Instructions:

• Answer 50 questions in 15 minutes.
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• Match each statement with the correct term.
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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. Structuring is a common technique in jurisdictions that...
Intergovernmental Action Group against Money Laundering in Africa
When residents are prevented from benefiting from a tax-regime or when non-residents are prevented from accessing the domestic market.
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.
have in place compulsory currency reporting requirements.


2. What is meant by 'Know Your Customer's customer'?
Review customer files and conduct random sampling of accounts.
Provide mutual legal assistance.
Procedures used to determine the identities of the account holders of a respondent bank in a correspondent banking relationship.
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.


3. In Emerging Money Laundering Risks - what 3 methods are identified as 'Funds Transfers'?
Processes transactions for merchants who accept credit cards.
Stored Value Cards - Mobile Payments - Internet Payments.
A record that financial institutions must retain for each cash sale of bank checks - drafts - money orders - cashier's checks and traveller's checks between $3 -000 and $10 -000.
Countries should maintain comprehensive statistics to gauge effectiveness of their AML and CTF efforts.


4. (Credit card) Acquiring Bank
EurAsian Group
Non-Coperative countries and Territories. Country or territory that has been designated by the FATF as non-cooperative with international AML principles and procedures.
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.
Processes transactions for merchants who accept credit cards.


5. FATF Sepcial Recommendation on Terrorist Financing -- SR One
USD/EUR 3 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
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.
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.
Take immediate steps to ratify and implement the UN instruments.


6. FATF Recommendation 32
Countries should maintain comprehensive statistics to gauge effectiveness of their AML and CTF efforts.
A contractual provision that allows the contract owner the right to return the contract within a specified period for a refund.
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.
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.


7. Open System Stored Value Card
Countries should ensure policy makers - the FIU - law enforcement and supervisors have effective mechanisms to enable cooperation.
A prepaid card that is linked to the global funds network - which can allow for worldwide ATM with-drawls and purchases with many merchants.
To reduce financial crime - including money laundering and terrorit financing.
Berlin- based - non-governmental organization with goal of improving government accountability and curbing national and international corruption.


8. FATF Recommendation 3
Should give special attention to relationships or transactions of people - companies or financial institutions from countries showing little regard for these Recommendations.
Countries should enable their competent authorities to freeze - seize and confiscate laundered property or proceeds.
Electronic transmissions of funds between financial institutions on behalf of themselves or their customers.
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.


9. Derivatives
A US Federal Court
Financial instrument whose price is realted to the underlying commodity - currency - economic variable - financial istrument or security.
Because it represents funds drawn on the account of a financial institution and not on a particular individual.
A merchant submits a saled transaction on his personal bankcard account to ontain cash advances through their business.


10. What is a Financial Intelligence Unit?
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.
An intelligence gathering law enforcement or regulatory body that receives financial information form covered financial institutions - businesses and persons in tis respective country.
An introducing broker-dealer with an exclusive written agreement with a Futures Commission Merchant (FCM) that obligates the FCM to assume responsibility for the introducing broker's performance.
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.


11. Abusive Squeezes

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12. FATF Recommendation 39
October 1980. The instigation of Basel Committee on Banking supervision (with which the group maintains close contact).
Because it represents funds drawn on the account of a financial institution and not on a particular individual.
The FIU of the UK
Countries should recognize money laundering as an extraditable offense.


13. The USA Patriot Act enacted a number of statutory provisions that bear directly on the procedures US financial institutions must follow in connection with their...
foreign correspondent banks
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.
They pool investors' money and invest those funds in financial instruments in an effort to turn a profit. They typically issue securities in 'private offerings' that are usually not required to be registered with sa securities or financial regulator.
Countries should apply Recommendations to any business or profession that poses a money laundering or terrorist financing risk.


14. USA Patriot Act Section 312 'Offshore Bank'
Council of European committee of Experts on the Evaluation of AML measures and the Financing of Terrorism
FATF principles should apply to all branches and subsidiaries of a financial institution - even those abroad. Inability to do should re reported to parent institution's regulatory/supervisory authority.
A bank whose license has conditions that prohibhit the licensed entity from conducting banking activities with the citizens - or with the local currency - of the country that issued that license.
USD/EUR 3 -000 (Interpretive Note to Reommendations 5 - 12 and 16)


15. Underwriting
Because they are accounts through which funds are transferred and commingled without personally identifying the originator.
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.
Respondent banks may be used by other banks and customers to conduct transactions through a correspondent account.
Urge investors to buy 'house stocks' - stocks that the firm buys and sells as a market maker or has in its inventory. Oftentimes - they are running a 'pump-and-dumo' scheme.


16. MENAFATF
In many major money laundering operations - it is not unusual to find a complicit employee in financial institution.
Middle East and North Africa Financial Action Task Force
Countering the Financing of Terrorism (Counter Terrorist Financing).
The financial institution can become subject to lawsuits from the failure to observe mandatory KYC standards or from the failure to practise due diligence.


