CAMS Certified Anti-Money Laundering Specialist (CAMS7 the 7th edition) Questions and Answers

A long-term client wants a change to a policy that is already in force

The payment was made via a company that appears to be owned and controlled by the client being insured

The additional premium payable appears to be within the client's means based on the KYC information collected

The payment was made via a company in a jurisdiction known to have lax AML controls

Real-time data analysis capabilities as part of a broader strategy

Preference for the lowest-cost solution

Complete elimination of manual processes

Compatibility with existing IT infrastructure

Scalability to handle increasing transaction volumes

Allow beneficial owners to provide proxies lot voting on corporate decisions

Obscure beneficial ownership

Allow domicile in the nominee's jurisdiction

Derail investigations

A customer being hesitant to provide beneficiary name or address information when sending international wire transfers

Cash-intensive businesses, such as convenience stores or restaurants, making large cash deposits

A customer exchanging foreign currency from a higher-risk jurisdiction for domestic currency under the reporting threshold

A customer using multiple accounts under different names to conduct transactions

A customer completing frequent small-dollar international money transfers to their native country

Excluding information obtained from the dark web

Only relying on information from international news agencies

Cross-checking with multiple sources

Ignoring social media sources

Ensuring the structure is reviewed by an outside auditor or consultant

Establishing a system of internal controls commensurate with the institution’s size and complexity

Designating a qualified board of directors to monitor day-to-day compliance

Establishing clear roles and responsibilities for AFC risk escalations and issues

Change the risk profile to "high-risk" if an existing customer becomes a sanctioned entity and continue monitoring further transactions.

Adopt automatic screening systems to detect designated persons and entities.

Conduct enhanced due diligence for prohibited entities on the sanctions list.

Freeze the funds or assets of designated persons and entities once this decision is approved by the board.

Conduct an open-source intelligence investigation using artificial intelligence tools to gain more information on the activities of the suspected employee

Use the FI's whistleblowing channel to report the suspected employee

Question their co-worker to determine if their suspicions are correct before reporting to the FI's Human Resources department

Warn colleagues and customers of the FI that the employee's suspicious financial investment proposals could be a scam

Report the suspected employee to the line manager of the FI to take the required action

The account activity includes deposit activity into both savings and checking accounts

The account activity includes incoming funds transfers at irregular intervals from small businesses located in New York

The account activity includes deposits made in multiple branches around New York City into the same account.

The account activity includes frequent purchases of tickets to industry conferences and other events.

Ensuring sanctions compliance by relying solely on international bodies like the UN because there is no requirement to adhere to local laws

Ensuring group policies and procedures prioritize adherence to US regulations because they are the most influential worldwide

Applying global AFC and sanctions policies to ensure consistency without the need to adapt to local regulations

Ensuring group policies cater to compliance with each country's specific AML and sanctions regulations

Relying on self-reported compliance certifications from vendors and employees to confirm adherence to AML standards on a periodic basis

Establishing a surveillance program for employees, vendors, and third parties, including periodic risk assessments, access controls, and regular reviews of their compliance with AML policies

Implementing background checks for employees and vendors prior to onboarding or the start of engagement to identify any red flags

Limiting the number of vendors and third parties in high-risk jurisdictions in order to reduce exposure to compliance risks

The US Federal Reserve and the European Central Bank oversee money laundering and sanctions

FinCEN and ESMA issue sanctions and combat money laundering

The SEC and the EBA are the main bodies enforcing AML and sanctions

The Office of Foreign Assets Control (OFAC) enforces US sanctions, while FinCEN focuses on money laundering. In the EU, the European Commission sets AML/CFT regulations, with enforcement by member states coordinated by the AML Authority

Enterprise-wide risk assessments and the employee handbook for any limitations on sharing commercially sensitive customer data

The risk rating of the customers to avoid sharing data relating to higher risk customers

The organization's AML compliance policies to ensure that customer data can be easily shared internally and internationally

Applicable data privacy laws in relevant jurisdictions and the organization's data security and privacy policies for any limitations

