CAMS

Question 1

Give an example of the second stage of money laundering.

Answer 1

Electronically moving funds from one country to another; moving funds from one financial institution to another; and converting the cash placed into the system into monetary instruments.

Question 2

Integration

Answer 2

The integration phase, often referred to as the third and last stage of the classic money laundering process, places laundered funds back into the economy by re-entering the funds into the financial system and giving them the appearance of legitimacy.

Question 3

Give an example of the first stage of money laundering.

Answer 3

making foreign exchange transactions with illegal funds; and depositing small amounts of cash into various accounts.

Question 4

Yates memo

Answer 4

The Yates memo, issued by then-Deputy Attorney General Sally Yates of the Department of Justice, reminds prosecutors that criminal and civil investigations into corporate misconduct should also focus on individuals who perpetrated the wrongdoing.

Question 5

What are some indicators of money laundering using electronic transfers of funds?

Answer 5

Funds transfers to or from a financial secrecy haven; large, incoming fund transfers from a foreign client with little or no explanation or apparent reason; and fund transfers that have no apparent link to legitimate business.

Question 6

Payable Through Account

Answer 6

Transaction account opened at a depository institution by a foreign financial institution through which the foreign institution’s customers engage, either directly or through subaccounts, in banking activities and transactions in such a manner that the financial institution’s customers have direct control over the funds in the account. These accounts pose risks to the depository institutions that hold them because it can be difficult to conduct due diligence on foreign institution customers who are ultimately using the PTA accounts.

Question 7

Concentration Account

Answer 7

Also called an “omnibus account.” Held by a financial institution in its name, a clearing account is used primarily for internal administrative or bank-to-bank transactions in which funds are transmitted and commingled without personally identifying the originators.

• internal accounts established to facilitate the processing and settlement of multiple or individual customer transactions within the bank, usually on the same day.
• used to facilitate transactions for private banking, trust and custody accounts, funds transfers and international affiliates.

Question 8

Which money laundering stage(s) are credit cards most likely to be used and what is an example of money laundering through the use of credit cards?

Answer 8

Credit cards are not likely to be used in the initial placement of money laundering. They are more likely to be used in the layering or integration stages of money laundering. One example of using credit cards for money laundering purposes is overpaying a credit card balance and then asking for a refund. Receiving a check from the reputable credit card company makes it look like the funds received are legitimate.

Question 9

What are some of the risks posed by Third-Party Payment Processors (TPPPs)?

Answer 9

Multiple financial institution relationships whereby the TPPP’s suspicious activity cannot be seen in its entirety by one institution; engaging in ACH transactions from overseas whereby the suspicious transactions get hidden by the large number of other transactions the TPPP engages in; and the possibility of the return rates stemming from unauthorized transactions are higher than average.

Question 10

Money Services Business (MSB)

Answer 10

A person (whether a natural or legal person) engaged in any of the following activities where it exceeds the applicable regulatory threshold, at which point the person is generally deemed to be a financial institution subject to AML obligations:
•Dealing in foreign exchange
•Check cashing
•Issuing or selling traveler’s checks or money orders
•Providing or selling prepaid access
•Money transmission

Question 11

What are some of the aspects associated with securities broker-dealers that increase the risk of money laundering?

Answer 11

Its international nature; the speed of their transactions; the ease of converting holdings into cash without significant loss of principal; the large volume of wires used; the competitive, commission-driven environment; the practice of maintaining securities accounts in the name of nominees or trusts; and weak AML programs

Question 12

What are some red flags associated with casinos and gambling?

Answer 12

Paying off gambling debts in cash just under the reporting requirements; purchasing chips, but engaging in minimal gambling and then cashing the chips back in; using the gambling house for banking-like financial services, including wiring funds overseas; betting on both “red” and “black” spaces in roulette; and purchasing chips with cash just under the reporting requirements.

Question 13

List ways in which a travel agency could be used to launder money.

Answer 13

Purchasing an expensive airline ticket and then asking for a refund; paying for travel tours with multiple wires just under the reporting threshold; and creating false bookings through tour operator networks to justify significant payments from foreign travel groups.