17. In what country is the Egmont Group Secretariat now located?
Canada
The principal US money laundering law can apply to a non-US citizen if the 'conduct' occurs 'in part' of the US.
Direct or indirect advisor on buying and selling futures or commodity options.
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.


18. Examples of White-collar crime
Procedures used to determine the beneficial owners of a correspondent bank and the type of activity that wil be 'normal and expected' for the bank.
An account that does not show activity other than the posting of interest or account maintenance fees.
Real Estate - Insurance Transactions - Trade-Based Money Laundering.
Money Laundering - bribery - health care - tax - bankruptcy - securities or environmental frauds etc.


19. What is the Serious Organised Crime Agency (SOCA)?
Person who - for compensation - provides advice on securities and investments and manages client assets.
The FIU of the UK
Render mutual legal assistance notwithstanding the absence of dual criminality. Where dual criminality is required - classification should not be an issue.
Report suspicious transactions linked to terrorism.


20. 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.
The exempt accounts must be documented and the financial institution that secures the exemptions must still monitor their financial transactions.
To take additional steps of examination and caution in identifying their customers and confirming that the customers' activities and funds are legitimate.
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.


21. Who conducts the Financial Sector Assessment Program (FSAP)?
Terrorism and Terrorist Financing
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.
Stored Value Cards - Mobile Payments - Internet Payments.
The International Monetary Fund (IMF) and the world bank conduct the joint program.


22. OCC Office of the Comptroller of the Currency
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.
A federal regulator in the US - responsible for auditing risk and compliance measuers of federally chartered banks.
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.
The US State Dept issues the report annually.


23. What is important about the US Money Laundering Control Act (MCLA)?
Countries should have effective criminal - civil and administrative sanctions for money laundering or terrorist financing violations.
October 1980. The instigation of Basel Committee on Banking supervision (with which the group maintains close contact).
Supervisors should have powers to monitor and ensure compliance - including the ability to compel production of information and to impose sanctions.
It was the first law in any country to make money laundering a crime.


24. White-Collar crime

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25. FATF Recommendation 17
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.
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 effective criminal - civil and administrative sanctions for money laundering or terrorist financing violations.
An association of global financial institutions that issues guidelines is such areas as correspondent banking - private banking - terrorist financing etc.


26. FATF Recommendation 10
A US Federal Court
Goods such as food - grains and metals that are usually traded in large amounts on a commodities exchange - usually through future contracts.
Countries should criminalize money laundering and apply it to all serious offenses - even if committed in another country.
Record retention: 5 years - data to recreate any individual transaction; 5 years after relationship ends - all customer identification data


27. When is a jurisdiction considered to be 'ring-fenced'?
A corporation - often established in an offshore jurisdiction with tight secrecy laws to protect the financial privacy of its owners.
When residents are prevented from benefiting from a tax-regime or when non-residents are prevented from accessing the domestic market.
Operator or solicitor of funds for a commodity pool - which combines funds from members and trades futures or options contracts.
Firm that contracts with issuing or acquiring banks to provide transaction processing and other credit-card related services for the banks.


28. What is a 'NCCT'?
A fund setup by an investment trust that issues a fixed number of shares to its investors. As such - the market price of the shares fluctuates - often selling at a premium or discount to the fund's net asset value (NAV).
Non-Coperative countries and Territories. Country or territory that has been designated by the FATF as non-cooperative with international AML principles and procedures.
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.
A merchant submits a saled transaction on his personal bankcard account to ontain cash advances through their business.


29. Downstream Correspondent Clearer
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.
Take immediate steps to ratify and implement the UN instruments.
weakness in the implementation of bank programs - ineffective control procedures and failure to practice due diligence.
An intelligence gathering law enforcement or regulatory body that receives financial information form covered financial institutions - businesses and persons in tis respective country.


30. FATF Recommendation 40
If provided for money laundering to be an internationally extraditable offense.
Countries should ensure that their competent authorities provide the widest possible range of international cooperation to their foreign counterparts.
'Tip Off' a customer that a report has been filed. Failure to maintain confidentiality is a violation of law.
An arrangement whereby an investor pays for part of a securities purchase and borrows the rest from a securities intermediary.


31. FATF Recommendation 6
PEP accounts need to be identified - approved by senior management - and have ongoing enhanced monitoring. Sources of Wealth and funds must also be established.
Supervisors should have powers to monitor and ensure compliance - including the ability to compel production of information and to impose sanctions.
Countries should maintain comprehensive statistics to gauge effectiveness of their AML and CTF efforts.
As a financial institution service that is very vulnerable to money laundering.


32. FATF Recommendation 31
An order from government authority requiring a financial institution to provide transaction information on a suspect account for a specified period of time.
a chain-referral scheme.
Countries should ensure policy makers - the FIU - law enforcement and supervisors have effective mechanisms to enable cooperation.
Canada


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

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34. Cash Letter
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.
A market is which securities are bought and sold outside of establisehd securities markets.
Countries should ensure that knowledge can be inferred. Additionally - legal persons should be subject to theses laws.
Ad interbank transmittal form - resembling a deposit slip - used to accompany cash and cash equivalent items sent from one bank to another.


