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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. Under the US Bank Secrecy Act - SAR filings are confidential and the institutions employees cannot ____?

2. What was the target of UN Security Council Resolution 1267?
Middle East and North Africa Financial Action Task Force
Adopted in 1999 - it imposed sanctions on Taliban-controlled Afghanistan for its support of Osama Bin Laden and the Al-Qaeda organization
When residents are prevented from benefiting from a tax-regime or when non-residents are prevented from accessing the domestic market.
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.

3. FATF Recommendation 38
With respect to STR/SAR reporting - financial institutions should be afforded safe harbor - yet barred from any unauthorized disclosures.
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].
Freeze and confiscate terrorist assets.

4. What is the significance of 'Non-Financial Trades and Businesses' in realtion to Money Laundering?
It was the first law in any country to make money laundering a crime.
The UN Convention against Illicit Trafficking in Narcotic drugs and Pyshotropic substances [Adopted 12/88].
They are businesses such as ariplane - automobile and boat dealers - lawyers - jewelers - real estate brokers and others that are subjec to BSA regulations (US).
A US Federal Court

5. What must a financial institution do if they have 'Exempt Accounts'?
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.
Financial institutions should NOT keep any anonymous or fictionally named accounts - plus they should undertake customer due diligence measures.
The exempt accounts must be documented and the financial institution that secures the exemptions must still monitor their financial transactions.
All admininstrative and law enforcemnt authorities concerned wiht combating money laundering and terrorist financing - including the FIU and supervisors.

6. Apostille

7. Affidavit
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 adequate supervision and regulation. Ensure no criminal element in position on control. Money transfer/exchangers should be registered and subjected to monitoring.
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
Entities such as American Express - Master Card and VISA - which license member banks to issue bankcards - authorize merchants to accept those cards - or both.

8. OTC markets Over-The-Counter
Financial institutions should be required - by law or regulation - to report suspicious activity to their national FIU.
Typical mass-market banking where individual customers use local branches of larger commercial banks.
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 market is which securities are bought and sold outside of establisehd securities markets.

9. Why is 'Know Your Customer's Customer' important?
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'
Terrorism and Terrorist Financing
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.
Respondent banks may be used by other banks and customers to conduct transactions through a correspondent account.

10. Basel committee's 'Customer Due Diligence for Banks' when verifying a unit's compliance with KYC policies and procedures - the home country supervisors or auditors should do what?
The financial institution can become subject to lawsuits from the failure to observe mandatory KYC standards or from the failure to practise due diligence.
Review customer files and conduct random sampling of accounts.
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.
To take additional steps of examination and caution in identifying their customers and confirming that the customers' activities and funds are legitimate.

11. FATF Sepcial Recommendation on Terrorist Financing -- SR Three
Freeze and confiscate terrorist assets.
It was the first law in any country to make money laundering a crime.
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.
To reduce financial crime - including money laundering and terrorit financing.

12. Cash Log

13. FATF Recommendation 15
Normally seen as non-violent or involving 'business-related' schemes rather than violent or threat or violence crimes.
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
Countering the Financing of Terrorism (Counter Terrorist Financing).
Financial institutions should have AML/CFT programs that include approved policies - employee screenings & ongoing training and an audit function to test it all.

14. FATF Recommendation 14
A US Federal Court
With respect to STR/SAR reporting - financial institutions should be afforded safe harbor - yet barred from any unauthorized disclosures.
It analyzes and processes information and disseminates it to appropriate government authorities in support of AML efforts and financial crime investigations.
The exempt accounts must be documented and the financial institution that secures the exemptions must still monitor their financial transactions.

15. The Palemo Convention
Direct or indirect advisor on buying and selling futures or commodity options.
Foreign Corrupt Practices Act
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.
The UN Convention against Transnational Organized Crime [Adopted 12/2000].