Question 14

Gatekeepers

Answer 14

Professionals such as lawyers, notaries, accountants, investment advisors, and trust and company service providers who assist in transactions involving the movement of money, and are deemed to have a particular role in identifying, preventing and reporting money laundering. Some countries impose due diligence requirements on gatekeepers that are similar to those of financial institutions.

Question 15

List reasons why real estate can be an attractive method of money laundering, according to the 2015 report by the Australian Transaction Reports and Analysis Centre (AUSTRAC).

Answer 15

It can be purchased with cash; the ultimate beneficial owner can be disguised; it is a relatively stable and reliable investment; and the value can be increased through renovations and improvements.

Question 16

What are two of the most common money laundering techniques involved with trade-based money laundering?

Answer 16

Over and under invoicing.

Question 17

How does the black market peso exchange (BMPE) work in laundering money?

Answer 17

As an example, the drug trafficker sells drugs for US dollars in the US and – in order to avoid smuggling the US dollars back to Mexico – the trafficker gives the proceeds to a “peso broker.” The broker finds businesses in Mexico that want to buy goods in the US. Then the broker buys the US goods with US dollars and has the goods shipped to Mexico. The business in Mexico pays the broker in Mexico in pesos and the broker then gives the pesos – minus a fee – to the drug traffickers.

Question 18

What are some of the money laundering risks pertaining to the use of pre-paid bank cards or reasons why they are attractive to money launderers?

Answer 18

Some of the risks of pre-paid bank cards include: anonymous card holders; anonymous funding; high value limits; global access to cash through ATMs; lax offshore jurisdictions issuing the cards; and the cards being a substitute for bulk-cash smuggling.

Question 19

Virtual Currency

Answer 19

A medium of exchange that operates in the digital space that can typically be converted into either a fiat (e.g., government issued currency) or it can be a substitute for real currency..Beneficial ownership information may be difficult to obtain

Question 20

What are some emerging risk for Terrorist Financing?

Answer 20

Self-funding by foreign terrorist fighters; terrorists raising funds through the use of social media; new payment products and services; and exploitation of natural resources;

Question 21

Correspondent Bank/Respondent Bank

Answer 21

The provision of banking services by one bank (the “correspondent bank”) to another bank (the respondent bank“”). Large international banks typically act as correspondents for hundreds of other banks around the world. Respondent banks may be provided with a wide range of services, including cash management (e.g., interest-bearing accounts in a variety of currencies), international wire transfers of funds, check clearing services, payable-through accounts and foreign exchange services.

Question 22

What are the two main reasons correspondent banking is vulnerable to money laundering?

Answer 22

• By their nature, correspondent banking relationships create a situation in which a financial institution carries out financial transactions on behalf of customers of another institution. This indirect relationship means that the correspondent bank provides services for individuals or entities for which it has neither verified the identities nor obtained any first-hand knowledge, and
• The amount of money that flows through correspondent accounts can pose a significant threat to financial institutions, as they process large volumes of transactions for their customers’ customers. This makes it more difficult to identify the suspect transactions, as the financial institution generally does not have the information on the actual parties conducting the transaction to know whether they are unusual.

Question 23

How can the early redemption method on insurance policies be used to launder money?

Answer 23

One indicator of possible money laundering is when a potential policyholder is more interested in the cancellation terms of a policy than the benefits of the policy. The launderer buys a policy with illicit money and then tells the insurance company that he has changed his mind and does not need the policy. After paying a penalty, the launderer redeems the policy and receives a clean check from a respected insurer.

Question 24

Describe several ways commodity futures and options accounts may be susceptible to money laundering.

Answer 24

• Withdrawal of assets through transfers to unrelated accounts or to high-risk countries,
• Frequent additions to or withdrawals from accounts,
• Checks drawn on, or wire transfers from, accounts of third parties with no relation to the client,
• Clients who request custodial arrangements that allow them to remain anonymous,
• Transfers of funds to the adviser for management followed by transfers to accounts at other institutions in a layering scheme,
• Investing illegal proceeds for a client, and
• Movement of funds to disguise their origin.

