According to the FATF 40 Recommendations, financial institutions should apply due diligence to: A. Domestic PEPs only B. International PEPs only C. International and domestic PEPs D. None of the above Question 2.1 122
• A bank in Italy holds a business account for an Italian company that sells gold throughout Europe and the Western Hemisphere. • The bank knows the purpose of this account is to receive payment for sales. • A review of the account shows a pattern of wire transfers coming from payable through accounts. • There is also a pattern of purchases of gold bullion held in Swiss banks. • The MOST important factor in assessing whether money laundering is a threat is that the: Question 2.2 123 A. Customer sells gold in regions where it carries an important or religious significance that adds to the high intrinsic value B. Payments come from third-party accounts C. Payments received are in the form of wire transfers instead of cash D. Account holder maintains gold bullion rather than finished pieces of jewelry
124 According to the Basel Committee, banks without due diligence requirements can be subject to the following? A. Organizational risk. B. Transactional risk. C. Legal risk. D. Confiscation risk. Question 2.3
125 According to the Basel Committee, the three lines of defense in a bank’s AML efforts include? A. Information technology, line of business, and AML compliance. B. Line of business, information technology, and audit. C. Audit, AML compliance, and board of directors. D. Line of business, AML compliance and audit. Question 2.4
126 What is the Office of Foreign Assets Control responsible for? A. Requiring enhanced due diligence on political exposed persons from sanctioned jurisdictions. B. Requiring enhanced due diligence for all foreign correspondent accounts. C. Designating a jurisdiction as a primary money laundering concern. D. Administering and enforcing US economic and trade sanctions. Question 2.5
AML/CFT Compliance Programs 127
128 • To prevent money laundering and terrorist financing • To report suspicious activity to the proper authorities when the law or regulations require it • To train all employees on the legal and internal procedures that must be followed AML/CFT Program Objectives
129 Prohibited High Risk Low Risk Medium Risk AML/CFT Risk Levels
130 AML/CFT Risk Factors
Sanctions, lacking adequate AML/CFT regimes, terrorist funding countries, corruption, etc. Casinos, offshore corporations, banks located in tax havens, embassies, currency exchange houses, money remitters, check cashers, car/boat/plane dealers, travel agencies, gem dealers, import/export, cash intensive businesses, accountants, etc. Summary: High Risk Factors Private banking, offshore international activity, deposit-taking facilities, wire transfer and cash management functions, transactions in which beneficiary is undisclosed, travelers checks, money orders, etc.
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- Fall '19