Organizations are required to demonstrate that customers have opted into information sharing before submitting suspicious activity reports to relevant financial intelligence units (FIUs)

Any customer that is the subject of a suspicious report filing has the right to request redaction of their personal data

FIUs should document purposes for which personal data included on suspicious activity reports may be shared with other agencies

Data privacy laws prohibit information sharing between financial institutions for the purposes of AML investigations in all jurisdictions

product risk.

credit risk.

geographic risk.

customer risk.

liquidity risk.

collaborating with law enforcement agencies, financial institutions, and other stakeholders to detect and prevent Illicit financial activities.

conducting examinations of financial institutions to ensure compliance with anti-money laundering regulations.

engaging in providing financial services, including banking and investment activities, to the public and private sectors

facilitating the exchange of information between the public and private sectors.

enacting legislation regarding the operations of financial institutions.

Number of days required to hire new staff

Number of alerts raised for review or reporting

Number of alerts by region

Number of transactions by top customers

Average time to review an alert

A large multinational corporation with extensive, documented wire transfer activity

A local convenience store that replenishes the onsite automated teller machine (ATM) with cash from its till

A local used car sale lot that allows individuals to pay their monthly bill in cash

A virtual asset service provider (VASP), facilitating peer-to-peer cryptocurrency transactions

Engage in the PPP without strict data sharing protocols, allowing for open and unrestricted flow of information between the bank, FIUs, and other financial institutions

Rely solely on the intelligence provided by government agencies through the PPP because they have the most comprehensive data on suspicious activities

Establish a clear framework within the PPP that outlines data privacy protections and ensures that information sharing complies with legal and regulatory requirements in all jurisdictions involved

Prioritize the bank’s internal data sources over external intelligence from PPPs, as internal data is easier to control and does not present data privacy challenges

The head office of a foreign legal entity which has a branch in the US does not need to comply with OFAC rules.

A foreign individual visiting the US for a short vacation is obligated to follow OFAC rules.

Nationals of the US must comply with OFAC rules, regardless of where they are located in the world.

Any foreign corporation is also penalized if it conducts transactions with sanctioned countries under OFAC rules.

A subsidiary of a legal entity of the US, which is formally registered in a foreign country, is exempt from OFAC rules.

Knowing the goods or services, if identified, do not match the profile of the company or the nature of the financial activity

All payments are in smaller amounts below reporting thresholds but are high when aggregated while still being consistent with standard business practices

A company regularly conducts large-volume transactions in a medium-risk jurisdiction with longstanding business partners and provides complete documentation and audit trails

Insufficient or no information is available to identify originators or beneficiaries of funds transfers through searches or direct inquiries

Payments have no stated purpose, do not reference goods or services, or only reference a contract or invoice number

evaluate and monitor compliance with the FATF standards and provide recommendations for improvement.

assist countries in implementing EU, UN, and regional sanctions regimes.

develop and promote international standards to prevent money laundering and terrorist financing.

conduct investigations on countries legislations and laws to prevent them from being used for money laundering and terrorist financing.

ensure that countries follow its laws to maintain financial stability.

Identifies AML/CFT risks without the need for human involvement

Reduces the need for human resources

Processes and analyzes large data sets more quickly and accurately

Increases auditability, accountability, and overall good governance

Consumer protection laws may intersect will) AML/CFT requirements when handling customer complaints or disputes, potentially affecting how FIs implement their compliance programs.

AML/CFT laws are the primary focus for FIs, and other regulations like data privacy and consumer protection may only indirectly influence their compliance obligations

Environmental, social, and governance (ESG) frameworks can influence a Fl's risk management strategies but are generally considered separate from core AML/CFT compliance requirements

Data privacy laws can restrict the sharing of customer information, while financial inclusion initiatives require FIs to avoid excessive de-risking that could exclude vulnerable populations.