Question 25

Trust and company service providers (TCSP) services?

Answer 25

• include those persons and entities that, on a professional basis, participate in the creation, administration or management of corporate vehicles.
  •Acting as a formation agent of legal persons,
  •Acting as (or arranging for another person to act as) a director or secretary of a company, a partner of a partnership, or a similar position in relation to other legal persons,
  •Providing a registered office, business address or correspondence for a company, a partnership or any other legal person or arrangement,
  •Acting as (or arranging for another person to act as) a trustee of an express trust, and
  •Acting as (or arranging for another person to act as) a nominee shareholder for another person.

Question 26

According to a 2001 report, “Money Laundering in Canada: An Analysis of RCMP Cases,” what are the four related reasons to establish or control a shell company for money laundering purposes?

Answer 26

• Shell companies accomplish the objective of converting the cash proceeds of crime into alternative assets,
• Through the use of shell companies, the launderer can create the perception that illicit funds have been generated from a legitimate source,
• Once a shell company is established, a wide range of legitimate and/or bogus business transactions can be used to further the laundering process, and
• Shell companies can also be effective in concealing criminal ownership. Nominees can be used as owners, directors, officers or shareholders.

Question 27

What is the significance of a trust account, whether offshore or onshore, in the context of money laundering?

Answer 27

It can be used as part of the first step in converting illicit cash into less suspicious assets; it can help hide criminal ownership of funds or other assets; and it is often an essential link between different money laundering vehicles and techniques, such as real estate, shell and active companies, nominees and the deposit and transfer of criminal proceeds.

Question 28

Hawala

Answer 28

An informal value transfer system common in the Middle East, North Africa, and the Indian sub-continent. The system operates outside traditional banking systems. In a basic form, a customer contacts a hawaladar and gives him money to be transferred to another person. The hawaladar contacts his counterpart where the second person lives, who remits the funds to that person. A running tally is kept between the hawaladars of which owes the other a net sum

Question 29

What characteristics of charities or non-profit organizations make them particularly vulnerable to misuse for terrorist financing?

Answer 29

• Enjoying the public trust,
• Having access to considerable sources of funds,
• Being cash-intensive,
• Frequently having a global presence, often in or next to those areas that are exposed to terrorist activity, and
• Often being subject to little or no regulation and/or having few obstacles to their creation.

Question 30

USA Patriot Act Section 312

Answer 30

Section 312, which requires institutions to set up risk based due diligence to mitigate the money laundering risks posed by foreign financial institutions.

Question 31

USA Patriot Act 313

Answer 31

which prohibits U.S. financial institutions from opening or maintaining correspondent accounts for foreign shell banks and requires them to take “reasonable steps” to ensure that a correspondent account of a foreign bank is not being used indirectly to provide banking services to a shell bank.

Question 32

USA Patriot Act 319(b)

Answer 32

which requires U.S. financial institutions to maintain records of the identity of the owners of foreign banks for which they maintain correspondent accounts.

Question 33

Private Banking

Answer 33

A department in a financial institution that provides high-end services to wealthy individuals. Private banking transactions tend to be marked with confidentiality, complex beneficial ownership arrangements, offshore investment vehicles, tax shelters and credit extension services.

Question 34

Remittance Services

Answer 34

Also referred to as giro houses or casas de cambio, remittance services are businesses that receive cash or other funds that they transfer through the banking system to another account. The account is held by an associated company in a foreign jurisdiction where the money is made available to the ultimate recipient.

Question 35

How can the free-look period be used to launder money?

Answer 35

free-look period is a feature that allows investors, for a short period of time after the policy is signed and the premium paid, to back out of a policy without penalty. This process allows the money launderer to get an insurance check, which represents cleaned funds. However, as more insurance companies are subject to AML program requirements, this type of money laundering is more readily detected and reported.

Question 36

How does having a lawyer as a trustee on an account at a financial institution create vulnerabilities to money laundering at an institution?

Answer 36

Lawyers often serve as trustees by holding money or assets “in trust” for clients. This enables lawyers to conduct transactions and to administer the affairs of a client. Sometimes, the illicit money is placed in a law firm’s general trust account in a file set up in the name of the client, a nominee, or a company controlled by the client.

