Instructions:

• Answer 50 questions in 15 minutes.
• If you are not ready to take this test, you can study here.
• Match each statement with the correct term.
• Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

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. Legal Arrangements (Insurance Industry)
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.
Applied by an authority - it is a special seal which certifies that a document is a true copy of an original. However - it does not and cannot speak to the validity of the document's content.
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]
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.


2. Open System Stored Value Card
Countries should enable their competent authorities to freeze - seize and confiscate laundered property or proceeds.
People who help move the billions of dollars drug traffickers earn around the world.
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.
A prepaid card that is linked to the global funds network - which can allow for worldwide ATM with-drawls and purchases with many merchants.


3. Fraud
Intentional misrepresentation - concealment or omission of the truth for the purpose of deception or manipulation to ther detriment of a person or organization.
Render mutual legal assistance notwithstanding the absence of dual criminality. Where dual criminality is required - classification should not be an issue.
Financial institutions should pay to any threats from new or developing technologies - especially with non f2f relationships.
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.


4. Convertible Bond
tipped off that they are being investigated.
Electronic transmissions of funds between financial institutions on behalf of themselves or their customers.
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 UN Convention against Transnational Organized Crime [Adopted 12/2000].


5. FATF Recommendation 31
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).
Countries should ensure policy makers - the FIU - law enforcement and supervisors have effective mechanisms to enable cooperation.
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.
Respondent banks may be used by other banks and customers to conduct transactions through a correspondent account.


6. What is one of the cental stragetic tools required for effective action against money laundering?
Confiscation
A trust clearly created by the settlor - usually in the form of a document - such as a written deed or trust.
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.
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.


7. What is important about the US Money Laundering Control Act (MCLA)?
www.artloss.com
The transfer of physical - hard-copy security certificates to book entry credits of a security holder's interest.
It was the first law in any country to make money laundering a crime.
Confiscation


8. As considered by UN and OECD - these are jurisdictions that have no or low tax rates - and do not attract real business or foreign investment
Financial Action Task Force
Casinos - real estate agents - precious metal/stone dealers - lawyers - notaries - accountants and trust & company service providers.
Harmful or Preferrential Tax Regimes.
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


9. FATF Recommendation 39
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.
A fund - offered by an investment company - that offers shares while investing the capital in diversified securities of other companies.
Countries should recognize money laundering as an extraditable offense.
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.


10. What are the three main functions of a 'Transfer Agent'?
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
Extending the offense of money laundering to include money laundering associated with all serious offenses - not only with drug trafficking [Adopted 9/90].
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.
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.


11. Behaviour detection

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12. 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...
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.
All admininstrative and law enforcemnt authorities concerned wiht combating money laundering and terrorist financing - including the FIU and supervisors.
Banking services between merchant banks and other financial institutions.
foreign correspondent banks


13. 'Introducing Broker-Dealers in Commodities' (IB-C)

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14. Commodity
Goods such as food - grains and metals that are usually traded in large amounts on a commodities exchange - usually through future contracts.
Countries should recognize money laundering as an extraditable offense.
Criminalize the financing of terrorism - terrorist acts and terrorist organisations.
Real Estate - Insurance Transactions - Trade-Based Money Laundering.


15. OTC markets Over-The-Counter
A market is which securities are bought and sold outside of establisehd securities markets.
Terrorism and Terrorist Financing
A merchant submits a saled transaction on his personal bankcard account to ontain cash advances through their business.
Open and Closed system


16. Three stages of money laundering
Placement - Layering - Integration.
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.
Berlin- based - non-governmental organization with goal of improving government accountability and curbing national and international corruption.
Open and Closed system


17. Examples of White-collar crime
Money Laundering - bribery - health care - tax - bankruptcy - securities or environmental frauds etc.
Strengthen customer identification measures in iternational and domestic wire transfers.
Terrorism and Terrorist Financing
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).


