Module 2 (Part 2)

Question 1

What does the 2012 Revision of the FATF 40 Recommendations state

Answer 1

some customer types pose heightened risks, and recommend additional customer due diligence on specific customers and activities

Question 2

What are the 6 areas listed

Answer 2

1. PEPs
2. Cross-Border Correspondent Banking
3. Money or Value Transfer Services
4. New technologies
5. Wire Transfers
6. Transparency and Beneficial Ownership of Legal persons and arrangements

Question 3

Appropriate steps must be taken to _________ PEPs

Answer 3

identify

Question 4

including what 3 steps

Answer 4

1. obtaining senior management approval of such business relationships
2. taking measures to establish the sources of wealth and funds
3. conducting ongoing monitoring

Question 5

Regarding cross-border correspondent banking, appropriate steps must be taken to understand what 4 things about the institutions

Answer 5

1. The institutions business,
2. reputation
3. Supervision,
4. AML controls

Question 6

What should countries ensure about Money or Value Transfer Services

Answer 6

that they are licensed or registered

Subject to AML requirements

Question 7

What should countries and financial institutions assess regarding new technologies

Answer 7

the risks associated with the development of new products, business practices, deliver mechanisms, and technology

Question 8

What should countries require regarding wire transfers

Answer 8

they should require financial institutions to obtain and send required and accurate originator, intermediary, and beneficiary information with wires

Question 9

what should financial instutions monitor wires for

Answer 9

incomplete information and take appropriate measures

Question 10

what should they also monitor wires for

Answer 10

for those involving parties designated by the UN Security council

Question 11

what should they do if they involve such parties

Answer 11

take freezing actions or otherwise prohibit the transactions from occurring

Question 12

Regarding transparency and beneficial ownership of legal persons and arrangements what should countries do

Answer 12

take appropriate measures to prevent the misuses of legal persons for money laundering or terrorist financing,

Question 13

including what

Answer 13

ensuring information about the BO and control of such legal persons is available to competent authorities

Question 14

particularly with regard to what types of legal persons

Answer 14

legal persons that can issue bearer shares or have nominee shareholders or directors

Question 15

how many members is FATF currently comprised of

Answer 15

35 member jurisdictions and 2 regional organizations

Question 16

what are the 2 regional organizations

Answer 16

the gulf cooperation council

European commission

Question 17

What else are there in the organization

Answer 17

31 associate members or observers of FATF

Question 18

What are the first 10 members of FATF

Answer 18

1. Argentina
2. Australia
3. Austria
4. Belgium
5. Brazil
6. Canada
7. China
8. Denmark
9. Finland

10 France

Question 19

What are the second group of 10

Answer 19

1. Germany
2. Greece
3. Hong Kong (China)
4. Iceland
5. India
6. Ireland
7. Italy
8. Japan
9. Korea
10. Luxembourg

Question 20

What is the third group of 10

Answer 20

1. Malaysia
2. Mexico
3. Netherlands
4. New Zealand
5. Norway
6. Portugal
7. Russian Federation
8. Singapore
9. South Africa
10. Spain

Question 21

What are the final 5

Answer 21

1. Sweden
2. Switzerland
3. Turkey
4. United Kingdom
5. United States

Question 22

What is the primary global standard-setter for the prudential regulation of banks

Answer 22

The Basel Committee on Banking Supervision

Question 23

What kind of forum does it provide

Answer 23

cooperation on banking supervisory matters

Question 24

what is the committees mandate

Answer 24

to strengthen the regulation, supervison and practices of banks worldwide with the purpose of enhancing financial stability

Question 25

What paper did the basel committee publish in october of 2001

Answer 25

Customer Due Diligence for Banks

Question 26

what are the 4 areas it addresses

Answer 26

1. Importance of KYC standards for supervisors and banks 2. Essential elements of KYC standards 3. The role of supervisors 4. Implementation of KYC standards in a cross-border context

Question 27

what does the paper specify as the four key elements of KYC program

Answer 27

1. Customer identification 2. Risk management 3. Customer acceptance 4. Monitoring

Question 28

Banks should not only establish the identity of their customers, but what

Answer 28

should also monitor account activity to identify transactions that do not conform to the normal or expected transactions for that customer or type of account

Question 29

Should numbered accounts be prohibited?

Answer 29

No

Question 30

but what

Answer 30

should be subjected to exactly the same KYC procedures as other customer accounts

Question 31

What does the paper also identify

Answer 31

specific customer identification issues related to higher risk customers

Question 32

what should banks develop

Answer 32

customer acceptance policies and procedures

Question 33

what should these policies and procedures describe

Answer 33

background, country of origin, business activities, and other risk indicators

Question 34

what is the second bullet point

Answer 34

banks should use standard identification procedures when dealing with non face to face customers

Question 35

what is the third

Answer 35

banks should provide periodic bank-wide employee training that explains the importance of the KYC policies and AML requirements

Question 36

what is the final bullet point

Answer 36

conduct continued monitoring of high risk accounts by compliance personnel to obtain a greater understanding of the customers' "normal activities" and to enable the updating of identification papers and the detection of suspicious transaction patterns