Question 37

Identify three ways money laundering can occur through vehicle sellers.

Answer 37

• Structuring cash deposits below the reporting threshold, or purchasing vehicles with sequentially numbered checks or money orders,
• Trading in vehicles and conducting successive transactions of buying and selling new and used vehicles to produce complex layers of transactions,
• Accepting third-party payments, particularly from jurisdictions with ineffective money laundering controls.

Question 38

What are the economic effects of money laundering?(6)

Answer 38

• Loss of control of, or mistakes in, decisions regarding economic policy,
• Economic distortion and instability,
• Loss of tax revenue,
• Risks to privatization efforts,
• Reputation risk for the country, and
• Social costs.

Question 39

Risk-Based Approach

Answer 39

The assessment of the varying risks associated with different types of businesses, clients, accounts and transactions in order to maximize the effectiveness of an anti-money laundering program.

Question 40

Bank Secrecy Act (BSA)

Answer 40

The primary U.S. anti-money laundering regulatory statute (Title 31, U.S. Code Sections 5311- 5355) enacted in 1970 and most notably amended by the USA PATRIOT Act in 2001. Among other measures, it imposes money laundering controls on financial institutions and many other businesses, including the requirement to report and to keep records of various financial transactions.

Question 41

Bank Secrecy Act (BSA) Compliance Program requires what 4 things?

Answer 41

development of internal policies, procedures and controls;
the designation of a compliance officer;
ongoing employee training;
independent audit function to test the program.

Question 42

Benami Account

Answer 42

Also called a nominee account. Held by one person or entity on behalf of another or others, Benami accounts are associated with the hawala underground banking system of the Indian subcontinent. A person in one jurisdiction seeking to move funds through a hawaladar to another jurisdiction may use a Benami account or Benami transaction to disguise his/her true identity or the identity of the recipient of the funds.

Question 43

Collection Accounts

Answer 43

Immigrants from foreign countries deposit many small amounts of currency into one account where they reside, and the collected sum is transferred to an account in their home country without documentation of the sources of the funds. Certain ethnic groups from Asia or Africa may use collection accounts to launder money.

Question 44

Custodian

Answer 44

A bank, financial institution, or other entity that is responsible for managing, administering, or safekeeping assets for other persons or institutions. A custodian holds assets to minimize risk of theft or loss, and does not actively trade or handle the assets.

Question 45

Corporate Vehicles

Answer 45

Types of legal entities that may be subject to misuse such as private limited companies and public limited companies whose shares are not traded on a stock exchange, trusts, non-profit organizations, limited partnerships and limited liability partnerships, and private investment companies.

Question 46

Express Trust is created by> How does it differ from a trust?

Answer 46

A trust created expressly by the settlor, usually in the form of a document such as a written deed of trust. An express trust differs from trusts that do not result from the specific intent or decision of a settlor to create a trust (e.g., constructive trust established by a court of law to address undeclared property).

Question 47

Grantor

Answer 47

The party who transfers title or ownership of property or assets. In a trust, typically the person who creates or funds the trust.

Question 48

Letter of Credit

Answer 48

A credit instrument issued by a bank that guarantees payments on behalf of its customer to a third party when certain conditions are met.

Question 49

Monetary Instruments

Answer 49

Travelers checks, negotiable instruments, including personal checks and business checks, official bank checks, cashier’s checks, promissory notes, money orders, securities or stocks in bearer form. Monetary instruments are normally included, along with currency, in the antimoney laundering regulations of most countries, and financial institutions must file reports and maintain records of customer activities involving them.

Question 50

Money Order

Answer 50

A monetary instrument usually purchased with cash in small (generally under Euro/$500) denominations. It is commonly used by people without checking accounts to pay bills or to pay for purchases in which the vendor will not accept a personal check. Money orders may be used for laundering because they represent an instrument drawn on the issuing institution rather than on an individual’s account.

