AML/CFT Quiz Discussion PDF

AML/CFT Quiz Discussion Some Learnings  Learning on AML/K YC National Investigation Agency is functioning as the Central Counter Terrorism Law Enforcement Agency in India. Shell Companies are fake companies that appear on paper, but may...

AML/CFT Quiz Discussion Some Learnings  Learning on AML/K YC National Investigation Agency is functioning as the Central Counter Terrorism Law Enforcement Agency in India. Shell Companies are fake companies that appear on paper, but may not physically exist. A bank should apply customer due diligence when it establishes a business relationship, Carries out an occasional transaction, Suspects money laundering or terrorist financing and Doubts the veracity of documents, data or information previously obtained Example of Layering : A customer conducts 3-wire transfer for Rs. 4 lac each on the same day instead of one transfer of Rs. 12 lakh and refuses to provide required information. A Money Mule is a person who transfers money (digitally or in cash) received from a third party to another one, obtaining commission for it or Money Mule is a term used to describe innocent victims who are duped by fraudsters intoIMAGE laundering stolen / illegal money via their bank account/s.  Learning on AML/K YC A month ago, Mr. Sam purchased an investment property in the name of a Jennifer Corps ltd through a bank. Mr. Sam completed the transaction by means of a cash payment of Rs. 45 Lakh. You have learned through newspaper that he had been arrested for drug trafficking. In this case make a STR to the FIU about the transaction. A person on country A wants to transfer some black money to someone in country B and gives the money to the broker in country A. The agent accepts it and calls up his colleague in country B. His colleague give the money in country B’s currency to the person in country B to whom it has to be transferred. An identification code is requested, ensuring the authenticity of the receiver. The brokers and agents in the whole transaction is called Hawaladars. Banks need to report attempted money laundering transaction. Hawala is an Arabic word IMAGE  Learning on AML/K YC India observes Anti-terrorism day on 21st May. Bombing, Hijacking, Hostage taking is an example of terrorism. Suspicious Transaction Report (STR ) should be furnished within 07 days of arriving at a conclusion that any transaction, whether cash or non-cash, or a series of transactions integrally connected are of suspicious nature. Terrorism requires financial support for Purchase of weapons, Making of Bombs, Expenses for recruiting and training of terrorists and spreading terror ideologies and for Financing the living expenditure of the terrorist etc. IMAGE  Learning on AML/K YC The account opening records including identification documents should be kept for 10 years from the date of cessation of transactions/relationship between the customer and the bank. The Financial Action Task Force (FATF) is an intergovernmental organization founded in 1989 on the initiative of the G7 forum to develop policies to combat money laundering and terrorism financing. The key elements of the Master Direction on K YC issued by RBI are Customer Acceptance Policy, Customer Identification Procedure, Monitoring of Transactions and Risk Management. The Negotiable Instruments Act deals with Promissory Notes, Bills of Exchange and ChequeIMAGE The prescribed periodicity for the periodic KYC updation for medium risk customers are 8 years  Learning on AML/K YC The time line for submission of Cash transaction report is by 15th of the succeeding month. Transactions of Internet Banking excludes withdrawal of cash anywhere in India. State financing and Private financing are the sources of terrorist financing. Types of terrorism include both domestic and international terrorism Under KYC/AML regulations CFT stands for Combating the financing of terrorism IMAGE  Learning on AML/K YC A suspicious transaction gives rise to a reasonable ground of suspicion that it may involve the proceeds of crime, appears to be made in circumstances of unusual or unjustified complexity, appears to have no economic rationale or bonafide purpose, gives rise to a reasonable ground of suspicion that it may involve financing of the activities relating to terrorism FATF blacklist countries are North Korea, Iran and Myanmar When managing AML/CTF in business we should consider Knowing your Customer, Destination of funds, Methods of delivery such as cash, telephone and internet banking. Financial Action Task Force plays the central role in the global efforts for combatting terrorist financing IMAGE  Learning on AML/K YC Branches should not open deposit/advance accounts of banned/terrorist organizations as circulated by FIU FCRA means Foreign contribution Regulation Act A newly opened account should be closely monitored upto 6 months IBA brought out the first edition of “Know Your Customer” and “AML” – IBA guidance for banks in the year 2003 If a customer does not have PAN branch should inform the customer to apply for PAN card and Account can be opened without PAN or Form 60 IMAGE  Learning on AML/K YC If a customer is routing business transactions through his savings account educate him and request him to open a current account with valid documents. If an account is classified as high risk , fresh K YC documents are to be collected after 2 years. In anti-money laundering terminology “red flag” is a warning sign indicating potentially suspicious, risky transactions/activities. India is a member of FATF Joint Financial Intelligence Unit has developed a “SAFE” approach to assist in identifyingIMAGE suspicious transactions and business activities. SAFE stands for Screen, Ask , Find, Evaluate  Learning on AML/K YC KYC compliance is a mandatory exercise under the Prevention of Money Laundering Act 2002. Mr. Mishra wants to conduct a transaction involving Rs. 14, 00,000/- in cash. However, knowing that depositing it all at once would exceed the cash-reporting threshold of Rs. 10, 00,000/- in cash and would trigger the filing of CTR. Therefore, he goes to three different banks and deposits Rs. 5 Lakh, Rs. 5 Lakh and Rs. 4 Lakh in each bank. This process is called Structuring. PEP in the context of PMLA stands for Politically exposed persons STR in the context of PMLA stands for Suspicious Transaction Reports IMAGE The branches should report suspicious transactions to banks respective authority  Learning on AML/K YC The process of money laundering is perpetrated by placement and layering. Under KYC, accounts cannot be categorized as very high. Principal Officer can file a report onward to the FIU-IND, if the bank concludes that a transaction is suspicious. IMAGE