Analyzing customer sentiment through feedback and surveys

Identifying individuals or entities linked to criminal activities or sanctions

Periodically monitoring regulatory updates and enforcement actions for associated entities

Scanning publicly available news articles and regulatory alerts

Monitoring changes in credit scores of individuals or entities

Information provided by a prospective customer

Photocopy of a copy of a government-issued identity document

Information obtained from an open-source database

Information obtained directly from a government-managed registry

Determining detailed risk profiles for customers based on their activities and relationships

Focusing monitoring primarily on previously flagged customers while using standard controls for others

Choosing and applying effective controls that align with the identified risk levels

Performing a comprehensive risk assessment to identify customer, transaction, and geographic risks

Allocating resources equally across all customer segments to ensure fairness

Understanding why a customer has selected a particular financial institution for banking

Verifying the identity of a customer with reputable online source documentation

Limiting the online activities of a new customer during the first two months

Understanding the nature and purpose behind a new business opening an account at the bank

Allowing clients lo transact anonymity-enhanced tokens

Onboardlng of clients who are residents abroad. Including those with politically exposed person (PEP) status

Enabling transfer of tokens from one blockchain to another

Offering services to VASPs established in jurisdictions that are not FATF compliant

Operating a network of crypto ATMs charging high fees

Lack of adequate IP address tracking capabilities

Increase the number of false positive alerts

Create unbiased scenarios during the machine training phase

Identify changes in customer behavior to more accurately assess risk

Generate customer risk scores to predict potential financial crime activity

Make copies of the customer's documents and submit the originals to the enforcement agency

Notify the customer being investigated before submitting documents

Keep the customer's accounts open at the enforcement agency's verbal request

Have the institution's assigned legal counsel review the subpoena

Paying premium several years in advance and terminating early for a refund

Natural persons having more than one insurance policy

High-premium life insurances that provide high payouts

Regularly switching policies and accepting penalties

Beneficiary payouts to elderly people

Fully rely on central beneficial owner registry records in the high-risk third country to determine the ultimate beneficial owners of all customers

Apply tailored due diligence measures, based on the level of risk posed by each customer following risk assessment

Monitor every cross-border transaction in real time, flagging all for enhanced scrutiny due to the country risk level

Automatically apply enhanced customer due diligence measures to all customers in the high-risk third-country branch regardless of risk level

Appointing individuals to serve in official capacities of the company

Annual maintenance services

Provision of a local business address

Company incorporation services

An external audit highlights several deficiencies

The company is merging with or acquiring another entity

Extensive AML legislation is proposed by a legislative body in the company's jurisdiction

A high-profile money laundering case involving another industry is publicized

helping to identify high-risk sectors that require enhanced due diligence (EDO),

eliminating the need for sectoral risk assessments within the organization

guiding the allocation of resources for mitigating financial crime risks

requiring all organizations to apply standardized measures

automatically reducing the organization's responsibility for conducting its own risk assessment

Make an official request directly from the head of Country A's anti-corruption authority to Country B's corresponding law enforcement authority

Make a request for the required evidence using Country A's mutual legal assistance treaty with Country B

Use the International Criminal Police Organization (INTERPOL) network to obtain the required evidence from Country B

Use the Egmont Secure Web to obtain the required evidence from Country B's financial intelligence unit

Establishing BSA/AML compliance staff reporting to the management of the business line in the first line of defense

Ensuring BSA/AML compliance staff is primarily outsourced

Providing BSA/AML compliance staff a reporting line to compliance or other second line of defense internal control function

Providing BSA/AML compliance staff with a reporting line to the chief financial officer

Generated results will still have to be assessed for the completeness and applicability of the identified rules

Training should focus on the rules used and not how the AI performs its function

Generated results are likely to be accurate and valid because of the large number of rules analyzed

AI may be ineffective because it cannot be trained to identify rules applicable to a specific bank

Trade-based

Check Kiting

Microstructuring

Structuring

Sponsoring the research and development of advanced technological surveillance tools to be used nationally

Prosecuting significant cases of money laundering or terrorist financing falling under national jurisdiction

