AMLCA Quiz 24

The source of reference for financial institutions in making their risk ratings is from The OFAC, The European Union, HM Treasury, United Nations Security Council, CIA Factbook, FATF 40 Recommendations and the Mutual Evaluation reports, Transparency International and The Wolfsberg Group, Country Risk Frequently Asked Questions.

In November 2019 FinCen published “Advisory on the Financial Action Task Force-Identified Jurisdictions with Anti-Money Laundering and Combating the Financing of Terrorism Deficiencies and Relevant Actions by the United States Government.”

Funding cycle revolves around raise, store, move, use.

The three basic levels of terrorist organization are, first, headquarters, where the core organization has a defined leadership structure, regional franchises of the core organization have leadership structures which may or may not be directly aligned with the core organization and the grassroots operatives, likely inspired by, or led by, the regional franchises or the core organization.

Examples of correct funding flows are from the point of origin to a terrorist organization, from the organization to a specific operation, and to the individual operative.

The effectiveness of an AML/CTF and sanctions screening program is based on data integrity. Following its elements, such as accuracy, completeness, timeliness and authorized.

It is annually recommended to update the risk process assessment, but it is best when a merger or an acquisition is being considered and all the products of the combined financial institution have a consistent risk rating, a new financial product or service is being launched and lastly, an existing product or service is being launched in a new jurisdiction.

“The countries included in FATF improving global AML/CFT compliance process are Bahamas, Botswana, Cambodia, Ghana, Pakistan, Panama, Syria, Trinidad and Tobago, and Yemen.”

The Low Inherent Risks is no exposure to high-risk jurisdictions, normal retail domestic products such as checking and savings accounts, stable domestic customer base without significant growth and face to face contact at account opening for new customers.

The control technique documentation is as follows, being improving, stable, or decreasing with the supporting evidence.

The risk assessment document will contain the red, amber and green (RAG) ratings at the enterprise and the front line unit levels for customers, products, countries and delivery channels for the current and previous years

The following statements shall be included as a commentary in risk assessment documents: reasons supporting each of the risk ratings; the direction of the residual risk; changes in the control environment since the previous risk assessment; and changes in the risk assessment methodology.

Terrorist funding has the following characteristics, funding requirements, funding sources, and funding mechanisms.

Wolfsberg Anti-Bribery and Corruption (ABC) Compliance Programme Guidance indicate bribery as:
“…involving the offer, promise, request, acceptance or transfer of anything of value either directly or indirectly to or by an individual, in order to improperly induce, influence, or reward the performance of a function or an activity.”

In Data Integrity , the process which is extremely significant to the accuracy of the data submitted for transaction monitoring and sanctions screening is referred to as “data mapping”.

FATF REPORT Emerging Terrorist Financing Risks was published in October 2015 and it discusses the following key concepts: threat, vulnerability and consequence.

Some of the elements for Anti-Bribery and Corruption (ABC) program are governance, firm-wide policy, a controlled environment, and customer-related corruption risks

It is the Global AML/CTF Policy that should be a high-level summary defining all the major components of the AML/CTF compliance program.

The major components of the AML/CTF compliance program are risk assessment, transaction monitoring, suspicious activity reporting, currency transaction reporting, independent testing, training, and sanctions.

The process that is effective in helping a financial institution identify any potential vulnerability and reducing its risk down to an acceptable level of AML/CTF residual risk is by effectively monitoring customer transaction data.

Its purpose is to process the transaction data of the customers in order to identify patterns of financial activity that are either potentially suspicious, because they may be indicative of a predicate crime, or unusual in the context of that customer.

The term typologies refer to the individual sections of program code in the transaction monitoring application that executes against the transaction data of the customers of the financial institution.

In confirming the validity of the typology thresholds and reduce the volume of false-positive alerts, the testing has to establish that the number of false negatives is not significant.

The approach is called as testing Below The Line (BTL).

It focuses on the monitoring of customer transactions and interactions, which include but are not limited to: deposits, transfers, and withdrawals of money.

The committee is responsible for managing the global standards and guidelines for the transaction monitoring component of the AML/CTF Compliance program of the financial institution. It ensures that the transaction monitoring program is globally consistent, effective and sustainable as it regards typology, maintenance and tuning.

The terms used are false positive and false negatives.

The false-negative threshold value are alerts that are not generated, but perhaps should have been because they are likely to be indicative of potentially suspicious activity. It may occur because the thresholds are too high.

The Quantitative analysts use their knowledge, research and analysis of past history in order to recommend a threshold that captures the majority of relevant alerts while attempting to minimize the number of false positives to be investigated.

The typologies are considered for decommissioning.