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Certified Anti Money Laundering Specialist Cams

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. FATF Recommendation 40
Customer makes payments on account with bad checks - then takes cash advances before they clear - thereby expanding his credit.
An account that does not show activity other than the posting of interest or account maintenance fees.
'Tip Off' a customer that a report has been filed. Failure to maintain confidentiality is a violation of law.
Countries should ensure that their competent authorities provide the widest possible range of international cooperation to their foreign counterparts.

2. Boiler Room
Refers to dishonest broker-dealers who set up a group of high pressure salespeople who use banks of telephones to make cold calls to as many potential investors as possible.
foreign correspondent banks
A contemporaneous record of the steps - observations - evidence - findings and decisions of an investigation.
Person who - for compensation - provides advice on securities and investments and manages client assets.

3. FATF Recommendation 2
Through the use of experts - the program optimizes expert resources - reduces duplication of efforts and provides uniform advice in financial sector work.
Countries should ensure that knowledge can be inferred. Additionally - legal persons should be subject to theses laws.
Financial institutions should be required - by law or regulation - to report suspicious activity to their national FIU.
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.

4. FATF Recommendation 37
Provide the widest possible range of assistance to other countries' law enforcement and regulatory authorities for terrorist financing investigations.
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.
Render mutual legal assistance notwithstanding the absence of dual criminality. Where dual criminality is required - classification should not be an issue.
Countries should establish national centers to receive and disseminate AML/CFT information and have access to law enforcement and others.

5. FATF Recommendation 18
A corporation - often established in an offshore jurisdiction with tight secrecy laws to protect the financial privacy of its owners.
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.
If provided for money laundering to be an internationally extraditable offense.
If one needs to transport currency across borders - one needs to have the smallest package possible to avoid detection.

6. 'Kiting' via credit card
Criminalize the financing of terrorism - terrorist acts and terrorist organisations.
bear the mark 'APOSTILLE'
A merchant submits a saled transaction on his personal bankcard account to ontain cash advances through their business.
Financial institutions should pay to any threats from new or developing technologies - especially with non f2f relationships.

7. Why is it imperative to have a strong Know Your Employee program?
that appear to be linked
The US State Dept issues the report annually.
In many major money laundering operations - it is not unusual to find a complicit employee in financial institution.
A co-operative property seller agrees to sell home at a well-below market reported price - then accepts the difference 'under the table'. When launderer later sells house - he recognizes 'gain' and all funds appear legitimate as it sold at market.

8. What does Financial Sector AssessmentProgram (FSAP) do?
PEP accounts need to be identified - approved by senior management - and have ongoing enhanced monitoring. Sources of Wealth and funds must also be established.
Canada
Through the use of experts - the program optimizes expert resources - reduces duplication of efforts and provides uniform advice in financial sector work.
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).

9. Under the US Bank Secrecy Act - SAR filings are confidential and the institutions employees cannot ____?
'Tip Off' a customer that a report has been filed. Failure to maintain confidentiality is a violation of law.
a Sr Management level
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.
The exempt accounts must be documented and the financial institution that secures the exemptions must still monitor their financial transactions.

10. What was the effect of the 1988 Vienna Convention as it relates to extradtition?
If provided for money laundering to be an internationally extraditable offense.
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
Refers to dishonest broker-dealers who set up a group of high pressure salespeople who use banks of telephones to make cold calls to as many potential investors as possible.
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.

11. Express Trust
Type of foreign bank that is incorporated in the host country but is considered to be owned by a foreign parent bank. It only needs to operarted under the host country's regulations.
A trust clearly created by the settlor - usually in the form of a document - such as a written deed or trust.
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.
Countries should recognize money laundering as an extraditable offense.

12. FATF Recommendation 9
It one wants to open a bank account overseas - but do it through the mail - the bank may need to be assured that the copy of the passport is correct. The Apostille mark can assure this.
Money Laundering - bribery - health care - tax - bankruptcy - securities or environmental frauds etc.
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'.
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.

