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AML CFT Program Study Guide Exam Questions with Verified Answers.
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AML CFT Program Study Guide Exam Questions with Verified Answers.AML CFT Program Study Guide Exam Questions with Verified Answers.
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AML CFT Program Study Guide Exam Questions with VerifiedAnswers.
Establishing a Culture of Compliance - 1. Leadership must actively support and
understand compliance efforts.
i.e. reviewing and approving the overall AML/CFT program and ensuring that there is
ongoing oversight.
2. Leadership and staff must understand the purpose of its AML/CFT efforts and how its
STR reporting is
used
3. Compliance staff should be empowered with sufficient authority to implement an
organization's AML/CFT policies. Efforts to manage and mitigate AML/CFT deficiencies
and risk must not be compromised by revenue interests.
4. The institution must devote adequate resources to its compliance function
5. Relevant information from the various departments within the organization must be
shared with compliance
staff to further AML/CFT efforts barriers in communication should not exist within an
institution
6. The compliance program must be effective.
To be effective, an AML/CFT program must include an ongoing documented risk
assessment, risk-based customer
due diligence, and provide for testing by an independent, unbiased and qualified party.
.
The primary goal /Objective of an AML/CFT program? - • To protect the organization
against Money Laundering, terrorist financing and other financial crimes and
• To report suspicious activity to Proper authority
• To train all employees on the legal and internal procedures, and the risks faced
• To ensure that the organization is in full compliance with relevant laws and regulations.
How should be an AML program be? - 1. An AML/CFT program should be risk-based
2. Size: Depending on the size of the organization- AML function can be Stand-alone /
integrated in other
dept.
3. AML Program should establish minimum standard to comply with all applicable laws
and regulations.
Should include corporate governance and overall management AML/CFT risk
Before designing understand what is required of a financial institution, its employees
and customers by
the laws and regulations
What to consider when assessing risk? - • Customer risk factors such as non-resident
customers, cash-intensive businesses, and complex ownership
structure of a company, and companies with bearer shares.
, • Country or geographic risks such as countries with inadequate AML/CFT systems,
countries subject to
sanctions or embargo, countries involved with funding or supporting of terrorist
activities, or those with
significant levels of corruption.
• Product, service, transaction or delivery channel risk factors such as private banking,
anonymous
transactions,
WHAT ARE AML/CFT VARIOUS Risk LEVELS - • Prohibited—the institution will not
tolerate any dealings of any kind given the risk. e.g transactions with
Sanctioned entities/countries
• High Risk — the risks here are significant, but are not necessarily prohibited Countries
that maintain a
reputation for corruption or drug trafficking. High-risk customers may include politically
exposed persons
(PEPs) or certain types of money services businesses or cash intensive business, high-
risk products and
services may include correspondent banking and private banking.
• Medium Risk—Medium risks merit additional scrutiny, but do not rise to the level of
high-risk.
For example, a retail business that accepts low to moderate levels of cash, but is not
considered cashintensive.
• Low Risk—this represents the baseline risk of Money Laundering. Typically, low risk
indicates normal,
expected activity.
What are source of identifying high risk jurisdictions? - • The US State Department
issues an annual "International Narcotics Control Strategy Report" rating more
than 100 countries on their Money Laundering controls
• Transparency International publishes a yearly "Corruption Perceptions Index," which
rates more than
100 countries on perceived corruption
• FATF identifies jurisdictions with weak AML/CFT regimes and issues country-specific
Mutual Evaluation
Reports
• In the United States certain domestic jurisdictions are evaluated based on whether
they fall within
government-identified higher-risk geographic locations such as High Intensity Drug
Trafficking Areas
(HIDTA) or High Intensity Financial Crime Areas (HIFCA).
I) AML/CFT policies - • Clear and simple high-level statements that are uniform across
the entire organization (sets the tone from
the top).
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