16. FATF Recommendation 25
Competent authorities should provide guidelines in applying national AML/CFT measures - especially for detecting and reporting suspicious activity.
Render mutual legal assistance notwithstanding the absence of dual criminality. Where dual criminality is required - classification should not be an issue.
Assess any international correspondent's bank nature - ownership - management - reputation - supervision and AML & Terrorist Financing controls. Also. document relationship responsibilities.
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]

17. What is a Private Investment company (PIC)?
A corporation - often established in an offshore jurisdiction with tight secrecy laws to protect the financial privacy of its owners.
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.
An arrangement whereby an investor pays for part of a securities purchase and borrows the rest from a securities intermediary.
Financial institutions should pay to any threats from new or developing technologies - especially with non f2f relationships.

18. Guaranteed Introducing Broker

19. FATF Recommendation 28
Render mutual legal assistance notwithstanding the absence of dual criminality. Where dual criminality is required - classification should not be an issue.
A contemporaneous record of the steps - observations - evidence - findings and decisions of an investigation.
Competent authorities should have powers of subpoena - search and seizure.
The UN Convention against Illicit Trafficking in Narcotic drugs and Pyshotropic substances [Adopted 12/88].

20. FATF Recommendation 34
2% - 5% ($590B - $1.5T)
Procedures used to determine the identities of the account holders of a respondent bank in a correspondent banking relationship.
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.
Countries should ensure that there is adequate - accurate and timely information on express trusts - including information on the settlor - trustee and beneficiaries.

21. Cash Equivalent

22. Account Monitoring Order (UK and several other countries)
Absolutely NOT. If the decision is based purely on profile - then you are discriminating. you need to file such reports on the ACTIVITY especially if it differs from the 'normal and expected' as reflected in the customer profile.
Solicits potential customers and issues the credit cards.
Countries should ensure policy makers - the FIU - law enforcement and supervisors have effective mechanisms to enable cooperation.
An order from government authority requiring a financial institution to provide transaction information on a suspect account for a specified period of time.

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

24. What is one of the Financial Service Authority's (UK) tasks?
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).
To reduce financial crime - including money laundering and terrorit financing.
disrupt or adversely afftect the business of the bank.
Customer makes payments on account with bad checks - then takes cash advances before they clear - thereby expanding his credit.

25. Variable Annuity
Countries should ensure that knowledge can be inferred. Additionally - legal persons should be subject to theses laws.
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.
A merchant submits a saled transaction on his personal bankcard account to ontain cash advances through their business.
Competent authorities should be provided with adequate financial - human and technological resources. Personnel should be of high integrity.

26. 'Kiting' via credit card
A merchant submits a saled transaction on his personal bankcard account to ontain cash advances through their business.
A market is which securities are bought and sold outside of establisehd securities markets.
Report suspicious transactions linked to terrorism.
Financial institutions should have AML/CFT programs that include approved policies - employee screenings & ongoing training and an audit function to test it all.

27. (Credit Card) Issuing Bank
Solicits potential customers and issues the credit cards.
Pouch activity.
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.
Provide mutual legal assistance.

28. What does an Extradition Treaty specify?
An association of global financial institutions that issues guidelines is such areas as correspondent banking - private banking - terrorist financing etc.
The terms of such exchanges - the persons subject to being exchanged - and the crimes for which exchanges will be permitted.
Combines funds from various members and users them to trade in futures or options contracts.
Person who - for compensation - provides advice on securities and investments and manages client assets.

29. OCC Office of the Comptroller of the Currency
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.
Person who - for compensation - provides advice on securities and investments and manages client assets.
Countries should ensure that there is adequate - accurate and timely information on the beneficial ownership and control of legal persons.
A federal regulator in the US - responsible for auditing risk and compliance measuers of federally chartered banks.

30. 'Loan Back' method. Give example of how it works.

31. The Joint Money Laundering Steering Group (UK) has published a series of AML Guidance Notes for different sectors of the financial community. But - As a group of trade associations - it has...
foreign correspondent banks
disrupt or adversely afftect the business of the bank.
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.
no regulatory power or function

32. FATF Recommendation 16
Solicits potential customers and issues the credit cards.
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.
Supervisors should have powers to monitor and ensure compliance - including the ability to compel production of information and to impose sanctions.
High-speed matching of known or suspected patterns in very large DB's using recognition algorithms.

