Module 2 (Part 4) Flashcards

1
Q

What topic is covered here

A

Key US legislative and regulatory initiatives

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2
Q

what does the USA PATRIOT Act have implications for

A

US institutions and non US institutions that DO BUSINESS in the US

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3
Q

What is the important section first mentioned

A

Section 311

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4
Q

What is its title

A

special measures for primary money laundering concerns

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5
Q

what does this section provide

A

the US treasury department with the authority to apply graduated, proportionate measures against a foreign jurisdiction, a foreign financial institution, a type of international transaction, or a type of account that the treasury secretary determines to be a “primary money laundering concern.”

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6
Q

What are the five special measures that the treasury department can require US financial institutions to follow

A
  1. Keep records and/or file reports on certain financial transactions, including a description of the transactions, the identities and addresses of the participants in the transactions, and the identifies of the beneficial owners of the funds involved.
  2. obtain information of the beneficial ownership of any account opened or maintained in the US by a foreign person or a foreign person’s representative
  3. identify and obtain information about customers who are permitted to use, or whose transactions are routed through, a foreign bank’s “payable-through” account
  4. Identify and obtain information about customers permitted to use or whose transactions are routed through, a foreign bank’s “correspondent” account.
  5. Close certain payable-through or correspondent accounts
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7
Q

What does section 312 cover

A

correspondent and private banking accounts

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8
Q

what does it require

A

due diligence/ EDD for foreign correspondent accounts and private banking for non-US persons

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9
Q

What does 312 say about the due diligence program

A

must be “appropriate, specific, and risk based”

where necessary, must include enhanced policies, procedures and controls reasonably designed to identify and report suspected money laundering in a correspondent account maintained in the US.

This due diligence program must also be included in the institution’s AML/CFT program

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10
Q

what are the 3 due diligence measures the program must address

A
  1. determining whether EDD is necessary
  2. assessing the money laundering risk presented by the correspondent account.
  3. Applying risk-based procedures and controls reasonably designed to detect and report suspected money laundering
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11
Q

what are the three items necessary for conducting enhanced scrutiny for possible money laundering and suspicious transactions

A
  1. Obtaining information relating to the foreign bank’s AML/CFT program
  2. Monitoring transactions in and out of the correspondent account in a manner reasonably designed to detect possible money laundering and suspicious activity
  3. obtaining information about the correspondent account that is being used as a payable - through account
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12
Q

under the private banking rule how is a private banking account defined

A
  1. an account with a minimum aggregate deposit of $1 million
  2. for one or more non-US persons, and
  3. which is assigned to a bank employee acting as a liason with the non-US person
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13
Q

For covered private banking accounts, US institutions must take what reasonable 4 steps

A
  1. Ascertain the identity of all nominal and beneficial owners of the accounts.
  2. ascertain whether any such owner is a SPF
  3. Ascertain the source of funds in the account and expected use of the account.
  4. monitor the account to ensure the activity in the account is consistent with the information provided as to the source of funds and the purpose and expected use of the account, as needed to guard against ML and to report any suspected ML or suspicious activity
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14
Q

What is the name of section 313

A

prohibition on correspondent accounts for foreign shell banks

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15
Q

what does this section do

A

prohibits US banks and securities brokers and dealers from maintaining correspondent accounts for foreign, unregulated shell banks that have no physical presence anywhere

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16
Q

what is section 319(a) called

A

forfeiture from US correspondent account

17
Q

what does this section do in situations where funds hav ebeen deposited with a foreign bank

A

permits the US government to seize funds in the same amount from a correspondent bank account in th eUS that has been opened and maintained for the foreign bank

18
Q

Is the government required to trace the funds

A

no, because they are deemed to have been deposited into the correspondent account

19
Q

What is section 319(b) called

A

Records relating to correspondent accounts for foreign banks

20
Q

What does this section allow the appropriate federal banking agency

A

to require a financial institution to produce within 120 hours (5 days) records or information related to the institution’s AML compliance or related to a customer of the institution or any account opened, maintained, administered or managed in the US by the financial institution

21
Q

what does the section also require of foreign banks

A

to designate a registered agent in the US to accept service of subpoenas pursuant to this action

22
Q

Under this section what must US banks and securities brokers and dealers that maintain correspondent accounts do

A

must keep records of the identity of the 25 percent owners of the foreign bank (unless publicly traded), as well as the name of the correspondent banks registered agent in the US.

23
Q

What does OFAC stand for

A

Office of foreign asset control

24
Q

what does OFAC do

A

administers and enforces economic trade sanctions based on US foreign policy and national security goals against targeted foreign countries, terrorists, international narcotics traffickers and those engaged in activities related to the proliferation of weapons of mass destruction

25
Q

What are many of the OFAC sanctions based on

A

UN and other international mandates that are multilateral in scope and involve close cooperation with allied governments

26
Q

What do OFAC sanction programs prohibit

A

transactions and require the blocking of assets of persons and organizations that appear on one of a series of lists that OFAC issues periodically

27
Q

What does OFAC have the power to do

A

impose significant penalties on those who are fount do be in violation of the blocking orders within each of the sanction programs

28
Q

what must all US persons do

A

comply with OFAC regulations

29
Q

who do these US persons consist of

A
  1. All US citizens and permanent resident aliens, regardless of where they are located.
  2. all persons and entities within the US
  3. All US incorporated entities and their foreign branches