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ACAMs > Chapter 2 - International AML / CFT Standards > Flashcards

Chapter 2 - International AML / CFT Standards Flashcards

1
Q

FATF - Basics

A
  • Financial Action Task Force
  • Established 1989
  • Based at OECD with its own secretariat
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2
Q

FATF - Objectives and how achieved

A
  • Promote implementation of legal, reg and ops measures for combating ML and TF
  • Spreading AML message worldwide (increase membership, develop regional bodies)
  • Monitoring implementations of FATF recommendations (Technical Compliance, Effectiveness Assessment)
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3
Q

FATF - Technical compliance assessment / Effectiveness assessment

A

TCA
- Focus on fundamental building blocks (legal and institutional framework)
EA
- Focus on whether the legal and institutional framework is producing the expected results

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4
Q

FATF - Effectiveness Assessment - Immediate Outcomes (examples)

A
  • Risks are understood, coordinated actions to combat
  • Actionable info to use against criminals
  • Supervision in place
  • FIs apply preventative measures and report suspicious txns
  • Bene ownership is available to authorities for legal persons
  • Fin Intel is used
  • ML / TF is criminally prosecuted
  • Proceeds of crime are confiscated
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5
Q

FATF - Effectiveness Assessment - Intermediate outcomes

A
  • Policy, cooperation and coordination to mitigate ML and TF
  • Prevent proceeds from crime entering financial system and report if they do
  • Detection and disruption of ML/TF threats
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6
Q

FATF - Enforcement

A

Peer pressure, suspension of membership

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7
Q

FATF 40 Recommendations + 9 Special Recommendations on TF

A
  • First issued in 1990, revised in 1996, 2003 and 2012
  • TF special recommendations issued in 2001/2004
  • Combined into 40 recommendations in 2012
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8
Q

FATF 40 Recommendations - Broad scope (5 points)

A
  • Identification of risks and development of policies
  • Criminal justice system and law enforcement
  • Financial system and its regulation
  • Transparency of legal persons
  • International cooperation
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9
Q

FATF Recommendations - Group I

A

AMl / CFT Policies & Coordination

1) Assessing risks and applying risk based approach
2) National cooperation and coordination

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10
Q

FATF recommendations- Group II

A

Money Laundering and Confiscation

  • ML offences
  • Confiscation and provisional measures
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11
Q

FATF recommendations - Group III

A

Terrorist Financing and Financing of Proliferation

  • Terrorist financing offences
  • Targeted financial sanctions (TF and PF)
  • Nonprofit organisation
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12
Q

FATF recommendations - Group IV

A

FI and Non FI Preventative measures

  • FI secrecy laws
  • CDD and record keeping
  • Additional measures for specific customers
  • Reliance controls and financial groups
  • Reporting Suspicious txn
  • Designated nonfin businesses
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13
Q

FATF Recommendations- Group V

A

Transparency and Beneficial Ownership of Legal Persons and Arrangements

  • Legal Persons
  • Legal arrangements
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14
Q

FATF Recommendations- Group VI

A

Powers and Responsibilities of Competent Authorities

  • Regulation & Supervision
  • Operational and law enforcement
  • General requirements
  • Sanctions
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15
Q

FATF Recommendations- Group VII

A

International coopperation

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16
Q

FATF Recommendations - 2012 Revisions

A
  • Risk based approach
  • Designated categories of offences
  • Terrorist Financing and Proliferation Financing
  • Knowledge and criminal liability
  • CDD and risk based approach
  • Additional CDD for PEPs and Correspondent Banks
  • SA reporting
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17
Q

FATF 2012 revision (DNFBP)

A

Designated non financial business and professions (should be subject to AML measures)

  • Casinos
  • Real Estate Agents
  • Precious Metal dealers
  • Lawyers, notaries, accountants etc.
  • TCSP
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18
Q

FATF Country Membership - Criteria

A
  • Quantitative (GDP, size of banking sector)

- Qualitative (impact on financial system, participation in FSRBs)

19
Q

FATF - Country membership (process)

