Chapter 14

Question 1

14.1: What types of organisation are required to comply with AML and CFT regulations?

Answer 1

A wide variety of organisation types are required to comply with AML and CFT regulations. AML and CFT regulations are
most common where organisations:

• make, receive or facilitate large cash transactions (in the UK and Ireland this means transactions that exceed
  €10,000);
• provide credit (such as loans and sometimes trade credit);
• offer products that provide investment returns; and
• provide certain types of insurance service.

Organisations subject to AML and CFT regulations include:

• accountancy firms
• auctioneers
• banks
• bureau de change
• estate agents and rental agencies
• housing developers
• insurers and insurance agents
• investment firms
• lawyers
• motor vehicle sales
• pawn brokers.

Question 2

14.2: Explain the adverse implications of behavioural risk for organisations.

Answer 2

Behavioural risks such as poor employee conduct, criminal activities or negligence can have a variety of adverse
implications. Key implications include:

• potential financial loss (due to fraud, for example);
• legal and regulatory compliance breaches that could lead to lengthy court cases, supervisory intervention,
  enforcement action and criminal sanctions;
• damage to employee morale, (as a result of bullying, for example); and
• adverse media coverage, leading to reputation damage.