Sharing real-time criminal intelligence gathered from national law enforcement agencies with the private sector

Serving as a national center for the collection and analysis of suspicious activity

Narrow the media sources to avoid unrelated articles

Rely on manual filtering by investigators

Increase the frequency of updates to media sources

Adjust AI/ML models to focus on high-risk keywords/phrases from reputable media sources

private banks agree that transparency of client beneficial ownership Is necessary and appropriate.

due diligence requirements tor private banking customers are necessary to prevent predicate offenses.

risk based approaches are insufficient to address the heightened risk presented through private banking

private banks need to better coordinate and align their global AML control environment strategies.

evidence that the increased residual risk arising from the change is within the bank's risk appetite.

approval by money-laundering reporting officer for the proposal.

how many resources are spent on the less productive lower threshold and the associated costs.

the number of cases that will not be filed and the resources that can be freed up for other tasks.

minutes of meeting held with the regulator where agreement was obtained that the higher threshold was justified.

historical analysis proving that the current scenario generates a disproportionate number of false positives.

The foreign bank will not allow indirect use of the correspondent bank accounts by Politically Exposed Persons (PEPs)

The jurisdictions in which the foreign bank maintains a physical presence

The foreign bank's operations will be limited to the country of incorporation

The ownership details of the foreign bank

The foreign bank will not allow indirect use of the correspondent bank accounts by shell banks

reputational risk.

the customers personal relationships.

the frequency of account activity

the Fl's policies and procedures.

the seriousness of the underlying conduct.

correspondence with law enforcement

the legal basis for closing the account.

simultaneous encryption and decryption for underlying data.

full access to underlying data with full and uninterrupted calculations made on the data.

secure processing of data while it remains encrypted.

transfer, decryption and storage of data by the data processor.

The institution has observed an increase in customer demand for large-denomination banknotes.

The institution maintains a sequentially numbered log of the monetary instruments it sells.

The institution has observed a reduced settlement time in the transaction services that support the rapid movement or remittance of funds.

The institution has observed an increase in the adoption of its digital products and services.

Surrendering a policy early to liquidate funds

Focusing excessively on the investment performance of an insurance product

Using a credit card to purchase an insurance policy

Using cryptocurrencies or other non-fiat currencies to fund an insurance policy

Using gaming accounts to transfer illicit funds between players undetected

Structuring transactions to avoid reporting thresholds by keeping them under certain limits

Providing false personal information to evade regulatory oversight

Ensuring identity verification is completed prior to the onboarding of new customers

Investing all gaming winnings into high-risk stocks to conceal funds

Prioritizing resources towards lower-risk areas to reduce workload

Regularly reassessing risks to adjust resource allocation

Allocating more resources to areas with higher financial crime risk

Providing equal resources to all departments to maintain consistency

Using a fixed resource allocation plan without adjustments

create a common database of key information and share analysis of suspicious activities with FATF

exchange strategic information between FlUs and obliged entities

exchange strategic information between financial institutions

exchange operational information between public authorities and obliged entities

Mandatory participation in all regulatory inspections

Mandatory attendance and review of alt financial crime trainings

Setting clear criteria for escalations to senior management

Setting tone from the top

It is subject to heightened regulatory obligations with strict reporting requirements to safeguard the financial system from illicit fund flows and ensure market stability

It invests in new technology and systems to ensure effective and timely detection of financial crime

It offers complex financial products, which can make it easier to obscure the source of funds

It is frequently engaged with high-risk jurisdictions, which can increase exposure to financial crime or weak regulatory oversight

It has high transaction volumes, making it difficult to identify suspicious activities and track the origin of funds

increased reputation risk.

inclusion on the UN Consolidated List.

civil and criminal penalties

delisting of public filing status.

