Test 4 Flashcards
2 primary domestic wholesale payment systems for interbank funds transfers
Fedwire and CHIPS
Who operates Fedwire
Federal Reserver Bank
CHIPS is a bank owned, privately operated, real-time, multilateral payment system. Any banking organization may use CHIPS as long as they…
regulated US presence
CLS Bank is private sector, special purpose bank simultaneously settles both the payment obligations that arise from a single foreign exchange transaction. How?
ensures that one payment segment of a foreign exchange transaction is settled if only the corresponding payment segment is also settled, eliminating the foreign exchange settlement risk that arise when each segment of the foreign exchange transaction is settled separately
What does SWIFT stand for
Society of Worldwide Interbank Financial Telecommunications
Automated clearing house transactions aka ACH have recently been expanded to do what
include one time debit and check conversion
Prepaid access cards allow the holder access to merchants, ATMs, financial institutions associated with the cards payment network. Risk include
false identification, funded with stolen credit cards, load with cash from illicit sources inside or outside the US
What are non bank or third party payment processors
bank customers that provide payment-processing services to merchants and other business entities
Risk factors
generally not subjected to BSA/AML regulatory requirements, vulnerable to money laundering, ID theft, fraud schemes, processing illicit or OFAC-sanctioned transactions
What are the risks to privately owned ATMs or their ISOs
most states don’t currently register, limit ownership, monitor, or examine privately owned ATMs or ISOs
Risk factor in Non deposit investment products
complex legal arrangements, large dollar amounts, rapid movement of funds
Ways insurance products can be used to launder money include
borrowing against, selling units such as annuities, purchasing insurance products through unusual methods such as currency or currency equivalents
Risk factors of concentration accounts
customer identifying information, such as name, transaction amount, and account number is separated from the financial transaction
Risk factors for lending activities
purchases a certificate of deposit with illicit funds, made for ambiguous or illegitimate purposes and are mead for or are paid for a third party
Risk factors for Trade Finance Activities
involvement of multiple parties or both sides of any international trade transaction, document-based than other banking activities, it can be susceptible to document fraud, applicants true identity or ownership may be disguised by the use of certain corporate forms such as shell companies or offshore front companies
