Chapter 2 Flashcards
Identify three important tasks that FATF focusses on to fill its objectives
1) spreading anti-ML messages worldwide
2) monitoring implementation of the FTF recommendations among FATF members
3) reviewing ML trends, and countermeasures
According to FATF 40 recommendations, complete set of counter measures against money laundering and terrorist financing cover what six elements
I’d of:
-risks
-development of appropriate policies
-criminal justice system, and law enforcement
-Financial system and its regulation
-Transparency of legal persons and arrangements
-international cooperation
Describe FATS recommendation 15 concerning new products, delivery mechanisms, and technologies
Countries and financial organizations should assess the risk associated with the development of new products, business practices, delivery mechanisms, and technology. They should assess these risks prior to launching new products and take appropriate measures to mitigate the identified risk.
What are the topics of the six principles set for in the basil committee statement of principles, called prevention of criminal use of the banking system for the purpose of money laundering
-customer ID
-Compliance with laws
-conformity with high ethical standards and local laws and regulations
-Cooperation with natural law enforcement to the extent permitted without breaching customer confidentiality
-Staff training
-recordkeeping and audits
According to the basal committees, January 2014 guidelines, sound management of risk related to money, laundering, and financing of terrorism, what control should banks implement?
-Risk analysis and governance
-3 lines of defence
-customer due diligence and acceptance
-Transaction monitoring systems and ongoing monitoring
-Management of information
-Reporting of suspicious transactions and asset freezing
According to the basil committee KYC guidance what are the four key elements of a KYC program?
1) customer ID
2) risk management
3) customer acceptance policy
4) ongoing monitoring
Describe the elements that should be addressed in the global approach KKYC, as identified in the basil committees October 2004 paper, consolidated Kyc risk management
-Risk management
-customer acceptance and identification policy
-ongoing monitoring of high risk accounts
How does the scope of the European Union third money laundering directive differ from the second money laundering directive
-It specifically includes the category and service providers
-it covers all dealers trading in goods who trade in cash over €15,000
-Expand the definition of financial institution to include certain insurance intermediary
How is the private banking account defined under section 312 of the USA patriot act
-Private banking account is defined as an account with a minimum aggregate deposit of 1 million US
-an account for one or more non-US US person
-an account that is assigned to a bank employee acting as liaison with the non-US person
What are the primary ways in which the EU second money laundering directive expanded the scope of the first directive?
-Extended the scope of the first directive beyond drug related crimes
-expanded the definition of criminal activity to cover not just drug trafficking but all serious crimes
-Brought currency exchanges and money reminiscence offices under AML coverage
-Clarified the knowledge of criminal conduct can be inferred from objective factual circumstances
-Provided a more precise definition of money laundering
-widen the businesses and professions that are subject to obligations of the directive
According to section 312 of the USA patriot act, do diligence programs for correspondent banks must address what three measures?
-Determining whether enhanced diligence is necessary
-Assessing money, laundering risk presented by the correspondent account
-Applying risk based procedures and controls, reasonably detect, and report suspected money laundering
What are FATF – designated threshold that should trigger AML scrutiny?
-Should monitor for occasional customers is $15,000 US (rec10)
-Casinos, including Internet casinos 3000 US (rec 22)
-Dealers and precious metals when engage in any cash transaction 15,000 US (rec 22-23)
Describe FATS recommendations regarding suspicious activity reporting
-Financial organizations must report to the appropriate FIU when they suspect or have reasonable ground suspect that funds are the proceeds of crime or related to Terrorist financing
-Financial organizations and employees reporting such suspicious should be protected from liability for reporting and prohibited from disclosing that they have such a activity
-confidentiality regarding suspicious activity reports is critical to the effective functioning of reporting regime
Wolfsburg group and FATF recommended what enhancing due diligence before commencing or continuing a business relationship with high risk customer
-Obtaining approval of senior management to commence or continue business relationship
-first payment to be carried out through an account in the customers name with bank subject to some CDd standards
Identify seven topics of international standards Inc. into the FATF 40 recommendations
-AML/CFT policies and coordination (rec 1-2)
-Money, laundering and confiscation (3-4)
-terrorist financing and financing a proliferation (5-8)
-Financial and nonfinancial institution for preventative measures. (9-23)
-transparency and beneficial ownership of legal persons in arrangements. (24-25)
-Powers and responsibilities of competent authorities and other institutional measures (26-35)
-international corporation (36-40)
Describe FATS recommendation concerning risk based approach
-countries should start by identifying, assessing, understanding, money, laundering, and terrorist financing risk they face
-take appropriate measures to mitigate identified risk
-it allows countries to allocate their limited resources in target manner in line with their own specific circumstances to increase efficiency of the preventative measures
Differentiate between what are referred to as FATf blacklist and Grey list
Black list
-Countries and jurisdiction on blacklist have strategic deficiencies that are so serious the FATF calls on members and nonmembers to apply Edd
-and most serious cases counter measures
Grey list
-Countries intersections on green list are already actively engaging with ATF to dressed deficiencies in their to counter money, laundering, terror, financing, and proliferation financing
-Is under increased moderating. It means it has committed to swiftly resolve identified to deficiencies within an agreed-upon timeframe while the FATF keep it under close monitoring
At high-level, what are the criteria from coming FATF member
-should be strategically important based on quantitative (size of GDP,population) and qualitative indicators (impact on global financial system, level of AML risks faced) and additional considerations (level of adherence to financial sector standards) and FATF geographical balance should be enhance by the jurisdiction becoming a member
Does the basil committee prohibit the use of numbered accounts?
No
-Should be subjected to exactly the same Kyc procedures as other customer accounts
-KYC test may be carried out by select staff, but the identity of customers must be known to an adequate number of staff if the bank is to be sufficiently diligent.
-Should in no circumstance be used to hide customers identity from banks, compliance function from superiors
What must you member countries do with EU directives
Must transpose the directives into law
What was considered a predicate offence for money laundering under the first EU money laundering Directive
-first directive of 1991
-combined predicate offenses, money laundering to drug trafficking, as defined in the 1988 Geneva convention. However, member states were encouraged to extend offence to other crimes.
What is the revised threshold for reporting suspicious transactions under the fourth EU money laundering directive
-natural and legal persons trading and goods are covered to extent that they make or receive cash payments of 10,000 euro or more. This is decreased from 15,000 Euro.
What are the 9FATF style regional bodies?
- Asia/pacific groups of money laundering (apg )
-Caribbean financial action task force (cfatf) - Council of Europe committee of experts on the evaluation of AML measures and financing of terrorism (moneyval)
-Eurasian group (eag)
-Eastern and southern Africa AML group (esaamlg)
-Financial action task force of Latin America (gafilat)
-inter-governmental 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)
Which of the FATF style regional bodies, issued its own set of 90 recommendations which are specific to the region
Caribbean financial action task force (cfatf)
