment management, and access to exclusive banking products.

A financial entity that provides investment management services, often targeting private clients. They may be used to obscure the true owner of funds.

Individuals who hold prominent public positions, such as government officials, politicians, or high-ranking executives. They are at a higher risk of being targeted for corruption or money laundering.

A financial institution that provides banking services to its members, typically those with a common bond, often by offering lower interest rates on loans and higher rates on deposits.

A type of payment processor that acts as an intermediary between merchants and their customers, enabling online payments and other financial transactions. They can be used for money laundering if they don't have robust AML controls.

Businesses that provide money transfer services, such as remittances, wire transfers, and check cashing. They handle large sums of cash and are at a high risk of being used for money laundering activities.

A type of money laundering scheme that involves exploiting the global trade system. It uses legitimate trade transactions as a cover to move illicit funds. Examples include over-invoicing and under-invoicing of goods.