33. Corporate Bank

34. FATF Recommendation 37
Render mutual legal assistance notwithstanding the absence of dual criminality. Where dual criminality is required - classification should not be an issue.
Solicits potential customers and issues the credit cards.
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).
bear the mark 'APOSTILLE'

35. Investigative Log
An association of global financial institutions that issues guidelines is such areas as correspondent banking - private banking - terrorist financing etc.
The UN Convention against Transnational Organized Crime [Adopted 12/2000].
A contemporaneous record of the steps - observations - evidence - findings and decisions of an investigation.
Absolutely NOT. If the decision is based purely on profile - then you are discriminating. you need to file such reports on the ACTIVITY especially if it differs from the 'normal and expected' as reflected in the customer profile.

36. Commodity Trading Advisor
Direct or indirect advisor on buying and selling futures or commodity options.
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.
Impose AML requirements on alternative remittance systems.
A detailed report on the narcotics trade and a lengthy narrative on the status of the related money laundering issues in most nations.

37. Nostro

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

39. What does a 'Commission Rogatoire' normally specify?
October 1980. The instigation of Basel Committee on Banking supervision (with which the group maintains close contact).
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.
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.
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.

40. Transparency International
A contemporaneous record of the steps - observations - evidence - findings and decisions of an investigation.
Procedures used to determine the identities of the account holders of a respondent bank in a correspondent banking relationship.
Berlin- based - non-governmental organization with goal of improving government accountability and curbing national and international corruption.
Review customer files and conduct random sampling of accounts.

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

42. FATF Sepcial Recommendation on Terrorist Financing -- SR Seven
By acquiring personal information about the victim (e.g: DOB - address - CC numbers) through stealth and misrepresentations.
Review customer files and conduct random sampling of accounts.
Strengthen customer identification measures in iternational and domestic wire transfers.
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.

43. FATF Recommendation 1
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.
An account that does not show activity other than the posting of interest or account maintenance fees.
have in place compulsory currency reporting requirements.
Countries should criminalize money laundering and apply it to all serious offenses - even if committed in another country.

44. FATF Recommendation 5
Financial institutions should NOT keep any anonymous or fictionally named accounts - plus they should undertake customer due diligence measures.
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.
It conducts investigations in support of a government's confiscation or seizure efforts.
Financial Action Task Force on Money Laundering in South America

45. How is 'Legal Risk' defined by the 2001 Basel Due Diligence Principles?
Because they are accounts through which funds are transferred and commingled without personally identifying the originator.
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.
A firm or person that solicits or accepts orders on futures contracts or commodity options and accepts funds for their execution.
Berlin- based - non-governmental organization with goal of improving government accountability and curbing national and international corruption.

46. FATF Recommendation 2
In many major money laundering operations - it is not unusual to find a complicit employee in financial institution.
Ensure that entities - in particular non-profit organizations - cannot be misused to finance terrorism.
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 ensure that knowledge can be inferred. Additionally - legal persons should be subject to theses laws.

47. Cash Letter
Assess any international correspondent's bank nature - ownership - management - reputation - supervision and AML & Terrorist Financing controls. Also. document relationship responsibilities.
Ad interbank transmittal form - resembling a deposit slip - used to accompany cash and cash equivalent items sent from one bank to another.
A merchant submits a saled transaction on his personal bankcard account to ontain cash advances through their business.
An arrangement whereby an investor pays for part of a securities purchase and borrows the rest from a securities intermediary.

48. FATF Sepcial Recommendation on Terrorist Financing -- SR One
Take immediate steps to ratify and implement the UN instruments.
2% - 5% ($590B - $1.5T)
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).
Typical mass-market banking where individual customers use local branches of larger commercial banks.

49. Money Mules
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'.
Typical mass-market banking where individual customers use local branches of larger commercial banks.
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.
A corporation - often established in an offshore jurisdiction with tight secrecy laws to protect the financial privacy of its owners.

50. Who issues the Internationa Narcotics Control Strategy Report (INCSR) and how often?
The US State Dept issues the report annually.
Provide mutual legal assistance.
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.
Terrorism and Terrorist Financing