Anti-Money Laundering Certificate Exam
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Correspondent Banking - ANS ✓This is the provision of banking services
by one bank (The Correspondent Bank) to another bank (Respondent
Bank). This is used sp banks can undertake international financial
transactions for themselves and for their customers in jurisdictions where
they have no physical presence.
Correspondent Banking Vulnerability to ML - ANS ✓1. By its nature,
correspondent banking relationships create a situation in which a financial
institution carries out financial transactions on behalf of customers of
another institution of which they have not verified the identities of nor
obtained any first-hand knowledge.
2. The increase of money that flows through correspondent accounts
can pose a significant threat as they process large volumes of
transactions for their customers making it more difficult to identify
suspect transactions as the financial institution generally does not
have the information on the actual parties conducting the transaction
to know whether they are unusual.
Payable Through Accounts (PTAs) - ANS ✓In some correspondent
relationships, the respondent bank's customers are permitted to conduct
their own transactions through the respondent's banks correspondent
account without first clearing the transactions through the respondent
bank. This is different in that the foreign bank's customers have the ability
to directly control funds at the correspondent bank.
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Elements of PTA's that threaten the correspondent bank's money
laundering defenses - ANS ✓1. PTAs with foreign institutions licensed in
offshore financial service centers with weak or nascent bank supervision
and licensing laws.
2. PTA arrangements where the correspondent bank regards the
respondent bank as its sole customer and fails to apply its CDD
policies and procedures to the customers of the respondent bank.
3. PTA arrangements in which sub-account holders have currency
deposit and withdrawal privileges
4. PTAs used in conjunction with subsidiary representative or other
office of the respondent bank, which may enable the respondent bank
to offer the same services as a branch without being subject to
supervision.
Concentration Accounts - ANS ✓These are internal accounts established
to facilitate the processing and settlement of multiple or individual
customer transactions within the bank, usually on the same day. They do
this by aggregating funds from several locations into one centralized
account.
Risks Associated with Concentration Accounts - ANS ✓Money
laundering risks arise if the customer-identifying information is separated
from the financial transaction. If separation occurs, the audit trail is lost
and accounts may be misused or administered improperly.
Implementation of what for Concentration Accounts? - ANS ✓1.
Requiring dual signatures on general ledger tickets
2. Prohibiting direct customers access to concentration accounts.
3. Capturing customer transactions in the customer's accounts
statements.
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4. Prohibiting customers' knowledge of concentration accounts or
their ability to direct employees to conduct transactions through the
accounts.
5. Retaining appropriate transaction and customer identifying
information.
6. Reconciling accounts frequently by an individual who is
independent from the transactions.
7. Establishing a timely discrepancy resolution process.
8. Identifying and monitoring recurring customer names.
Private Bankingeduced transparency. - ANS ✓Private banking provides
highly personalized and confidential products and services to wealthy
clients at fees that are often based on "asset under management." Private
banking often operates semi-autonomously from other parts of a bank.
Vulnerabilities of Private Banking related to ML - ANS ✓A culture of
secrecy and discretion and intense competition and perceived high
profitability.
Private Investment Companies (PIC) - ANS ✓PICs are corporations
established by individual bank customers and others in offshore
jurisdictions to hold assets. They are "shell companies" formed to maintain
client's confidentiality and for various tax or trust related reasons.
Excellent money laundering vehicles.
Politically Exposed Persons (PEPs) - ANS ✓Iindividuals who are or have
been entrusted with prominent public functions by a country
1. Foreign PEPs
2. Domestic PEPs
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Structuring - ANS ✓Designing a transaction to evade triggering a
reporting or record-keeping requirement.
Smurfing - ANS ✓A type of structuring. This involves multiple individuals
making multiple cash deposits or buying multiple monetary instruments or
bank drafts in amounts under the reporting threshold in attempt to evade
detection.
Microstructuring - ANS ✓This is the same as structuring expect that it is
done at a much smaller level. Instead of two deposits of $9000 each there
would be 20 deposits of approximately $900.
Methods of detecting Microstructuring - ANS ✓1. The use of counter
deposit slips as opposed to preprinted deposit slips.
2. Frequent activity in an account immediately following the opening
of the account with only preliminary and incomplete documentation.
3. Frequent visits to make cash deposits of nominal amounts that are
inconsistent with typical business or personal banking activity.
4. Cash deposits followed by ATM withdrawals, particularly in higher
risk countries.
Cash deposits made into business accounts by third parties with no
apparent connection to the company.
Credit Unions and Building Societies - ANS ✓They are not-for-profit
member-owned and operated democratic financial co-operatives.
Credit Card Industry - ANS ✓1. Credit Card Associations
2. Issuing banks that issue credit cards
3. Acquiring banks which process transactions for merchants who
accept credit cards
Laundering Certificate
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