Money Laundering

Question 1

Financial Action Task Force (FATF)

Answer 1

Formed in 1989, international body created by Group of 7 industrialized nations to set standards and foster international action against money laundering

Question 2

What is the Palermo Convention?

Answer 2

The United Nations 2000 Convention against Transnational Organized Crime

Question 3

How does the Palermo Convention define money laundering?

Answer 3

conversion or transfer of property from criminal offense for the purpose of concealing the true orgin to evade legal consequences, knowing its from criminal sources, or acquisition (use) or funds

Question 4

What is the most imporant prerequisite in the definition of money laundering?

Answer 4

Knowledge - FATF 40 Recommendations
“intent and knowledge required to prove the offence of money laundering includes the concept that a the mental state could be inferred from facts”

Question 5

What is willful blindness?

Answer 5

deliberate avoidance of knowledge of the facts or purposeful indifference, actual knowledge of illegal source of funds or intentions in money laundering transaction

Question 6

What does CFT stand for?

Answer 6

Countering the financing of terrorism

Question 7

What are the three stages of money laundering?

Answer 7

1. Placement
2. Layering
3. Integration

Question 8

What is placement (in stages of money laundering)?

Answer 8

physical disposal of cash or other assets derived from crime
example: commingling illegitimate funds with legal funds, purchasing gift cards, structuring, currency smuggling, loans

Question 9

What is layering?

Answer 9

separation of illegal proceeds from their source via financial transactions intended to conceal the orgin
example: ETF transfers, cash to money intrustments, investing in real estate, investing, shell companies

Question 10

What is integration?

Answer 10

using seemingly clean money back into the economy - gives launderer the opportunity to increase wealth
example: real estate, financial ventures, luxury assets

Question 11

What does the Yates Memo state?

Answer 11

Reminds prosecutors that criminals and civil investigations into corporate misconduct should focus on individuals who perpetrated the wrongdoing

Question 12

What is the Financial Conduct Authority?

Answer 12

In the United Kingdom, published final rules for the Senior Managers and Certification Regime (SM&CR) - designed to improve individual accountability in the banking sector

Question 13

What does the SM&CR (senior managers and certfication regime) require?

Answer 13

Financial organization to give explicit responsibility to to a senior manager (MLRO) to ensure efforts to combat financial crimes

Question 14

What is the DFS?

Answer 14

Department of Financial Services in New York

Question 15

What is the Final Rule?

Answer 15

required regulated organizations to maintain transaction monitoring and filtering programs reasonably designed to monitor transactions in accordance to BSA/AML laws

Question 16

When was the final rule put into effect?

Answer 16

january 1, 2017

Question 17

What specific requirements were implemented due to the Final Rule?

Answer 17

1. Risk-based models
2. Model performance calibration
3. end-to-end, pre & post-model implentation testing

Question 18

What is FSRBs?

Answer 18

FATF and FATF-style regional bodies publish periodic typology reports to monitor changes and better understand money laundering and terrorist financing