13. Who issues the Internationa Narcotics Control Strategy Report (INCSR) and how often?
The US State Dept issues the report annually.
The UN Convention against Transnational Organized Crime [Adopted 12/2000].
disrupt or adversely afftect the business of the bank.
Take immediate steps to ratify and implement the UN instruments.

14. In Emerging Money Laundering Risks - what 3 methods are identified as 'Funds Transfers'?
Letters Rogatory
Financial institutions should be required - by law or regulation - to report suspicious activity to their national FIU.
Stored Value Cards - Mobile Payments - Internet Payments.
General recommendations for client acceptance - updating client files - practices when identifying unusual or suspicious activity - monitoring - control responsibilities - reporting - education and records retention.

15. What is a 'NCCT'?
When residents are prevented from benefiting from a tax-regime or when non-residents are prevented from accessing the domestic market.
Countries should recognize money laundering as an extraditable offense.
October 1980. The instigation of Basel Committee on Banking supervision (with which the group maintains close contact).
Non-Coperative countries and Territories. Country or territory that has been designated by the FATF as non-cooperative with international AML principles and procedures.

16. Why is 'refining' critical to a money launderer's efforts?
Entities such as American Express - Master Card and VISA - which license member banks to issue bankcards - authorize merchants to accept those cards - or both.
The UN Convention against Transnational Organized Crime [Adopted 12/2000].
It was the first law in any country to make money laundering a crime.
If one needs to transport currency across borders - one needs to have the smallest package possible to avoid detection.

17. FATF Recommendation 36
Customer makes payments on account with bad checks - then takes cash advances before they clear - thereby expanding his credit.
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 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.
Provide mutual legal assistance.

18. Nostro
They can accrue value as the price of the underlying stock rises.
Passed in 1977 - the US law is primarily known for its anti-bribery provisions (it also applies to foreign companies with stocks covered by the Securities and Exchange Act of 1934).
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.
Extending the offense of money laundering to include money laundering associated with all serious offenses - not only with drug trafficking [Adopted 9/90].

19. Why is 'Know Your Correspondent Bank' important?
The world's largest private DB of stolen art.
www.artloss.com
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.
General recommendations for client acceptance - updating client files - practices when identifying unusual or suspicious activity - monitoring - control responsibilities - reporting - education and records retention.

20. FATF Recommendation 28
Competent authorities should have powers of subpoena - search and seizure.
Ad interbank transmittal form - resembling a deposit slip - used to accompany cash and cash equivalent items sent from one bank to another.
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
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.

21. FATF Recommendation 25
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.
Competent authorities should provide guidelines in applying national AML/CFT measures - especially for detecting and reporting suspicious activity.
If one needs to transport currency across borders - one needs to have the smallest package possible to avoid detection.
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.

22. FATF Recommendation 15
Countries should ensure that knowledge can be inferred. Additionally - legal persons should be subject to theses laws.
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.
To promote the effective supervision of banks in their jurisdictions; to further international cooperation in the supervision between the Offshore Banking Supervisors - and with Basel committee member nations and other banking supervisors.
Financial institutions should have AML/CFT programs that include approved policies - employee screenings & ongoing training and an audit function to test it all.

23. FATF's designated transactional threshold for Delaers is Precious metals and / or Precious Stones is _____.
Non-Coperative countries and Territories. Country or territory that has been designated by the FATF as non-cooperative with international AML principles and procedures.
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
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.
Firm that contracts with issuing or acquiring banks to provide transaction processing and other credit-card related services for the banks.

24. What does an Extradition Treaty specify?
Refers to express trusts or other similar legal arrangements - such as fiducie - treuhand and fideicomiso [FATF Risk-Based approach - Guidance for the Life Insurance Sector - Oct 09]
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.
The terms of such exchanges - the persons subject to being exchanged - and the crimes for which exchanges will be permitted.
Countries should apply Recommendations to any business or profession that poses a money laundering or terrorist financing risk.

