AMLCA Quiz 23

UK Bribery Act of 2010
It says that the company is liable for corrupt acts committed by persons acting on behalf of the company and that it prohibits bribery of public officials and business-to-business bribery.

In 6AMLD the EU, it is stated that ‘Criminal activity’ means any kind of criminal involvement in the commission of any offense punishable, in accordance with national law, by deprivation of liberty or a detention order for a maximum of more than one year.

The three purposes are criminal activity, property, and legal person.

Compliance scope
PSD2 compliance scope are uniform requirements for the security of electronic payments, the abolition of additional charges claimed for card payments and clear rules for dealing with disputes and less responsibility for the customer in case of fraud.

“The other business processes that are related to the implementation of the AML/CTF risk governance framework are transaction monitoring, sanction screening investigation, alert management, model risk management, currency transaction governance, and rapid response team.”

For Risk Management, a policy is a high-level statement of intent defining the scope of coverage, identifying areas that are included and those which are explicitly excluded which are governed by the risk appetite statement.

A strategic plan will set forth the future direction of the financial institution in all aspects and appropriately consider the risk implications of each initiative. An initiative should be designed ultimately to either increase or maintain existing revenue directly or indirectly.

Treat strategy is used for a risk that can be treated with insurance or disclaimers; however, this is not an acceptable strategy for AML/CTF risks.

In financial institutions change is a constant factor, it can be at a horizontal level such as new front line units being created to address a market need and at a vertical level where a new product is being introduced into an existing market.

The record retention requirements includes currency transaction reports, suspicious activity reports, wire transfer records, PATRIOT Act Section 314(a) and 314(b) requests, special measures, national security letters, and exempt person designation.

The local managers or supervisors are responsible for quality control steps and are intended not only to immediately correct any issues that are identified during the execution of the transaction but also provide a commentary on the integrity of the operation.

Analytics uses data to identify trends and their effect on previous decisions and evaluate performance.

Transaction monitoring can include the number of alerts generated analyzed by front line units, number of alerts raised to case analyzed by front line units, the average time to review each alert and Backlog of alert review.

Sanctions screening could include the number of customer records processed analyzed by front line units, number of payment records processed analyzed by front line units, number of positive matches analyzed by front line units, number of false matches analyzed by front line units and changes to the “black” and “white” lists.

The average time of investigation could be included in the Case Management and Suspicious Activity Report filings.

Compliance scope:
PSD2 has compliance scope about transparent communication for customers regarding current account charges namely, uniform requirements for the security of electronic payments, the abolition of additional charges claimed for card payments and clear rules for dealing with disputes and less responsibility for the customer in case of fraud.

The PSD2 was implemented to solve or enhance a series of issues on the EU payment market.

The following components which comprise the development of a risk-based approach to the development of an AML/CTF are identifying and measuring risk, developing applicable policies, procedures, systems, and controls; risk-based BSA compliance program.

Combination risk includes client risk, country risk, and product risk.

The first step is to make a complete inventory of the financial institution with a focus on AML and CTF.

The KYC Committee uses the feedback loop in their meetings to provide information about customer types including, the number of recent alerts generated and STRs filed.

It states that countries should take measures to prevent the misuse of legal persons for money laundering or terrorist financing. It should ensure that there is adequate, accurate and timely information on the beneficial ownership and control of legal persons that can be obtained or accessed in a timely fashion by competent authorities.

If a financial institution is involved in a real estate transaction, it should be aware of the FinCen Geographic Targeting Order (GTO), requiring title insurance companies to collect and report the information about the natural persons behind certain residential real estate transactions, over different values, and in its jurisdictions.

One example of a case of remote deposit capture is a commercial company customer, it would typically include a hardware device that is used to read and transmit the check images making up the deposit. The security lies in the identification of the device and the transmission protocols.

It directly or indirectly affects inherent risk factors, one good example is a significant strategy and operational changes, such as the introduction of a major new product, or service, a merger or an acquisition, opening in a new location or closing an entity that may affect the inherent risk.

Some of the main qualitative risk factors are client base stability, integration of IT systems, expected account/client growth and expected revenue growth and last, recent AML compliance employee turnover.

Inherent risk ratings are the level of risk before any controls are applied to that customer, product, country or delivery channel.

Some of the high inherent risks are crossing the border or international wire transfers, private banking services, and trade finance.

The residual risk calculation is 100%(inherent risk) minus(-) 60% of control effectiveness equals residual risk.

The high residual risk will happen when the controls are rated as ineffective whatever the inherent risk rating. It is high and the controls are effective.