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Flashcards in Test 4 Deck (20):

2 primary domestic wholesale payment systems for interbank funds transfers

Fedwire and CHIPS


Who operates Fedwire

Federal Reserver Bank


CHIPS is a bank owned, privately operated, real-time, multilateral payment system. Any banking organization may use CHIPS as long as they...

regulated US presence


CLS Bank is private sector, special purpose bank simultaneously settles both the payment obligations that arise from a single foreign exchange transaction. How?

ensures that one payment segment of a foreign exchange transaction is settled if only the corresponding payment segment is also settled, eliminating the foreign exchange settlement risk that arise when each segment of the foreign exchange transaction is settled separately


What does SWIFT stand for

Society of Worldwide Interbank Financial Telecommunications


Automated clearing house transactions aka ACH have recently been expanded to do what

include one time debit and check conversion


Prepaid access cards allow the holder access to merchants, ATMs, financial institutions associated with the cards payment network. Risk include

false identification, funded with stolen credit cards, load with cash from illicit sources inside or outside the US


What are non bank or third party payment processors

bank customers that provide payment-processing services to merchants and other business entities


Risk factors

generally not subjected to BSA/AML regulatory requirements, vulnerable to money laundering, ID theft, fraud schemes, processing illicit or OFAC-sanctioned transactions


What are the risks to privately owned ATMs or their ISOs

most states don't currently register, limit ownership, monitor, or examine privately owned ATMs or ISOs


Risk factor in Non deposit investment products

complex legal arrangements, large dollar amounts, rapid movement of funds


Ways insurance products can be used to launder money include

borrowing against, selling units such as annuities, purchasing insurance products through unusual methods such as currency or currency equivalents


Risk factors of concentration accounts

customer identifying information, such as name, transaction amount, and account number is separated from the financial transaction


Risk factors for lending activities

purchases a certificate of deposit with illicit funds, made for ambiguous or illegitimate purposes and are mead for or are paid for a third party


Risk factors for Trade Finance Activities

involvement of multiple parties or both sides of any international trade transaction, document-based than other banking activities, it can be susceptible to document fraud, applicants true identity or ownership may be disguised by the use of certain corporate forms such as shell companies or offshore front companies


What isn't a red flag for trade based money laundering

goods being shipped by air or sea in order to avoid check at the border


Risk factors with Trust accounts

conceal the sources of uses of funds as well as identity of beneficial and legal owners and account beneficiaries may try to remain anonymous


Non resident aliens may have legitimate reasons for an account they are

asset preservation, business expansion, investments


Risk factors for nonresident aliens

accountholders identification, source of funds, funds transfers or the use of foreign automated teller machines


Politically exposed person is

senior public official figure, immediate family, and close associate