FATF Module (introduction) - Mod 1

Question 1

What is FATF?

Answer 1

It is a global AML/CFT/CPF standard setter.

Question 2

What is FATF’s objective?

Answer 2

To protect financial system and broader economy from the threats of ML/TF/PF

Question 3

What are FATF’s 4 functions?

Answer 3

1. Develop international standards.
2. Monitor member compliance with standards (using ME).
3. Identify & Engage countries with deficiencies.
4. Ensure clear understanding of standards

Question 4

What are FATF’s 4 functions?

Answer 4

1. Develop international standards.
2. Monitor member compliance with standards (using ME).
3. Identify & Engage countries with deficiencies.
4. Ensure clear understanding of standards

Question 5

Who makes up The Global Network?

Answer 5

1. The FATF
2. 9 FSRBs

Question 6

Name 3 closest to NZ FSRBs

Answer 6

1. Asia Pacific Group (APG)
2. Eurasian Group (EAG)
3. Financial Action Task Force of Latin America (GAFILAT)

Question 7

Define Money Laundering

Answer 7

The process of hiding the illicit origin of proceeds of crime.

Question 8

Define Terrorist Financing

Answer 8

It’s financing of terrorists, terrorist acts and terrorist organisations

Question 9

Define prolifiration financing

Answer 9

It refers to breach, non-implementation or evasion of the targeted financial sanction obligations referred to in Recommendation 7

Question 10

What are 3 actions in Money Laundering?

Answer 10

1. Transfer/convert property which is KTBIO (OR) conceal/disguise its origin (OR) help a person to evade consequences
2. Conceal/disguise True Nature, Source, Disposition, Movement or ownership of known illegal property.
3. Acquiring, Possessing or Using illegal property, while knowing at the time of the receipt that it was illegal.

Question 11

How many FATF Recommendations are there, and how many categories?

Answer 11

There are 40 recommendations, which are split into 7 categories

Question 12

What are FATF Recommendations?

Answer 12

These are comprehensive framework measures that countries should implement to tackle ML/TF/PF

Question 13

What is Category 1 on AML/CFT Policies and Coordination about (recommendations 1 & 2)?

Answer 13

1. Countries should assess their ML/TF risks.
2. Cooperate and coordinate risk-based approach to mitigate.

Question 14

What is Category 2 on ML and Confiscation (regulation 3-4)?

Answer 14

1. Countries must criminalise ML.
2. Enable law enforcement to freeze/seize and confiscate property derived/intended for use in TF or other crimes.

Question 15

What is Category 3 on TF and PF (regulation 5-8)?

Answer 15

1. Countries must criminalise TF
2. Impose targeted sanctions on individuals/entities to comply with UN resolution

Question 16

What is Category 4 on Preventative Measures (recommendations 9-23)?

Answer 16

1. Countries should ensure that the private sector takes measures to prevent criminals from misusing the financial system or gatekeepers.

Question 17

What is Category 5 on Transparency and Beneficial Ownership Arrangements (recommendations 24-25)?

Answer 17

1. Countries must prevent legal entities/arrangements from being misused.
2. Authorities must have access to info on owners and key personal.

Question 18

What is Category 6 on Powers and Responsibility of Competent Authorities (recommendations 26-35)?

Answer 18

1. To combat financial crimes, countries must empower competent authorities.
2. Establish FIU to receive/analyse STR

Question 19

What is Category 7 on International Cooperation (recommendations 36 - 40)?

Answer 19

1. Countries should collaborate in fight against ML/TF/PF by sharing info and legal assistance.

Question 20

What does effectiveness mean?

Answer 20

How well a country’s AML/CFT/CPF regime mitigate financial risks and threats.

Question 21

How does FATF assess the effectiveness of country’s AML/CFT/CPF?

Answer 21

It’s measure based on a hierarchy of defined outcomes (11 immediate outcomes.

This is done to see in detail how component parts operate.