Drafting detailed action plans for the audit team to execute to close the findings

Reperforming the testing for the controls mentioned in the findings to confirm the results of the audit

Defining remedial actions based on the findings' root cause analysis

Assigning responsibility for reviewing the action plan to the board of directors

A client frequently submits financial statements much earlier than required appearing overly eager

A client insists on using a personal bank account for business transactions despite being advised otherwise

A new client shows a preference for minimal direct interaction and relies primarily on indirect communication methods, citing convenience or time constraints

The client is a publicly listed company but very diversified

The ultimate beneficial ownership is unclear

The principal activities of the proposed company are importing and exporting new furniture

The prospective client presents confusing details about the proposed business and has very little knowledge about the proposed business activity

The prospective client is unable to provide information about the beneficial owners

The prospective client exhibits confidence when speaking to the accountant when providing personal details

The prospective client is able to provide source of funds and source of wealth documents

Forming a trust on behalf of a customer with a complex setup and acting as a nominee director

Auditing a firm that provides payroll software to large corporate customers

Preparing financial statements for a listed or a privately owned firm

Providing tax advice to an international customer hoping to move their assets out of their home country

Assisting an offshore corporation from a jurisdiction with no available beneficial owner information to buy property in the UK

The buyer is using high-value real estate transactions to obscure the origin of the funds.

The buyer is quickly diversifying their investment portfolio through structuring payments in order to take advantage of the liquidity of cash transactions in real estate.

The buyer is capitalizing on favorable market conditions and using cash purchases to outbid competitors in a competitive real estate market using insider information.

The buyer is a real estate developer acquiring multiple properties for a potential redevelopment project with a business partner located in a high-risk jurisdiction.

Advise further clarification is necessary, including which coins or tokens were sold and whether the crypto exchange conducts due diligence on its clients

Advise that the transaction should be stopped because cryptoassets in general are not regulated and by definition pose an unacceptable AML risk for the bank

Confirm to the advisor that the customer can proceed with the transaction if the client's KYC is up to date and a search on a public blockchain explorer does not provide any adverse media hits

Confirm to the advisor that the customer can proceed with the transaction because clients are already correctly onboarded KYC is complete and the source of funds is transparent

The preference of upper management regarding which teams should participate in the data-sharing initiative

The cost of the data-sharing system and whether it its within the existing IT budget

The potential return on investment (ROI) from the data shared versus the financial crime prevention effort

Ensuring that the shared data complies with applicable data protection regulations while maintaining the integrity and accuracy of the information

Annuity contracts

Permanent life insurance policies

Group insurance products

Cash-secured products

The beneficiary of the wire transfers is a foreign company whose shareholders and director are other companies

The wire transfers are for different amounts but with the same beneficiary

The beneficiary of the wire transfer is a resident of a grey-list country

The beneficiary of the wire transfers is a resident of a foreign country bearing the same family name as the business owner

Helping Financial Intelligence Units (FIUs) to analyze the suspicious activity reports (SARs)

Directly prosecuting money launderers in court

Providing financial assistance to governments to strengthen their anti-money laundering efforts

Raising awareness about the issue of money laundering and its consequences

Enhanced sanctions screening for traditional payment messages

Periodic manual review of blockchain-related transactions

Integration with blockchain analytics providers

Rule-based systems focusing only on known wallet addresses

Accounting

Model risk management

Technology solutions and IT security

Marketing

Fraud risk management

comparing these risks with industry benchmarks to determine the residual risk.

implementing new controls to eliminate all risks

rating the effectiveness of the related controls in order to calculate the residual risk.

documenting the historical risk incidents for future reference.

The European Commission and the High Representative issue a joint proposal for an import ban on refined oil products.

The European Commission and the High Representative issue a joint proposal for an import ban on oil extraction equipment

The Council of the European Union adopts a new export control regime for electronic equipment

The Council of the European Union adopts a new import restriction regime for goods coming from countries that do not respect human rights

have never worked in previous assignments within the AMUCFT departments.

have no involvement with the organization's AML/CP T compliance staff.

have been screened by the board of directors before the audit starts

be sufficiently trained in AML to be able to provide an independent review.

The EU AMLD and local AML regulations are separate and unrelated legal frameworks.

The EU AMLD and local AML regulations must have identical requirements.