Question 51

Money Transfer Service or Value Transfer Service

Answer 51

Financial service that accepts cash, checks and other monetary instruments that can store value in one location and pay a corresponding sum in cash or other form to a beneficiary in another location by means of a communication, message, transfer or through a clearing network to which the money/ value transfer service belongs. Transactions performed by such services can involve one or more intermediaries and a third-party final payment. A money or value transfer service may be provided by persons (natural or legal) formally through the regulated financial system (for example, bank accounts), informally through non-bank financial institutions and business entities or outside of the regulated system. In some jurisdictions, informal systems are referred to as alternative remittance services or underground (or parallel) banking systems.

Question 52

Nesting

Answer 52

• respondent bank provides downstream correspondent services to other financial institutions and processes these transactions through its own correspondent account.
• processing transactions for financial institutions on which it has not conducted due diligence.
• it requires the correspondent bank to conduct enhanced due diligence on its respondent’s AML program to adequately mitigate the risk of processing the customer’s customers’ transactions.

Question 53

Offshore Financial Center (OFC)

Answer 53

Institutions that cater to or otherwise encourage banks, trading companies, and other corporate or legal entities to physically or legally exist in a jurisdiction but limit their operations to “offshore,” meaning outside the jurisdiction (see Offshore). - in the Caribbean or on Mediterranean islands

Question 54

Offshore Banking License

Answer 54

A license that prohibits a bank from doing business with local citizens or in local currency as a condition of its license.

Question 55

2 Sources of Terrorist Financing

Answer 55

• involves financial support from countries, organizations or individuals.
• involves a wide variety of revenue-generating activities, some illicit, including smuggling and credit card fraud.

Question 56

Trustee

Answer 56

manager of the property of the trust

whereby the trustee manages the property for the benefit of the beneficiary in accordance with terms set by the grantor.

Question 57

Willful Blindness

Answer 57

• Legal principle
• “deliberate avoidance of knowledge of the facts” or “purposeful indifference.”
• Courts have held that it is equivalent of actual knowledge of the illegal source of funds or of the intentions of a customer in a money laundering transaction.

Question 58

Identify the three important tasks that FATF focuses on.

Answer 58

• Spreading the anti-money laundering message worldwide,
• Monitoring implementation of the FATF Recommendations among FATF members, and
• Reviewing money laundering trends and countermeasures.

Question 59

FATF 40 Recommendations: 5 elements?

Answer 59

IDC FIL
•Identification of risks 
•Criminal justice system 
•Financial system 
•Legal persons 
•International cooperation.

Question 60

Describe FATF’s Recommendation 15 (2012) on new technologies

Answer 60

Financial institutions should assess these risks prior to launching new products; they should also take appropriate measures to mitigate the risks identified.

Question 61

What are six principles set forth in the Basel Committee’s Statement of Principles called “Prevention of Criminal Use of the Banking System for the Purpose of Money Laundering”?

Answer 61

-CCC FSA-
Customer identification,
•Compliance with laws,
•Conformity with high ethical standards and local laws and regulations,
•Full cooperation with national law enforcement to the extent permitted without breaching customer confidentiality,
•Staff training,
• audits/Record keeping

Question 62

7 Specific Customer Identification Issues

Basel Committee’s 2001 - Customer Due Diligence for Banks

Answer 62

Corporates TIP PNC
•Trust, nominee and fiduciary accounts,
•Corporate vehicles, particularly companies with nominee shareholders or entities with shares in bearer form,
•Introduced businesses,
•Client accounts opened by professional intermediaries, such as “pooled” accounts managed by professional intermediaries on behalf of entities such as mutual funds, pension funds and money funds,
•Politically exposed persons,
•Non-face-to-face customers, i.e., customers who do not present themselves for a personal interview, and
•Correspondent banking.

Question 63

Basel Committee

• How was it created?
• Why was it created?
• How is the secretariat appointed?
• What has it issued?

Answer 63

• established by the G-10’s central bank of governors in 1974
• promote sound supervisory standards worldwide
• Bank for International Settlements in Switzerland
• papers on CDD for banks, consolidated KYC risk management, transparency in payment messages, due diligence and transparency regarding cover payment messages related to cross-border wire transfers, and sharing of financial records among jurisdictions in connection with the fight against terrorist financing

Question 64

4 KYC Parts

Basel Committee’s -“Customer Due Diligence for Banks

Answer 64

CiMo CaR
•Customer identification,
•Risk management,
•Customer acceptance, and
•Monitoring.