35. FATF Recommendation 36
Provide mutual legal assistance.
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
Ensure that entities - in particular non-profit organizations - cannot be misused to finance terrorism.
The possibility that lawsuits adverse judgements or contracts that turn out to be unenforceable can disrupt or adversely affect the operatinos or condition of a financial siutation.


36. What does Financial Sector AssessmentProgram (FSAP) do?
Attorneys - accountants - broker-dealers - communication and transportation providers - bankers and other financial service providers - concealment trap (hiding places) builders etc.
Person who - for compensation - provides advice on securities and investments and manages client assets.
Through the use of experts - the program optimizes expert resources - reduces duplication of efforts and provides uniform advice in financial sector work.
Firm that contracts with issuing or acquiring banks to provide transaction processing and other credit-card related services for the banks.


37. What is a 'Trust'?
A contractual arrangement whereby the trustee manages the property for the benefit of the beneficiary in accordance with the contractual terms set by the grantor.
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
A contractual provision that allows the contract owner the right to return the contract within a specified period for a refund.
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.


38. US law prohibhits Foriegn Shell Banks from ____?
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.
Use of electronic clearing houses to facilitate electronic transfers of money that complete transactions between two parties where the buyer receives securities - goods - services etc. in exchange for the money.
Maintaining correspondent accoutnts at US Financial Institutions (USA Patriot Act)
Countries should ensure that knowledge can be inferred. Additionally - legal persons should be subject to theses laws.


39. What was the target of UN Security Council Resolution 1373?
The UN Convention against Illicit Trafficking in Narcotic drugs and Pyshotropic substances [Adopted 12/88].
All admininstrative and law enforcemnt authorities concerned wiht combating money laundering and terrorist financing - including the FIU and supervisors.
By acquiring personal information about the victim (e.g: DOB - address - CC numbers) through stealth and misrepresentations.
Terrorism and Terrorist Financing


40. OTC markets Over-The-Counter
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.
People who help move the billions of dollars drug traffickers earn around the world.
A market is which securities are bought and sold outside of establisehd securities markets.
Middle East and North Africa Financial Action Task Force


41. FATF Recommendation 19
bear the mark 'APOSTILLE'
To profit all kinds of markets by pursuing leveraging and other speculative investment practises thay may increase the risk of investment loss.
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.
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


42. FATF Recommendation 22

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43. Nostro

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44. A notary can issue a Apostille but it must be in a country that signed The Hague Convention (1961) and it must ___________. If the notary doesn't understand - find another one.

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45. May a shell bank maintain a correspondent account with a US bank?
High-speed matching of known or suspected patterns in very large DB's using recognition algorithms.
General recommendations for client acceptance - updating client files - practices when identifying unusual or suspicious activity - monitoring - control responsibilities - reporting - education and records retention.
No.
Countries should ensure policy makers - the FIU - law enforcement and supervisors have effective mechanisms to enable cooperation.


46. Examples of VSP's
Attorneys - accountants - broker-dealers - communication and transportation providers - bankers and other financial service providers - concealment trap (hiding places) builders etc.
Firm or person that solicits and accepts commodity futures orders from customers but does not accept funds. Two types of IB_C's: Guaranteed and Independent.
Review customer files and conduct random sampling of accounts.
Adopted in 1999 - it imposed sanctions on Taliban-controlled Afghanistan for its support of Osama Bin Laden and the Al-Qaeda organization


47. Why is understanding 'Product Diversion' important to the AML investigator?
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.
Because it represents funds drawn on the account of a financial institution and not on a particular individual.
Non-Coperative countries and Territories. Country or territory that has been designated by the FATF as non-cooperative with international AML principles and procedures.
Their financial institution may - wittingly or unwittingly - handle the proceeds of this crime while believing it is serving a legitimate client with major account balances.


48. Retail Banking
They are businesses such as ariplane - automobile and boat dealers - lawyers - jewelers - real estate brokers and others that are subjec to BSA regulations (US).
Typical mass-market banking where individual customers use local branches of larger commercial banks.
The FIU of Russia
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.


49. (Stock) Warrants
Customer makes payments on account with bad checks - then takes cash advances before they clear - thereby expanding his credit.
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.
A security that offers the owner the right to subscribe for ordinary shares of a company at a fixed date - usually at a fixed price. Equivalent to stock options.
Helps to identify financial system strengths and vulnerabilities and to reduce the potential for crisis.


50. What must a financial institution do if they have 'Exempt Accounts'?
Expatriates sending money back to their home country or by other individuals sending money abroad.
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.
Countries should maintain comprehensive statistics to gauge effectiveness of their AML and CTF efforts.
The exempt accounts must be documented and the financial institution that secures the exemptions must still monitor their financial transactions.