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CAMS Chapter 2 > FATF > Flashcards

FATF Flashcards

1
Q

What are the main activities of FATF?

A
  1. Standards setting
  2. Ensuring effective compliance with standards
  3. Identifying ML/TF threats
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2
Q

When were 40 Recommendations issued first and then revised?

A

40 Recommendation were first issued in 1990 and then revised in 1996, 2003, 2012.

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3
Q

When were the Special Recommendations adopted?

A

First eight Special Recommendations were adopted on October 31, 2001, and the ninth on October 22, 2004.

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4
Q

Please describe 5 main set of FATF countermeasures.

A
  1. Identification of risks and development appropriate policies
  2. The criminal justice system and law enforcement
  3. The financial system and its regulation
  4. Transparency of legal persons and arrangements
  5. International cooperation
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5
Q

The first group of FATF Recommendations

A

Recommendations 1-2
AML/CFT Policies and Coordination

  1. Assessing risks and applying a risk-based approach
  2. National cooperation and coordination
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6
Q

The second group of FATF Recommendations

A

Recommendations 3-4
Money Laundering and Confiscation

  1. Money laundering offenses
  2. Confiscation and Provisional measures
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7
Q

The third group of FATF Recommendations

A

Recommendations 5 - 8
Terrorist Financing and Financing of Proliferation

  1. Terrorist financing offenses
  2. Targeted financial sanctions related to terrorism and terrorist financing
  3. Targeted financial sanctions related to proliferation
  4. Nonprofit organizations
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8
Q

The fourth group of FATF Recommendations

A

Recommendations 9-23
Financial and Non-financial Institution Preventative Measures

  1. FI secrecy laws
  2. CDD and record-keeping
  3. Additional measures for specific customers and activities
  4. Reliance, controls and financial groups
  5. Reporting of suspicious transactions
  6. Designated non-financial businesses and professions
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9
Q

The sixth group of FATF Recommendations

A

Recommendations 26-35
Powers and Responsibilities of Competent Authorities and Other Institutional Measures

  1. Regulation and supervision
  2. Operational and law enforcement
  3. General requirements
  4. Sanctions
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10
Q

The seventh group of FATF Recommendations

A

Recommendations 36-40
International Cooperation

  1. International instruments
  2. Mutual legal assistance
  3. Mutual legal assistance regarding freezing and confiscation
  4. Extradition
  5. Other forms of international cooperation
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11
Q

2003 important FATF Recommendations changes

A
  1. Expanded coverage to include terrorist financing
  2. Widened higher risk business: real estate agents, precious metal dealers, accountants, lawyers and trust services providers
  3. Customer identification and due diligence, including enhanced identification measures for higher risk customers and transactions
  4. Clearer definition of money laundering predicate offenses
  5. Prohibition shell banks, urged improved transparency of legal persons and arrangements
  6. Included stronger safeguards regarding international cooperation (terrorist financing investigations)
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12
Q

2012 important FATF Recommendations changes

A
  1. Assessing risks and applying a risk-based approach to all AML/CFT efforts
  2. Targeted financial sanctions related to proliferation of WMD
  3. More attention on domestic PEPs and PEPs entrusted by international organizations
  4. Identification and assessment of risks prior to the launch a new product
  5. Implementation group-wide AML/CFT programs and sharing information within the financial group
  6. Inclusion of tax crimes in offenses for money laundering
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13
Q

What does risk-based approach mean?

A
  1. Identify, assess and understand the money laundering and terrorist financing risks
  2. Take appropriate measures to mitigate the risk
  3. Based on risk allocate the limited resources to increase efficiency of preventative measures
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14
Q

What does terrorist financing and financing of proliferation include?

A

Countries should

  1. criminalize terrorist financing
  2. Impose sanction regimes including freezing assets of persons designated by UN Security Council
  3. Establish sufficient controls to mitigate the misuse of nonprofit organizations to provide support to terrorists
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15
Q

When should CDD be conducted?

A
  1. Establish business relations
  2. Carry out an occasional transaction or a wire transfer above the specified threshold
  3. Have suspicion of money laundering or terrorist financing
  4. Have doubts about the veracity or adequacy of previously obtained customer identification information
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16
Q

What must FIs in frame of CDD?