Question 65

Describe the elements that should be addressed in a global approach to KYC identified in the Basel Committee’s October 2004 paper called “Consolidated KYC Risk Management.”

Answer 65

addresses the need for banks to adopt a global approach and to apply the elements necessary for a sound KYC program to both the parent bank or head office and all of its branches and subsidiaries. These elements consist of:
•Risk management,
•Customer acceptance and identification policies, and
•Ongoing monitoring of higher-risk accounts.

Question 66

How does the scope of the European Union’s Third Money Laundering Directive differ from the Second Money Laundering Directive?

Answer 66

• It specifically includes the category of trust and company service providers,
• It covers all dealers trading in goods who trade in cash over 15,000 Euros, and
• The definition of financial institution includes certain insurance intermediaries.

Question 67

How is a private banking account defined under Section 312 of the USA Patriot Act?

Answer 67

Under Section 312 of the USA Patriot Act, a private banking account is defined as an account with a minimum aggregate deposit of $1 million for one or more non-U.S. persons and which is assigned to a bank employee acting as a liaison with the non-U.S. person.

Question 68

What was the primary way in which the European Union’s Second Directive on Prevention on the Use of the Financial System for the Purpose of Money Laundering (2001) expanded the scope of the First Directive?

Answer 68

The definition of “criminal activity” was expanded to cover not just drug trafficking, but all serious crimes, including corruption and fraud against the financial interests of the European Community.

Question 69

Section 312 of the USA Patriot Act,

- The due diligence program for foreign correspondent accounts must address what 3 measures?

Answer 69

312 - Deed A Risk
•Determining whether enhanced due diligence is necessary,
•Assessing the money laundering risk presented by the correspondent account,
•Applying risk-based procedures and controls reasonably designed to detect and report suspected money laundering.

Question 70

FATF Recommendations 2012: threshold that financial institutions should monitor

• 10
• 22
• 23

Answer 70

10- occasional customers is €15,000
22 - casinos, including Internet, it is €3,000
23 - dealers in precious metals, for cash, it is €15,000

Question 71

Describe FATF’s Recommendations 20-21 (2012) on suspicious transaction reporting and liability.

Answer 71

The Recommendations say that financial institutions must report to the Financial Intelligence Unit where they suspect or have reasonable grounds to suspect that funds are the proceeds of a criminal activity or are related to terrorist financing. The financial institutions and the employees reporting such suspicions should be protected from liability for reporting and should be prohibited from disclosing that they have reported such activity.

Question 72

According to the Wolfsberg Anti-Money Laundering Principles for Private Banking (2000), what are situations for private banking that require further due diligence?

Answer 72

• Public officials, including individuals holding, or having held, positions of public trust, as well as their families and close associates,
• High-risk countries, including countries “identified by credible sources as having inadequate anti-money laundering standards or representing high-risk for crime and corruption,” and
• High-risk activities, involving clients and beneficial owners whose source of wealth “emanates from activities known to be susceptible to money laundering.

Question 73

Identify the seven topics of international standards incorporated into the FATF 40 Recommendations (2012).

Answer 73

• AML/CFT policies and procedures [Recommendations 1-2],
• money laundering and confiscation [Recommendations 3-4],
• terrorist financing and financing of proliferation [Recommendations 5-8],
• financial and non-financial institution preventative measures [Recommendations 9-23],
• transparency and beneficial ownership of legal persons and arrangements [Recommendations 24-25],
• powers and responsibilities of competent authorities and other institutional measures [Recommendations 26-35], and
• international cooperation [Recommendations 36-40].

Question 74

5 criteria for becoming a FATF Member?