Local AML regulations may impose additional or more stringent requirements than the EU AMLD.

The EU AMLD take precedence over local AML regulations.

Local AML laws and regulations override the requirements of the EU AMLD.

The EU AMLD provide a framework that member countries must implement through local AML regulations.

Restrict trade between countries that have robust AML/CFT and sanctions regulatory regimes and those that do not.

AFC (Anti-Financial Crime) and sanctions-related seminars, webinars, and training within these countries.

Enforcement and pecuniary fines against these countries.

Bilateral conversations and cooperation between governments.

triggers identifying static data changes and data based on client's behaviors in real time.

periodic refreshing at one-, three- and five-year cycles.

ability to prioritize better based on client data rather than driven by schedules alone.

classification of clients into categories of risk.

impose sanctions lo maintain of restore international peace and security

impose sanctions on countries that lack AML/CFT controls.

conduct research on and analyze the impacts of sanctions to improve the effectiveness of sanctions regimes.

impose sanctions on economic targets to maintain or restore financial stability within a country.

Open source information

Customer profile

Adverse media search

Account activity

Public organizations can belter understand what the private sector experiences and inform policy and the enactment of laws

Data-protection privacy policies provide an opportunity to develop information sharing protocols to prevent unauthorized access to information

Data-protection privacy policies prohibit the evolution of PPPs due to restrictions based on legacy government legislation

Small business owners can choose third-party providers or financial institutions to keep their private data safe which can easily be shared within a PPP

Incoming fund transfers from third-party payment processors, with limited originator information

Transactional activity with a registered virtual currency exchange

Large amounts of cash payments to migrant agricultural workers

Frequent payments for online advertisements or non-local classified ads

Accountants are not required to keep records of business relationships for more than two years

Drafting a customer acceptance policy can help accountants define customers outside their risk appetite

When determining transaction and service risk, the jurisdiction where the accountant provides the service is not important

Due to their small size and limited resources, accountants are allowed to organize AML/CFT risk only as customer risk or transaction/service risk

Due to the nature of services accountants provide, automated transaction monitoring systems used by financial institutions may not be appropriate

An FI must demonstrate that the risks identified in its AML/CFT risk assessment are aligned with the NRA and sectoral risk assessments and that these risks are managed effectively

If a sectoral risk assessment is published, the FI must implement it directly across all subsidiaries and branches without modification

An FI’s AML/CFT risk assessment must be written and approved by the board of directors exactly as specified in the NRA and sectoral risk assessment

An FI must strictly adopt the exact risk factors, weightings, and methodologies from the NRA and sectoral risk assessment without adjustment

Extended AML oversight to crowdfunding platforms and professional football clubs

Eliminated the requirement for the European Commission to conduct a risk assessment

Created a central EU watchdog to combat money laundering

Strengthened provisions relating to the accuracy of data submitted to central beneficial ownership registries

The Financial Action Task Force (FATF)

The AUSTRAC Fintel Alliance

The Egmont Group

The Wolfsberg Group

Tailor training and offer regular training to all employees

Train outside of daily operations and promote awareness of Compliance

Train core AML topics once per year, at a minimum, to relevant employees

Use a variety of training methods and provide necessary resources to employees

Communicate regularly and measure effectiveness of training

Management structure

Governance framework

Asset structure

Origin of the funds

FATF, MONEYVAL, and other regional bodies acting as a contact point for FIUs

The Wolfsberg Group serving as a communication platform for FIUs

Memoranda of Understanding (MOUs) between FIUs establishing structured information sharing

Mutual Legal Assistance Treaties (MLATs) allowing FIUs to request arrests and evidence

provide the information available to them because the exchange is between two FlUs that are members of the Egmont Group, and the formal request was made using secure communication channels.

provide the requested information only if a memorandum of understanding (MoU) is signed between Country A and Country

direct the FIU of Country A to the Fl where the account was opened for further information.

deny the request if the FIU of Country B has not received a suspicious activity report (SAR) from the Fl where the account was opened.

