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This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.

1. In Emerging Money Laundering Risks - what 3 methods are identified as 'Funds Transfers'?
Stored Value Cards - Mobile Payments - Internet Payments.
Transportation/transfer of funds (even clean) to/from the US - if done to promote unlawful activity - or with knowledge that the funds are illicit - or to conceal/disguise the nature - location - source - ownership - etc. of funds - or to avoid feder
Pouch activity.
Countries should have effective criminal - civil and administrative sanctions for money laundering or terrorist financing violations.


2. FATF Recommendation 11
Countries should ensure that secrecy laws do NOT inhibit implementation of these Recommendations.
Financial institutions should pay special attention to (and examine & document) complex - unusual large transactions - and all transactions which have no apparent economic or lawful purpose.
With respect to STR/SAR reporting - financial institutions should be afforded safe harbor - yet barred from any unauthorized disclosures.
Financial institutions may rely upon intermediaries to perform certain CDD elements provided the intermediary is supervised and regulated. However - ultimate responsibility remains with the financial institution.


3. Convertible Bond
Corporate bond that includes an option for the holder to convert it into other securities after a specified period at the discretion of the bondholder.
Council of European committee of Experts on the Evaluation of AML measures and the Financing of Terrorism
Countries should criminalize money laundering and apply it to all serious offenses - even if committed in another country.
Countries should take immediate steps to become party to and implement fully the relevant international conventions related to AML and CFT efforts.


4. According to FATF - financial transactions above a designated threshold may include situations where the transaction takes place in a single operation or in several operations...
USD/EUR 3 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
A degree of satisfaction not necessarily amounting to belief but extending beyond specualtionas to whether an event has occured or not. Though suspicion requires a lesser factual basis than a belief - it must be built upon some foundation.
that appear to be linked
No.


5. In general terms - EDD requires what of a financial institution?

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6. Behaviour detection

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7. FATF Sepcial Recommendation on Terrorist Financing -- SR One
Take immediate steps to ratify and implement the UN instruments.
A deliberate attempt to interfere with the free and fair operation of the market and create artificial - false or misleading appearances with respect to the price of - or market for a security - commodity or currency.
The exempt accounts must be documented and the financial institution that secures the exemptions must still monitor their financial transactions.
Issue and cancel securities certificates to reflect chagnes in ownership - act as an intermediary for the issuing company - and hanlde lost - stolen or destroyed certificates.


8. FATF Recommendation 26
Countries should establish national centers to receive and disseminate AML/CFT information and have access to law enforcement and others.
It conducts investigations in support of a government's confiscation or seizure efforts.
With respect to STR/SAR reporting - financial institutions should be afforded safe harbor - yet barred from any unauthorized disclosures.
Under what authority? Among other things - it regulates brokers and dealers - under authority of the Securities Exchange Act of 1934.


9. A 'panzi' scheme is named for whom?
Charles Ponzi - an Italian immigrant to the US who spent 10 years in jail for a scheme that defrauded 40 -000 people out of $15 million.
Market participants intentionally restrict a security's liquidity. May lead to increased profits when the security's price rises due to the lack of 'supply'.
When residents are prevented from benefiting from a tax-regime or when non-residents are prevented from accessing the domestic market.
A degree of satisfaction not necessarily amounting to belief but extending beyond specualtionas to whether an event has occured or not. Though suspicion requires a lesser factual basis than a belief - it must be built upon some foundation.


10. FATF Recommendation 5
Financial institutions should NOT keep any anonymous or fictionally named accounts - plus they should undertake customer due diligence measures.
Intentional misrepresentation - concealment or omission of the truth for the purpose of deception or manipulation to ther detriment of a person or organization.
A written statement given under oath before an officer of the court - notary public - or other authorized person. Commonly used as the factual basis for an application for a search - arrest or seizure warrant.
Competent authorities should be provided with adequate financial - human and technological resources. Personnel should be of high integrity.


11. The Vienns Convention
Countries should ensure that secrecy laws do NOT inhibit implementation of these Recommendations.
The terms of such exchanges - the persons subject to being exchanged - and the crimes for which exchanges will be permitted.
Take expeditious action to requests by foreign countries to identify - freeze - seize and confiscate property that is proceeds of money laundering or a predicate crime.
The UN Convention against Illicit Trafficking in Narcotic drugs and Pyshotropic substances [Adopted 12/88].


12. White-Collar crime

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13. Convertible Preferred
No.
Provide mutual legal assistance.
Real Estate - Insurance Transactions - Trade-Based Money Laundering.
Preferred stocks that includes an option for the holder to convert it into common stock at a specified covnersion rate.


