Chapter 3 - Money Laundering

Question 1

What type of approach to identifying money laundering does the FATF recommend?

Answer 1

A risk based approach

Question 2

What types of firms are considered higher risk?

Answer 2

Those that accept physical cash from clients.

Question 3

What types of products are deemed to have a lower money laundering risk?

Answer 3

Pension scheme with disincentives for short term withdrawal.

Question 4

What can firms do as part of their money laundering due diligence checks if they don’t have sufficient resource?

Answer 4

Accept a certificate from another regulated firm confirming that the earlier firm has completed a full client identification check.

Question 5

What types of structural prevention techniques can firms use to prevent ML?

Answer 5

Staff training

Question 6

What factors should a firm consider when identifying its money laundering risk?

Answer 6

• Customers types
• Products
• Distribution channels
• Complexity and volume of transactions
• Processes and systems
• Operating environment

Question 7

What should AML systems and controls consist of?

Answer 7

• Training
• MI to board and senior management (annual reports by MLRO)
• Documented risk management policies and risk profile.
• Day to day consideration of ML including in new product development, taking on new customers, changes to business profile.
• Procedures for new customers that do not unreasonably deny access to its services.

Question 8

What are an MLROs responsibilities?

Answer 8

• Receiving reports of suspicious activity
• Considering all reports and assessing whether there evidence of ML or TF.
• Reporting any suspicions to the LEA using a SAR.
• Asking the LEA for consent to continue with any transactions that they have reported and making so that no transactions are continued illegally.
• Putting in place and operating AML controls
• Carrying out ML risk assessments
• Record keeping
• Training staff on preventing money laundering.