Purpose and intended use

Liquidity

Age of the beneficiary

Customer anonymity or third-party transactions

Length of waiting period

Determining whether the potential suspicious activity is consistent with the customer's transactional behavior, nature of business, and occupation

Contacting the country's financial intelligence unit's (FIU's) officers to seek advice on whether the potential suspicious activity is indeed a suspicious activity

Gathering and assessing internal sources of information, including information obtained from the customer, transactions, and value and volume

Identifying and reviewing external information, including online presence, customer-related entities, and relevant media

integrates seamlessly with existing systems and processes.

meets budget and cost requirements.

automates all regulatory reporting requirements.

replaces manual compliance training for employees.

The law firm is avoiding fees by minimizing documentation for clients in high-risk jurisdictions

The law firm is engaging in aggressive tax planning to help the client avoid legal taxes

The law firm is providing routine legal services that include creating complex legal structures, and no further scrutiny is required

The law firm is acting as a gatekeeper, facilitating the movement and concealment of illicit funds through complex corporate structures

Concealing sources of funds

Allowing for third-party custody safekeeping of funds

Adding a layer of anonymity to transactions

Concealing true legal and beneficial owners

Establishing escrow accounts for real estate transactions

Implementation of a blacklist of correspondent customers with previously detected and investigated suspicious activity

Enhancement of a customer acceptance policy to more clearly identify high-risk customers

Increased frequency of training provided to front office employees

Enhancement of customer identification procedures to appropriately identify trust, nominee, and fiduciary accounts

up to date and reflects all relevant regulatory developments

signed off by the board of directors and regulators

approved by the clients and third parties

clearly communicated and understood by staff

Gatekeepers have specialized knowledge that can be abused to facilitate the movement of illicit funds and conceal the Involvement of their clients in illicit schemes.

Gatekeeper positions ate of a secretive nature, often making it difficult to verify (heir source of wealth.

Gatekeepers have unique relationship structures, making it difficult to determine beneficial ownership

Gatekeepers are entrusted with prominent functions and code of conduct that can assist laundering Illicit funds.

Adverse media databases

Publicly available information on non-government data repositories

Credit reference agencies

Beneficial ownership registers available in country of incorporation of entity

The 40 Recommendations have not been updated to reflect the impact of new technology

Each jurisdiction can reach out to the FATF for private access to the interpretive notes to the 40 Recommendations

The 11 Immediate Outcomes are recommendations specific to high-risk jurisdictions requiring enhanced monitoring.

The cornerstone of the 40 Recommendations is the adoption of a risk-based approach by each jurisdiction

Relying on each jurisdiction’s existing legal frameworks and informal communication channels

Engaging a third-party consulting firm to mediate between the regulatory authorities and law enforcement agencies in different jurisdictions

Centralizing the investigation under the jurisdiction with the most stringent AML laws to streamline the process and reduce the complexity of multi-jurisdictional coordination

Establishing a Mutual Legal Assistance Treaty (MLAT)

Make a note in the customer's account that the customer's gambling activities are frequently conducted below the reporting limit

Follow internal reporting procedures to escalate the activity as suspicious and report to appropriate authorities

Inform the customer their activity Is suspicious and request an explanation

Contact law enforcement to launch an Investigation into the customer's financial activities

The customer is the object of a civil subpoena.

The customer uses a shipping company dealing with specially designated nationals.

The account shows periodic fixed amount remittances for tuition fees.

The account has transactions that triggered multiple suspicious activity reports.

Some MSBs provide bureau de change services to retail customers after they complete a due diligence process.

Some MSBs process large, individual cash transactions on behalf of customers.

Some MSBs allow regular and frequent transactions to the same family members based in another country

Some MSBs process small remittance payments on behalf of workers based abroad sending money home.