14. Dematerialization of Securities

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15. FATF Recommendation 34
Competent authorities should be provided with adequate financial - human and technological resources. Personnel should be of high integrity.
Take immediate steps to ratify and implement the UN instruments.
Countries should ensure that there is adequate - accurate and timely information on express trusts - including information on the settlor - trustee and beneficiaries.
The world's largest private DB of stolen art.


16. What is meant by 'Know Your Correspondent Bank'?

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17. What does theInternationa Narcotics Control Strategy Report (INCSR) entail?
Countries should ensure that their competent authorities provide the widest possible range of international cooperation to their foreign counterparts.
A detailed report on the narcotics trade and a lengthy narrative on the status of the related money laundering issues in most nations.
Countries should ensure that secrecy laws do NOT inhibit implementation of these Recommendations.
Electronic transmissions of funds between financial institutions on behalf of themselves or their customers.


18. What does a 'Commission Rogatoire' normally specify?
The sale of a stock that the investor does not own. To do so - a securities intermediary 'loans' the stock to the investor - which comes from the intermediary's own inventory - another client's margin account or another intermediary.
Person who - for compensation - provides advice on securities and investments and manages client assets.
The nature of the request - the relevant criminal charges in the requesting country - the legal provision under which the request is made - and the information that is sought.
Intentional misrepresentation - concealment or omission of the truth for the purpose of deception or manipulation to ther detriment of a person or organization.


19. A public perception that a bank is not able to manage its operational risk effectively can...
disrupt or adversely afftect the business of the bank.
that appear to be linked
Extending the offense of money laundering to include money laundering associated with all serious offenses - not only with drug trafficking [Adopted 9/90].
Have measures in place to detect the physical corss-border transportation of currency and bearer negotiable instruments - including a declaration system.


20. FATF Recommendation 25
Competent authorities should provide guidelines in applying national AML/CFT measures - especially for detecting and reporting suspicious activity.
Corporate bond that includes an option for the holder to convert it into other securities after a specified period at the discretion of the bondholder.
Competent authorities should have powers of subpoena - search and seizure.
The terms of such exchanges - the persons subject to being exchanged - and the crimes for which exchanges will be permitted.


21. (Credit card) Acquiring Bank
Processes transactions for merchants who accept credit cards.
The sale of a stock that the investor does not own. To do so - a securities intermediary 'loans' the stock to the investor - which comes from the intermediary's own inventory - another client's margin account or another intermediary.
The right - but not the obligation - to buy or sell a set amount of something - such as a share or commodity - at a set price after a set expiration date.
The principal US money laundering law can apply to a non-US citizen if the 'conduct' occurs 'in part' of the US.


22. When was the Offshore Group of Banking Supervisors established? What was the impetus behind its establishment?
Letters Rogatory
Countries should ensure that their competent authorities provide the widest possible range of international cooperation to their foreign counterparts.
Placement - Layering - Integration.
October 1980. The instigation of Basel Committee on Banking supervision (with which the group maintains close contact).


23. SRO (Self-Regulatory Organizations)
Represents a profession and is made up of member professionals; has a role in regulating the persons who are qualified to enter and who practise the profession; performs cetain supervisory or monitoring type function.
Securities with very low marker price - volume and/or liquidity that are traded on a securities exchange or on the OTC markets. They tend to be more volatile than those on the major exchanges.
It was the first law in any country to make money laundering a crime.
A degree of satisfaction not necessarily amounting to belief but extending beyond specualtionas to whether an event has occured or not. Though suspicion requires a lesser factual basis than a belief - it must be built upon some foundation.


24. What is the goal of FSAP?
To promulgate good practices in countering money laundering and to give practical assistance in interpreting the UK Money Laundering Regulations and laws
Non-Coperative countries and Territories. Country or territory that has been designated by the FATF as non-cooperative with international AML principles and procedures.
Helps to identify financial system strengths and vulnerabilities and to reduce the potential for crisis.
A fund - offered by an investment company - that offers shares while investing the capital in diversified securities of other companies.


25. What do boiler room salespeople typically do?

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26. Apostille

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27. FATF Recommendation 13
Financial institutions should be required - by law or regulation - to report suspicious activity to their national FIU.
Supervisors should have powers to monitor and ensure compliance - including the ability to compel production of information and to impose sanctions.
A Correspondent Banking Client who receives Corresponding Banking services from an institution and itself provides Correspondent Banking services to other financial institutions in the same currency as the account it maintains with the institution.
A bank which uses the services of another bank - such as check clearing - wire transfers - etc. The bank providing the service is the 'Correspondent Bank'


28. Foriegn Shell Banks are vehicles for ______ & ______?
Operator or solicitor of funds for a commodity pool - which combines funds from members and trades futures or options contracts.
Money Laundering and Tax Evasion
The FIU of the UK
Supervisors should have powers to monitor and ensure compliance - including the ability to compel production of information and to impose sanctions.