A
  1. Identify the customer and verify that customer’ a identity using reliable, independent source documents, data, information. Establishing accounts in anonymous or fictitious names should be prohibited
  2. Take reasonable measures to verify the beneficial owner. For legal persons and arrangements- ownership and control structure of the customer
  3. Understand and obtain information on the purpose and intended nature of the business relationship
  4. Conduct ODD on the business relationship and scrutinize transactions, including, where necessary, the source of funds
  5. Maintain records to comply with requests from competent authorities
  6. Rely on other parties to conduct CDD
  7. Establish group-wise AML program for financial group
17
Q

The measures for PEPs

A
  1. Obtaining senior management approval,
  2. taking measures to establish the source of wealth and funds
  3. Conducting ongoing monitoring
18
Q

The measures for cross-border correspondent banking

A
  1. Understand the respondent institution’s business, reputation, supervision and AML controls
  2. Obtain management approval
  3. document the responsibilities of each institutions
  4. Mitigate risks with payable-through accounts
  5. Ensure accounts are not established for shell banks
19
Q

Measures for Money or value transfer services (MVTS)

A

They should be license, registered and subject to appropriate AML requirements

20
Q

Measures for new technologies

A
  1. Countries and FIs should assess the risks associated with the development of new products, business practices, delivery mechanisms and technology.
  2. Assessing these risks prior to launching new products
  3. Take appropriate measures to mitigate identified risks
21
Q

Wire transfers requirements

A

FIs should:

  1. obtain and send originator, intermediary, beneficiary information with wires;
  2. Monitor wires for incomplete information and take appropriate measures
  3. Monitor wires for parties designated by the UN Security Council and take freezing actions or otherwise prohibit the transaction from occurring
22
Q

Suspicious transaction reporting requirements

A

FIs must report to FIU regarding suspicious transactions or activities.
Reporting FIs and employees should be protected from liability for reporting and should be prohibited from disclosing that they reported such activity.

23
Q

New nonfinancial businesses and professions

A
  1. Casinos
  2. Real estate agents
  3. Dealers in precious metals and stones
  4. Lawyers, notaries, independent legal professionals and accountants
  5. Trust and company service providers
24
Q

Powers and Responsibilities of competent authorities requirements

A
  1. Oversee FIs to ensure they are implementing FATF Recommendations and not owned by or controlled by criminals
  2. The supervisors should be given sufficient resources and powers to effective oversee FIs
  3. DNFB&P should be subject to oversight when they engage in certain financial activities
  4. FIU should be established
  5. Law enforcement and investigative authority should be provided with sufficient resources and powers to investigate ML/TF and seize or freeze criminal proceeds
  6. Measures to detect the physical cross-border movement of currency and bearer-negotiable instruments
  7. Authorities should provide statistics, guidance and feedback on AML/CFT systems
25
Q

FATF Membership Criteria

A
  • Quantitive Indicators
    1. Size of gross domestic product (GDP)
    2. Size of the banking, insurance and securities sectors
    3. Population
  • Qualitative Indicators
    1. Impact on the global financial system
    2. Active participation in a FATF-style regional bodies and regional prominence in AML/CFT efforts
    3. Level of AML/CFT risks faced and efforts to combat those risks
  • Additional considerations
    1. Level of adherence to financial sector standards
    2. Participation in other relevant international organizations
  • FATF’s geographic balance should enhanced
26
Q

Essential Recommendations for FATF membership

A
  1. Money laundering offense
  2. Terrorist financing offense
  3. Customer due diligence
  4. Record-keeping
  5. Reporting of suspicious transactions
27
Q

The first step of process for FATF membership

A
  1. Written commitment at the political/ ministerial level from the country:
    - endorsing and supporting the 2012 FATF Recommendations and 2013 FATF Methodology
    - agreeing to undergo a mutual evaluation
    - agreeing to participate in the FATF and to meet all the other commitments of the FATF membership
  2. High-level visit to the country
  3. Invitation to participate in the FATF as an observer or appoint a contact group to advise as to extend such an invitation to the country
28
Q

The second step of process for FATF membership

A
  1. Within a maximum of 3 years the mutual evaluation should be launched
  2. Mutual evaluation should be satisfactory result for granting of FATF membership

CAMS Chapter 2 (1 decks)

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