25. When is a jurisdiction considered to be 'ring-fenced'?
Processes transactions for merchants who accept credit cards.
To take additional steps of examination and caution in identifying their customers and confirming that the customers' activities and funds are legitimate.
When residents are prevented from benefiting from a tax-regime or when non-residents are prevented from accessing the domestic market.
Criminalize the financing of terrorism - terrorist acts and terrorist organisations.

26. Why is a 'money order' attractive to a money launderer?
The means through which the insurance products and services are provided to a customer [FATF Risk-Based approach - Guidance for the Life Insurance Sector - Oct 09]
Countries should criminalize money laundering and apply it to all serious offenses - even if committed in another country.
Because it represents funds drawn on the account of a financial institution and not on a particular individual.
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.

27. Who appoints a 'Federal Receiver' (US)?
Countries should maintain comprehensive statistics to gauge effectiveness of their AML and CTF efforts.
bear the mark 'APOSTILLE'
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 US Federal Court

28. What are included in the Wolfsberg AML Principles on Private Banking?
Customer makes payments on account with bad checks - then takes cash advances before they clear - thereby expanding his credit.
General recommendations for client acceptance - updating client files - practices when identifying unusual or suspicious activity - monitoring - control responsibilities - reporting - education and records retention.
Intergovernmental Action Group against Money Laundering in Africa
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.

29. Three stages of money laundering
Combines funds from various members and users them to trade in futures or options contracts.
Money Laundering and Tax Evasion
Placement - Layering - Integration.
'Tip Off' a customer that a report has been filed. Failure to maintain confidentiality is a violation of law.

30. Counter Party
Canada
Financial institutions should NOT keep any anonymous or fictionally named accounts - plus they should undertake customer due diligence measures.
As 'felonies' or 'all offenses in the criminal code'.
The opposing part of a transaction or trade.

31. FATF Recommendation 19
Countries should criminalize money laundering and apply it to all serious offenses - even if committed in another country.
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.
Futures contracts - forwards - swaps or options.
A fund setup by an investment trust in which the number of shares can fluctuate as investors' move in and out the fund. Share prices moves in direct proportion of the net asset value of the underlying investments (no premium or discount).

32. What does a 'Commission Rogatoire' normally specify?
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.
Supervisors should have powers to monitor and ensure compliance - including the ability to compel production of information and to impose sanctions.
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.
Banking services between merchant banks and other financial institutions.

33. Transparency International
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
Berlin- based - non-governmental organization with goal of improving government accountability and curbing national and international corruption.
The opposing part of a transaction or trade.
Record retention: 5 years - data to recreate any individual transaction; 5 years after relationship ends - all customer identification data

34. (Credit Card) Issuing Bank
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.
Financial instrument whose price is realted to the underlying commodity - currency - economic variable - financial istrument or security.
A federal regulator in the US - responsible for auditing risk and compliance measuers of federally chartered banks.
Solicits potential customers and issues the credit cards.

35. Vital Service Providers (VSPs)
Goods such as food - grains and metals that are usually traded in large amounts on a commodities exchange - usually through future contracts.
People who help move the billions of dollars drug traffickers earn around the world.
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.
Middle East and North Africa Financial Action Task Force

36. 'Loan Back' method. Give example of how it works.
Direct money of Criminal A is sent to foreign bank account of company B. Investment company C is formed as A's country. A is appointed as director of C. C borrows money from B and buys building which is rented to 3rd parties. with rent - C pays off B
Respondent banks may be used by other banks and customers to conduct transactions through a correspondent account.
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.
Criminalize the financing of terrorism - terrorist acts and terrorist organisations.

37. Underwriting
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.
It analyzes and processes information and disseminates it to appropriate government authorities in support of AML efforts and financial crime investigations.
Supervisors should have powers to monitor and ensure compliance - including the ability to compel production of information and to impose sanctions.
A corporation - often established in an offshore jurisdiction with tight secrecy laws to protect the financial privacy of its owners.

