Chapter 3 - Firms' Responsibilities for Financial Crime Prevention

Question 1

Who is expected to identify and manage a firm’s the risk of financial crime, terror financing and corruption to the firm?

Answer 1

The board of directors and senior management.

Question 2

Who in the firm is responsible for processing disclosures of crime, TF and corruption?

Answer 2

A nominated officer of the board and management.

Question 3

What must a board and management ensure the MLRO has?

Answer 3

Sufficient resources devoted to AML/CFT.

Question 4

Who is responsible for appointing an MLRO?

Answer 4

The board and senior management.

Question 5

Who is responsible for ensuring the policies and procedures established include systems and controls?

Answer 5

The board and senior management.

Question 6

What must the policies and procedures and systems and controls be?

Answer 6

1. Identify, assess, monitor and manage money laundering risk.
2. Comprehensive and proportionate to the nature, scale and complexity of the firm’s activities.

Question 7

Who in a firm is expected to set the AML policy?

Answer 7

The senior management.

Question 8

What must the AML policy do?

Answer 8

It should help the organisation comply with legal and regulatory AML regimes and set out the reporting framework and accountabilities of the employees and management.

Question 9

What will set out the application of the risk based approach to AML?

Answer 9

The internal information systems

Question 10

What should complement the internal information systems in assessing AML risk?

Answer 10

• client reports
• transaction reports
• record-keeping

Question 11

What are the international objectives focused on financial crime?

Answer 11

• reduce financial crime and deter use of financial systems
• ensure firms have policies and procedures in place to minimise the ML and FC risk to a firm.
• raise consumer awareness of FC issues.
• set out international cooperation
• standards and guidance for AML and fraud.
• improve the use of regulatory resources through risk assessment procedures.
• improve coordination of partner agencies.

Question 12

What should a risk based approach to combating financial crime consist of?

Answer 12

1. Anti-fraud culture
2. Allocation of responsibility for management of risk
3. Staff training
4. Robust KYC processes.
5. MI on fraud

Question 13

What will regulators look for in relation to anti financial crime and fraud prevention processes?

Answer 13

1. Who is responsible for managing fraud risks?
2. How many frauds has the firm suffered recently.
3. What are fraud losses?
4. What whistleblowing arrangements are in place and how successful are they?
5. How much is spent on preventing and detecting fraud?
6. How does the firm assess the effectiveness of fraud controls?
7. What information on fraud goes to the board or senior management?

Question 14

What are the types of controls that would be useful in combating fraud?

Answer 14

1. IT and manual systems
2. Separation of duties within a firm
3. Internal audit
4. Risk assessments
5. Mitigation and monitoring programme
6. Documented policies and procedures
7. Organisational culture
8. MI
9. Reforms following fraud