Answer 74

• The jurisdiction should be strategically important based on quantitative and qualitative indicators and additional considerations
• FATF’s geographic balance should be enhanced by the jurisdiction becoming a member
• The country should provide a written commitment at the political/ministerial level
• Within a maximum of three years after being invited to participate in FATF as an observer the mutual evaluation process for the country should be launched.
• Membership is granted if the mutual evaluation is satisfactory

Question 75

Does the Basel Committee prohibit the use of numbered accounts?

Answer 75

No

Question 76

The First Directive of 1991 confined predicate offenses for money laundering to?

Answer 76

• drug trafficking

- defined in the 1988 Vienna Convention.

Question 77

What is the revised threshold for reporting suspicious transactions under the Fourth EU Money Laundering Directive?

Answer 77

The threshold for entities obliged to report suspicious transactions (i.e., persons trading in goods or carrying out transactions) decreased from EUR 15,000 to EUR 10,000

Question 78

What are three high-level principles that apply to both FATF and FATF-Style Regional Bodies?

Answer 78

• Role
• Autonomy: free-standing organizations that share the common goals
• Reciprocity: (mutual or joint or common) recognition of their work

Question 79

What are the nine FATF-Style Regional Bodies?

Answer 79

• Asia/Pacific Group on Money Laundering (APG).
• Caribbean Financial Action Task Force (CFATF)
• Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL, formerly PC-R-EV)
• Eurasian Group (EAG)
• Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG)
• Financial Action Task Force of Latin America (GAFILAT) (formerly known as Financial Action Task Force on Money Laundering in South America (GAFISUD)
• Intergovernmental Action Group against Money- Laundering in West Africa (GIABA)
• Middle East and North Africa Financial Action Task Force (MENAFATF)
• Task Force on Money Laundering in Central Africa (GABAC

Question 80

Which of the FATF-Style Regional Bodies issued its own set of 19 recommendations, which were specific to the region?

Answer 80

The Caribbean Financial Action Task Force (CFATF), in 1990.

Question 81

What international organization developed the first model legislation specifically designed to combat money laundering?

Answer 81

Organization of American States (OAS), via the Inter-American Drug Abuse Control Commission

Question 82

What is the extraterritorial aspect of section 319(b) of the Patriot Act?

Answer 82

• allows the Secretary of the Treasury or the Attorney General to subpoena records of a foreign bank that maintains a correspondent account in the United States.
• subpoena can request any records relating to the account, including records located outside the United States.
• fails to comply: Secretary or the Attorney General can order the US financial institution to close the correspondent account within 10 days
• requires foreign banks to designate a registered agent in the United States to accept service of subpoenas pursuant to this section.
• US banks and securities brokers and dealers that maintain correspondent accounts for foreign banks must keep records of the identity of the 25 percent owners of the foreign bank, unless it is publicly traded, as well as the name of the correspondent bank’s registered agent in the U.S.

Question 83

How does the USA PATRIOT Act impact non-U.S. banks that have an account with a U.S. financial institution?
What if the funds are deposited in a foreign bank that keeps an “interbank account” at a US bank?

Answer 83

Section 319(a) of the USA PATRIOT Act greatly strengthened the forfeiture powers over the funds of foreign persons and institutions. 
-If the funds the United States pursues are deposited in a foreign bank that keeps an “interbank account” at a US bank, the United States may bring a case to forfeit the crime-tainted funds in the US account.

Question 84

What does OFAC do?

Answer 84

OFAC, the Office of Foreign Assets Control, is the division of the U.S. Department of Treasury that administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries, terrorists, international narcotics traffickers and those engaged in activities related to the proliferation of weapons of mass destruction

Question 85

Where does OFAC power come from?

Answer 85

OFAC acts under presidential wartime and national emergency powers, as well as authority granted by specific legislation, to impose controls on transactions and to freeze foreign assets under US jurisdiction.

Question 86

In its “AML Principles for Correspondent Banking,” what does the Wolfsberg Group indicate should be done for approval and ongoing review of higher risk correspondent bank relationships?

Answer 86

Approval of higher risk Correspondent Banking relationships at the time of on-boarding and periodic review shall be subject to a higher level of approvals by business and Compliance, or relevant control function. Periodic reviews shall be conducted of all high risk Correspondent Banking relationships, at minimum on an annual basis.