18. FATF Recommendation 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 chain-referral scheme.
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.
Direct or indirect advisor on buying and selling futures or commodity options.


19. FATF Recommendation 30
High-speed matching of known or suspected patterns in very large DB's using recognition algorithms.
Middle East and North Africa Financial Action Task Force
Because they are accounts through which funds are transferred and commingled without personally identifying the originator.
Competent authorities should be provided with adequate financial - human and technological resources. Personnel should be of high integrity.


20. FATF Recommendation 26
Countries should establish national centers to receive and disseminate AML/CFT information and have access to law enforcement and others.
PEP accounts need to be identified - approved by senior management - and have ongoing enhanced monitoring. Sources of Wealth and funds must also be established.
Foreign Corrupt Practices Act
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.


21. Cash Letter
Confidentiality - complex beneficial ownership arrangements - offshore investment vehicles - tax shelters and credit extension services.
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.
Ad interbank transmittal form - resembling a deposit slip - used to accompany cash and cash equivalent items sent from one bank to another.
Countries should ensure that there is adequate - accurate and timely information on the beneficial ownership and control of legal persons.


22. What are included in the Wolfsberg AML Principles on Private Banking?
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).
General recommendations for client acceptance - updating client files - practices when identifying unusual or suspicious activity - monitoring - control responsibilities - reporting - education and records retention.
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.
Expatriates sending money back to their home country or by other individuals sending money abroad.


23. FATF Recommendation 22

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24. What is the Wolfsberg group?
A firm or person that solicits or accepts orders on futures contracts or commodity options and accepts funds for their execution.
An association of global financial institutions that issues guidelines is such areas as correspondent banking - private banking - terrorist financing etc.
To create new overseas markets - dispose of excess goods - or otherwise recover their costs.
Designated non-financial businesses and professions should be subject to regulatory and supervisory measures. Casinos should prevent criminal ownership - operations or management.


25. FATF Recommendation 4
EurAsian Group
Strengthen customer identification measures in iternational and domestic wire transfers.
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 secrecy laws do NOT inhibit implementation of these Recommendations.


26. When was the Offshore Group of Banking Supervisors established? What was the impetus behind its establishment?
Processes transactions for merchants who accept credit cards.
Money Laundering and Tax Evasion
The UN Convention against Transnational Organized Crime [Adopted 12/2000].
October 1980. The instigation of Basel Committee on Banking supervision (with which the group maintains close contact).


27. Wholesale Banking
The US State Dept issues the report annually.
Banking services between merchant banks and other financial institutions.
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
Extending the offense of money laundering to include money laundering associated with all serious offenses - not only with drug trafficking [Adopted 9/90].


28. FATF Recommendation 12
The CDD and record-keeping requirements (of Rec 5 - 6 - 8 & 11) apply to non-financial businesses and professions.
Solicits potential customers and issues the credit cards.
PEP accounts need to be identified - approved by senior management - and have ongoing enhanced monitoring. Sources of Wealth and funds must also be established.
Countries should criminalize money laundering and apply it to all serious offenses - even if committed in another country.


29. What was the effect of the 1988 Vienna Convention as it relates to extradtition?
Respondent banks may be used by other banks and customers to conduct transactions through a correspondent account.
Ad interbank transmittal form - resembling a deposit slip - used to accompany cash and cash equivalent items sent from one bank to another.
The UN Convention against Transnational Organized Crime [Adopted 12/2000].
If provided for money laundering to be an internationally extraditable offense.


30. What is the Federal Service for Financial Monitoring?
Open and Closed system
The FIU of Russia
USD/EUR 3 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
Combines funds from various members and users them to trade in futures or options contracts.


31. 'Open-end Mutual Fund' (or Company)

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32. How do 'Hedge Funds' operate?