The Organisation for Economic Co-operation and Development (OECD)

The Egmont Group

The Wolfsberg Group

The International Monetary Fund (IMF)

Ensure the jurisdiction risks and other relevant factors have been taken into consideration in the EWRA and the residual risks are within the corporation's risk appetite

Partnering with established local businesses to leverage their knowledge and connections while sharing risks

Ensuring the company has strong ties with local government officials to influence policy and avoid negative scrutiny

Committing to open communication, ethical practices, and community engagement to build trust with stakeholders

Minimizing the company's direct presence in the country to reduce exposure to potential risks

Ongoing monitoring

Risk assessment

Policies and procedures

Suspicious activity reporting

Customer due diligence

Performing a comprehensive risk assessment to identify customer, transaction, and geographic risks

Focusing monitoring primarily on previously flagged customers while using standard controls for others

Choosing and applying effective controls that align with the identified risk levels

Determining detailed risk profiles for customers based on their activities and relationships

Allocating resources equally across all customer segments to ensure fairness

Training should cover practical examples, use case studies, and provide information on how to comply with policies.

Up-to-date records including logs of training and completion dates should be maintained.

Training should be broad, high level, and not role-specific in order to reach the largest audience.

Training should cover the consequences of not complying with policies and procedures.

Training should always be provided by an independent third party.

A check returning a mortgage overpayment made in error

A payment made to a mixer platform

A regular standing order to a high-interest savings account

A bill payment made to a friend after splitting a dinner bill

Regulation (EU) 2024/1624 of the European Parliament

Collaborative Sharing of Money Laundering/Terrorism Financing (ML/TF) Information & Cases (COSMIC)

USA Patriot Act Section 314(a)

USA Patriot Act Section 314(b)

Developing a culture of compliance

Improving governance in the public sector by requesting feedback from financial institutions

Reducing transaction monitoring false positives for all financial institutions

Improving the quality and quantity of data available for analysis by sharing information

Setting tone from the top

Mandatory participation in all regulatory inspections

Mandatory attendance and review of all financial crime trainings

Setting clear criteria for escalations to senior management

A lawyer located in a higher risk country deposits their firm's bank draft issued from their trust account to another lawyer's trust account located in a low-risk country for legal services rendered.

A lawyer's trust account regularly receives wire transfers from unknown remitters from a higher risk country and immediately transfers the same amount of funds received to a known beneficiary's account in a low-risk country.

A lawyer's trust account receives a large-value wire transfer from a regulated insurance company and immediately transfers the same amount of funds received to the beneficiary's bank account located in a low-risk country.

A lawyer's trust account receives a large wire transfer deposit from a client that wanted to purchase a piece of property and then transfers the same amount to the property seller's lawyer's trust account.

Disseminate analysis of suspicious transaction and suspicious activity reports to foreign judicial systems to enhance their anti-money laundering and terrorist financing investigations and prosecutions

Receive reports of suspicious transactions and suspicious activities from reporting institutions or obliged institutions

Disseminate the analysis of suspicious transaction and suspicious activity reports to local law enforcement agencies and foreign FIUs to combat money laundering

Investigate and where appropriate prosecute all suspicious transaction and suspicious activity reports received from reporting institutions or obliged institutions

Analyze all suspicious transaction and suspicious activity reports received from reporting institutions or obliged institutions

Trade-based money laundering

Corruption

Illicit resource trade

Environmental crime

Be consistent with the head office audits

Be tailored to the higher of standards between the jurisdictions.

Conform to the foreign jurisdiction policies to align with the head office policies.

Provide all foreign jurisdiction reports to the head office for approval.

Accountants can prepare ledgers and spreadsheets, draft annual returns and make payments to government offices

Accountants can advise on the structuring of companies as well as ensure compliance with local tax regulations

Accountants are knowledgeable about financial management, including what to record over the course of the accounting year

Accountants are able to create and structure companies, falsify accounts and manipulate financial statements

Supporting company liquidity and ease of exit strategies

Providing anonymity for the beneficial owner by keeping their identity hidden from the public register

Simplifying administrative tasks associated with shareholding

Helping non-residents comply with local ownership laws

Investment advisor

Relationship manager

Operations manager

Compliance officer