38. Why is understanding 'Product Diversion' important to the AML investigator?
The UN Convention against Illicit Trafficking in Narcotic drugs and Pyshotropic substances [Adopted 12/88].
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.
Supervisors should have powers to monitor and ensure compliance - including the ability to compel production of information and to impose sanctions.
Passed in 1977 - the US law is primarily known for its anti-bribery provisions (it also applies to foreign companies with stocks covered by the Securities and Exchange Act of 1934).

39. Identification data
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.
Normally seen as non-violent or involving 'business-related' schemes rather than violent or threat or violence crimes.
Reliable - independent source of documents - data or information.

40. What is one of the Financial Service Authority's (UK) tasks?
To reduce financial crime - including money laundering and terrorit financing.
Assess any international correspondent's bank nature - ownership - management - reputation - supervision and AML & Terrorist Financing controls. Also. document relationship responsibilities.
Non-Coperative countries and Territories. Country or territory that has been designated by the FATF as non-cooperative with international AML principles and procedures.
When residents are prevented from benefiting from a tax-regime or when non-residents are prevented from accessing the domestic market.

41. 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...
'Tip Off' a customer that a report has been filed. Failure to maintain confidentiality is a violation of law.
that appear to be linked
Through the use of experts - the program optimizes expert resources - reduces duplication of efforts and provides uniform advice in financial sector work.
General recommendations for client acceptance - updating client files - practices when identifying unusual or suspicious activity - monitoring - control responsibilities - reporting - education and records retention.

42. Who appear to be predominant users of hawalas and other alternative remittance systems?
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.
They can accrue value as the price of the underlying stock rises.
Expatriates sending money back to their home country or by other individuals sending money abroad.
A merchant submits a saled transaction on his personal bankcard account to ontain cash advances through their business.

43. Portfolio Manager
Competent authorities should be provided with adequate financial - human and technological resources. Personnel should be of high integrity.
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.
The International Monetary Fund (IMF) and the world bank conduct the joint program.

44. Cash Log
High-speed matching of known or suspected patterns in very large DB's using recognition algorithms.
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.
USD/EUR 3 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
They can accrue value as the price of the underlying stock rises.

45. Short Sale
Futures contracts - forwards - swaps or options.
Direct money of Criminal A is sent to foreign bank account of company B. Investment company C is formed as A's country. A is appointed as director of C. C borrows money from B and buys building which is rented to 3rd parties. with rent - C pays off B
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.
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.

46. A 'panzi' scheme is named for whom?
USD/EUR 3 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
An order from government authority requiring a financial institution to provide transaction information on a suspect account for a specified period of time.
Intentional misrepresentation - concealment or omission of the truth for the purpose of deception or manipulation to ther detriment of a person or organization.
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.

47. What does the principal US money laundering law look for before implementing its 'Extraterritorial Reach'?
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
Contract issued by an insurance company under which an investor provides the insurer with funds (a lump-sum or series of payments). The insurer then agrees to make periodic payments to the investor starting the immediately or in the future.
Confiscation
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.

48. Who are the parties involved in a trust?
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.
As a financial institution service that is very vulnerable to money laundering.
The grantor (the owner of the property) - a beneficiary and the trustee (the manager of the property).
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).

49. What is the significance of 'Non-Financial Trades and Businesses' in realtion to Money Laundering?
The grantor (the owner of the property) - a beneficiary and the trustee (the manager of the property).
They are businesses such as ariplane - automobile and boat dealers - lawyers - jewelers - real estate brokers and others that are subjec to BSA regulations (US).
www.artloss.com
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.

50. Common types of 'Derivatives'
Customer makes payments on account with bad checks - then takes cash advances before they clear - thereby expanding his credit.
Futures contracts - forwards - swaps or options.
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.
Financial institutions should have AML/CFT programs that include approved policies - employee screenings & ongoing training and an audit function to test it all.

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