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33. FATF Recommendation 34
Countries should ensure that there is adequate - accurate and timely information on express trusts - including information on the settlor - trustee and beneficiaries.
A US Federal Court
Direct or indirect advisor on buying and selling futures or commodity options.
Operator or solicitor of funds for a commodity pool - which combines funds from members and trades futures or options contracts.


34. (Credit Card) Third-Party processor
If provided for money laundering to be an internationally extraditable offense.
Firm that contracts with issuing or acquiring banks to provide transaction processing and other credit-card related services for the banks.
An order from government authority requiring a financial institution to provide transaction information on a suspect account for a specified period of time.
Foreign Corrupt Practices Act


35. Why is it imperative to have a strong Know Your Employee program?
A trust clearly created by the settlor - usually in the form of a document - such as a written deed or trust.
If provided for money laundering to be an internationally extraditable offense.
In many major money laundering operations - it is not unusual to find a complicit employee in financial institution.
To profit all kinds of markets by pursuing leveraging and other speculative investment practises thay may increase the risk of investment loss.


36. FATF Recommendations examples of non-financial businesses and professions
The terms of such exchanges - the persons subject to being exchanged - and the crimes for which exchanges will be permitted.
Casinos - real estate agents - precious metal/stone dealers - lawyers - notaries - accountants and trust & company service providers.
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.
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.


37. The Palemo Convention
have in place compulsory currency reporting requirements.
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.
Financial Action Task Force on Money Laundering in South America
The UN Convention against Transnational Organized Crime [Adopted 12/2000].


38. What does theInternationa Narcotics Control Strategy Report (INCSR) entail?
A contemporaneous record of the steps - observations - evidence - findings and decisions of an investigation.
A detailed report on the narcotics trade and a lengthy narrative on the status of the related money laundering issues in most nations.
Middle East and North Africa Financial Action Task Force
Should give special attention to relationships or transactions of people - companies or financial institutions from countries showing little regard for these Recommendations.


39. FATF's designated transactional threshold for Financial Insitutions is _____.
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
Competent authorities should be provided with adequate financial - human and technological resources. Personnel should be of high integrity.
Funds transfers - Shell Corporations - Contractual Transactions.
Berlin- based - non-governmental organization with goal of improving government accountability and curbing national and international corruption.


40. Where is the Art Loss Register found?
A prepaid card that is linked to the global funds network - which can allow for worldwide ATM with-drawls and purchases with many merchants.
Report suspicious transactions linked to terrorism.
Electronic transmissions of funds between financial institutions on behalf of themselves or their customers.
www.artloss.com


41. Dormant Account
Competent authorities should be provided with adequate financial - human and technological resources. Personnel should be of high integrity.
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.
An account that does not show activity other than the posting of interest or account maintenance fees.
Countries should ensure that there is adequate - accurate and timely information on the beneficial ownership and control of legal persons.


42. FATF Recommendation 28
Competent authorities should have powers of subpoena - search and seizure.
Person who - for compensation - provides advice on securities and investments and manages client assets.
They can accrue value as the price of the underlying stock rises.
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.


43. Nostro

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44. Abusive Squeezes

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45. Derivatives
Provide the widest possible range of assistance to other countries' law enforcement and regulatory authorities for terrorist financing investigations.
Financial instrument whose price is realted to the underlying commodity - currency - economic variable - financial istrument or security.
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.
Maintaining correspondent accoutnts at US Financial Institutions (USA Patriot Act)


46. USA Patriot Act Section 312 'Offshore Bank'
It analyzes and processes information and disseminates it to appropriate government authorities in support of AML efforts and financial crime investigations.
Reliable - independent source of documents - data or information.
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.
www.artloss.com


47. 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.
Middle East and North Africa Financial Action Task Force
Typical mass-market banking where individual customers use local branches of larger commercial banks.
www.artloss.com


48. Operational risks in KYC context relate to...
weakness in the implementation of bank programs - ineffective control procedures and failure to practice due diligence.
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
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 chain-referral scheme.


49. White-Collar crime

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50. Apostille

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