29. FATF Recommendations examples of non-financial businesses and professions
Casinos - real estate agents - precious metal/stone dealers - lawyers - notaries - accountants and trust & company service providers.
Countries should ensure that secrecy laws do NOT inhibit implementation of these Recommendations.
Penny Stocks
Competent authorities should provide guidelines in applying national AML/CFT measures - especially for detecting and reporting suspicious activity.


30. FATF Recommendation 24
a Sr Management level
Countries should ensure that secrecy laws do NOT inhibit implementation of these Recommendations.
Designated non-financial businesses and professions should be subject to regulatory and supervisory measures. Casinos should prevent criminal ownership - operations or management.
Direct or indirect advisor on buying and selling futures or commodity options.


31. Where is the Art Loss Register found?
www.artloss.com
Designated non-financial businesses and professions should be subject to regulatory and supervisory measures. Casinos should prevent criminal ownership - operations or management.
No.
Provide the widest possible range of assistance to other countries' law enforcement and regulatory authorities for terrorist financing investigations.


32. FATF Recommendation 9
Transportation/transfer of funds (even clean) to/from the US - if done to promote unlawful activity - or with knowledge that the funds are illicit - or to conceal/disguise the nature - location - source - ownership - etc. of funds - or to avoid feder
a chain-referral scheme.
Countries should not allow shell banks. Financial institutions should not have correspondent banking relationships with shell banks or banks that allow shell banks to do business through their accounts.
Financial institutions may rely upon intermediaries to perform certain CDD elements provided the intermediary is supervised and regulated. However - ultimate responsibility remains with the financial institution.


33. How is 'Identity theft' often accomplished?
www.artloss.com
2% - 5% ($590B - $1.5T)
By acquiring personal information about the victim (e.g: DOB - address - CC numbers) through stealth and misrepresentations.
Issue and cancel securities certificates to reflect chagnes in ownership - act as an intermediary for the issuing company - and hanlde lost - stolen or destroyed certificates.


34. Why is 'Know Your Correspondent Bank' important?
Dealers in precious metals/stones - trust and company services providers - lawyers - notaries and accountants should all be required to report suspicious activity - but legal privilege cannot be violated.
A fund - offered by an investment company - that offers shares while investing the capital in diversified securities of other companies.
Countries should apply Recommendations to any business or profession that poses a money laundering or terrorist financing risk.
As a key tool in detecting suspicious or money laundering activity - it is important because correspondent accounts are often used as conduits to launder criminal proceeds in international settings.


35. FATF Sepcial Recommendation on Terrorist Financing -- SR Eight
Ensure that entities - in particular non-profit organizations - cannot be misused to finance terrorism.
A trust clearly created by the settlor - usually in the form of a document - such as a written deed or trust.
A Correspondent Banking Client who receives Corresponding Banking services from an institution and itself provides Correspondent Banking services to other financial institutions in the same currency as the account it maintains with the institution.
Refers to where the agent is acting under a contractual arrangement with the insurer to carry out its CDD functions (i.e. the agent is regarded as synonymous with the insurer) [FATF Risk-Based approach - Guidance for the Life Insurance Sector - Oct 0


36. FATF Sepcial Recommendation on Terrorist Financing -- SR Nine
Have measures in place to detect the physical corss-border transportation of currency and bearer negotiable instruments - including a declaration system.
The exempt accounts must be documented and the financial institution that secures the exemptions must still monitor their financial transactions.
USD/EUR 3 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
The process of agreeing to purchase a new issue of securities from an issuer and distribute it to investors. The underwriter makes a profit between the price paid to the issuer and the public offering price.


37. Characteristics of an 'Open System Stored Value Card'
Securities with very low marker price - volume and/or liquidity that are traded on a securities exchange or on the OTC markets. They tend to be more volatile than those on the major exchanges.
Often co-branded by financial institution; may have VISA or MasterCard logos; can be reloadable; usually can access ATMs for withdrawls globally; non-customers can buy them.
An order from government authority requiring a financial institution to provide transaction information on a suspect account for a specified period of time.
The UN Convention against Illicit Trafficking in Narcotic drugs and Pyshotropic substances [Adopted 12/88].


38. MENAFATF
A degree of satisfaction not necessarily amounting to belief but extending beyond specualtionas to whether an event has occured or not. Though suspicion requires a lesser factual basis than a belief - it must be built upon some foundation.
Middle East and North Africa Financial Action Task Force
a Sr Management level
Countries should establish national centers to receive and disseminate AML/CFT information and have access to law enforcement and others.