A
  • Granting observership (country shoul endorse 2012 Recommendations)
  • Carrying out mutual evaluation, agreeing action plan, granting membership
20
Q

FATF - NCCTs (characteristics)

A

Non-Cooperative Countries & Territories (2000 report, discontinued)

  1. Loopholes in financial regulations
  2. Obstacles raised by other reg requirements (e.g. inadequate commercial law)
  3. Obstacles to international cooperation
  4. Inadequate resources to prevent ML
21
Q

FATF - current reporting on non compliant countries

A
  • 2 public docs, published 3 times per year
  • FATF Public Statement (identifies countries where members are required to take counter measures or apply enhanced DD)
  • Improving Global AML/CFT Compliance: Ongoing Process (identifies countries with deficiencies but that have made a commitment to develop an action plan)
22
Q

Basel Committee on Bank Supervision (Basics)

A
  • Established 1974
  • Global standard setter for prudential regulation
  • Secretariat located at BIS in Basel
23
Q

BCBS - Initial focus in early papers

A
  • KYC

- 2001: Customer Due Diligence for Banks

24
Q

BCBS 2001 paper Customer Due Diligence for Banks

A
  1. Importance of KYC standards
  2. Essential elements of KYC standards
  3. Role of supervisors
  4. implementation of KYC standards in x-border context

Focus on:

  • Customer identification
  • Risk Management
  • Customer acceptance
  • Monitoring
25
Q

BCBS - 2016 Paper: Sound Management of Risks Related to ML and CFT (Key elements)

A
  • Risk Analysis and Governance
  • 3 LoDs
  • CDD
  • TM Systems and ongoing monitoring
  • MI
  • Reporting suspicious txns and asset freezing
26
Q

EU Directives (General)

A
  • Has force of law and prevails over national law
27
Q

EU 2. Directive

A
  • 2001
  • Went beyond standards of FATF
  • Detailed definitions and standards
28
Q

EU 3. Directive (key changes vs. 2nd directive)

A
  • Includes TCSS and certain insurance intermediaries

- Covers all dealers who trade in cash over EUR 15k

29
Q

FSRBs - APG

A

Asia Pacific Group on ML

30
Q

FSRBs - CFATF

A

Caribbean Financial Action Task Force

31
Q

FSRBs - Moneyval

A

Committee of experts on the evaluation of AML measures

32
Q

FSRBs - GAFILAT

A

FATF of Latin America

33
Q

FSRBs - GIABA

A

Intergovernmental Action Group against ML in West Africa

34
Q

FSRBs - MENAFATF

A

Middle East and North Africa FATF

35
Q

FSRBs - EAG

A

Eurasian Group on Combatting ML and Financing of Terrorism

36
Q

FSRBs - ESAAMLG

A

Eastern and South African AML Group

37
Q

FSRBs - GABAC

A

Task Force on ML in Central Africa (in French…)

38
Q

Inter- American Drug Abuse Control Commission

A

Commission set up by the Organization of American States to combat all aspects of drug crime, including ML, developed model legislation aimed specifically at dealing with ML

39
Q

Egmont Group

A

Informal cooperation of national Financial Intelligence Units

40
Q

Wolfsberg Group

A
  • 13 Global Banks
  • Issues guidelines to help members manage risk and make sound decisions
  • No enforcement powers
41
Q

Wolfsberg Group - Initial Focus

A

AML Principles for Private Banking

42
Q

Wolfsberg Group 2002/14 Guidelines on Correspondent Banking

A
  • Risk based due diligence (Collaboration with Banker’s Almanac to develop International Due Diligence Repository)
43
Q

Wolfsberg Group 2009 Monitoring, Screening and Searching Document

A
  • Covers in particular issues related to the development of risk-based processes for monitoring, screening and searching txns and clients
44
Q

World Bank and IMF

A
  • Actively supporting fight against financial crime
  • Working closely with FATF on country assessment
  • Insisting countries seeking financial assistance to apply international AML standards

ACAMs (7 decks)

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