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Flashcards in CAMS 3-4 Deck (50)
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1

What does FATF recommend considering when assessing risk?

•Customer risk
•Geographic risks
•Product/service risk

2

According to FATF, when should an institution conduct CDD?

•Establishing business relationships.
•Carrying out occasional transactions under certain circumstances.
•There is a suspicion of money laundering or terrorist financing.
•The financial institution has doubts about the veracity or adequacy of previously obtained customer identification data.

3

FATF Recommendation 10

bank should not establish a banking relationship until the identity of the customer verified

4

Targeted Sanctions

specifically named individuals, . These sanctions often include the freezing of assets and travel bans where possible.

5

Sectoral Sanctions

aimed at key sectors of an economy to prohibit a very specific subset of financial dealings within those sectors to impede future growth.

6

Comprehensive Sanctions

generally prohibit all direct or indirect import/export, trade brokering, financing or facilitating goods. These are often aimed at regimes responsible for gross human rights violations, and nuclear proliferation.

7

Specially Designated Nationals and Blocked Persons (SDN)

Office of Foreign Assets Control’s (OFAC) list of sanctions persons

8

When should institutions conduct economic sanctions screening?

Before a financial institution starts doing business with a new customer or engaging in certain transactions

9

What are some of the limitations on screening customers against lists of Politically Exposed Persons?

These lists do not always provide all relevant information related to PEPs that would assist in identifying them. For instance, there is no unique identifier, such as a date of birth or address.

10

Why is the risk-based approach best?

- Flexible
•Effective
•Proportionate

11

4 basic elements of financial institution’s AML program?

DC PAT
•system of internal Policies, procedures and controls,
• designated compliance officer
•ongoing training
•independent audit

12

Parts of AML compliance training program.

•Who to train,
•What to train on,
•How to train,
•When to train, and
•Where to train.

13

Who reviews the review Suspicious Transaction Reporting (STR) systems?

independent audit

14

Testing of STR

review of policies, procedures and processes for referring unusual or suspicious activity

15

Prohibited

The company will not tolerate any dealings of any kind given the risk. Countries subject to economic sanctions or designated as state sponsors of terrorism, such as Sudan or Iran, are prime candidates for prohibited transactions. Prohibited customers would include shell banks,

16

High-Risk

firm should apply more stringent controls to reduce the risk, such as conducting enhanced due diligence and more rigorous transaction monitoring. Countries that are noted for corruption or drug trafficking are generally deemed high risk. High-risk customers may include PEPs; high-risk products and services may include correspondent banking and private banking,

17

The 4 risk levels?

Prohibited
High
Med.
Low

18

The ultimate responsibility for the AML compliance program rests with the____________

board of directors

19

7 CDD Elements

I DID ARM
•Full identification of customer and business entities, including source of funds and wealth when appropriate,
•Development of transaction and activity profiles of each customer’s anticipated activity,
•Definition and acceptance of the customer in the context of specific products and services,
•Assessment and grading of risks that the customer or the account present,
•Account and transaction monitoring based on the risks presented,
•Investigation and examination of unusual customer or account activity, and
•Documentation of findings.

20

Know Your Employee (KYE) program

program in place that allows it to understand an employee’s background, conflicts of interest and susceptibility to money laundering complicity

21

Internal AML Reports

•Daily cash activity in excess or near threshold,
•Cash activity aggregated over a period ,
•Wire transfer reports
•Monetary instrument logs/reports,
•Check kiting/drawing on uncollected funds (significant debit/credit flows),
•Significant change reports
•New account activity reports.

22

5 Parts of suspicious or unusual transaction reporting process

• identify
•evaluation
•documentation
- notify management
•training

23

2 indicators of BMPE

•Payment made in cash or wire by a third party with no connection
•Payment made with checks, bank drafts or money orders not drawn on the account of the purchaser.

24

Watch list filtering

screening new accounts, existing customers, beneficiaries and transaction counterparties against terrorist, criminal and other blocked-persons watch lists,

25

“Corruption Perceptions Index,”

•Transparency International
- rates corruption

26

“International Narcotics Control Strategy Report”

- US State Department
- rates AML controls

27

Identify the factors a prosecutor many consider when determining whether or not to bring a case against an institution involving money laundering-related charges.

•criminal history,
• cooperated with the investigation,
• self-reported
• AML program,
• remedial action,
•civil remedies available
•Deterring wrongdoing by others is needed and will be served by a prosecution

28

Describe the steps the bank should consider taking upon receipt of the subpoena.

- notify seniors
- comply
- written notice for request to keep account open

29

If the government asks the bank to keep certain accounts open, what is required?

request should be obtained in writing under proper letterhead and authority from the government.

30

Steps for a Search Warrant

- call lawyers
- copy (warrant, affidavit, inventory, names)
- be present