39. FATF Sepcial Recommendation on Terrorist Financing -- SR Two
Criminalize the financing of terrorism - terrorist acts and terrorist organisations.
Freeze and confiscate terrorist assets.
Account established by a domestic banking institution to receive deposits from - make payments on behalf of - or handle other financial transactions for a foreign financial institution - usually in the foreign financial institutions's cureency.
Firm that contracts with issuing or acquiring banks to provide transaction processing and other credit-card related services for the banks.


40. FATF Recommendation 17
Financial institutions should have AML/CFT programs that include approved policies - employee screenings & ongoing training and an audit function to test it all.
Countries should have effective criminal - civil and administrative sanctions for money laundering or terrorist financing violations.
Competent authorities should provide guidelines in applying national AML/CFT measures - especially for detecting and reporting suspicious activity.
Futures contracts - forwards - swaps or options.


41. OTC markets Over-The-Counter
A market is which securities are bought and sold outside of establisehd securities markets.
Confidentiality - complex beneficial ownership arrangements - offshore investment vehicles - tax shelters and credit extension services.
A professional responsible for the securities portfolio of an individual or institutional investor. In return for a fee - the manager has the responsibility of choosing and managing assets.
Countries should take immediate steps to become party to and implement fully the relevant international conventions related to AML and CFT efforts.


42. Why is it imperative to have a strong Know Your Employee program?
Countering the Financing of Terrorism (Counter Terrorist Financing).
In many major money laundering operations - it is not unusual to find a complicit employee in financial institution.
Intentional misrepresentation - concealment or omission of the truth for the purpose of deception or manipulation to ther detriment of a person or organization.
Countries should take immediate steps to become party to and implement fully the relevant international conventions related to AML and CFT efforts.


43. Transparency International
Because they are accounts through which funds are transferred and commingled without personally identifying the originator.
While it is normally known as a Personal Investment Company (PIC) - in some jurisdictions - the international business company or exempt company is also the same.
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.
Berlin- based - non-governmental organization with goal of improving government accountability and curbing national and international corruption.


44. What criterion does the US need to enforce its 'Extraterritorial Reach'?

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45. Identification data
Have measures in place to detect the physical corss-border transportation of currency and bearer negotiable instruments - including a declaration system.
Financial instrument whose price is realted to the underlying commodity - currency - economic variable - financial istrument or security.
Countries should ensure that there is adequate - accurate and timely information on express trusts - including information on the settlor - trustee and beneficiaries.
Reliable - independent source of documents - data or information.


46. What does an Extradition Treaty specify?
weakness in the implementation of bank programs - ineffective control procedures and failure to practice due diligence.
The terms of such exchanges - the persons subject to being exchanged - and the crimes for which exchanges will be permitted.
Financial institutions should have AML/CFT programs that include approved policies - employee screenings & ongoing training and an audit function to test it all.
Countries should criminalize money laundering and apply it to all serious offenses - even if committed in another country.


47. Downstream Correspondent Clearer
The principal US money laundering law can apply to a non-US citizen if the 'conduct' occurs 'in part' of the US.
A Correspondent Banking Client who receives Corresponding Banking services from an institution and itself provides Correspondent Banking services to other financial institutions in the same currency as the account it maintains with the institution.
The FIU of the UK
Intentional misrepresentation - concealment or omission of the truth for the purpose of deception or manipulation to ther detriment of a person or organization.


48. How does 'Product Diversion' work?
Product is purchsed with terms that it is going to foreign country A. While in transit - the product is diverted back to originating country or to another foreign market where the greatly discounted price provides for extreme profits.
Entities such as American Express - Master Card and VISA - which license member banks to issue bankcards - authorize merchants to accept those cards - or both.
Countries should ensure policy makers - the FIU - law enforcement and supervisors have effective mechanisms to enable cooperation.
The FIU of the UK


49. FATF Recommendation 38
Take expeditious action to requests by foreign countries to identify - freeze - seize and confiscate property that is proceeds of money laundering or a predicate crime.
Harmful or Preferrential Tax Regimes.
Adopted in 1999 - it imposed sanctions on Taliban-controlled Afghanistan for its support of Osama Bin Laden and the Al-Qaeda organization
As a financial institution service that is very vulnerable to money laundering.


50. Money Mules
Maintaining correspondent accoutnts at US Financial Institutions (USA Patriot Act)
To provide a forum for FIU's (Financial Intelligence Unit) to improve support to their respective national AML progrmans and development protocols for the sharing of information.
a Sr Management level
A person who tranfers stolen money (or merchandise) from one country to another - often as a result of online scams. Transfers - can be done electronically - via mail or courier service or in person.