nn n n Definition of payable through accounts (PTA)nn Pro Tip: The below key points is an extraction of recently examined core concepts in CAMS examination. We highlighted below key points to encourage candidate to pay special attention to it. Please note, the below key study note do not cover all concepts and materials, you are always encouraged to study the official ACAMS study material and leverage our practice questions to study.
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Transactions such as wire, withdrawing deposits through respondent bank correspondent account without first clearing in the respondent bank.
Major difference:- Foreign clients can control their funds in correspondent bank
n n n What is structuring and smurfingnSmurfing is a common technique involved in structuring.
Structuring is to breaking down into small amount to evade triggering a report or record keeping requirements.
n n n Electronic transfer is often used in which stage?nSecond stage, for layering stage and movement of funds from one place to another.
n n n What is the requirement to operate MSB in the United States?nWritten AML policies, procedures and internal controls
Appointment of Bank Secrecy Act (BSA) officer
Education and training
Independent reviews and audits
Transaction monitoring
n n n Credit cards usually used in which stagesnLayer and Integration because credit cards do not offer cash arrangement
n n n Risks related to securities broker-dealersnOpportunities for criminals for engagement in ML and terrorist financing anonymously.
Usually very little currency is involved.
n n n Casino usually used in what stages of ML?nPlacement and layering stage
n n n How travel agents conduct ML process?nStructuring of wire transfer
Establishment of tour operator networks and false booking and documentation
Refund on expensive airline ticket
n n n Why is correspondent banking a high risk activity?nThey operate on behalf of customers of another institution and do not have first-hand info
They process large volumes of transactions
From various international sources:
Criminal and judicial, securities and exchanges.
Worldwide lists, political exposure, negative news and making due diligence directly in front line.
n n n What do FATF and FSRB do together?nPublish periodic typology reports to monitor changes and understand the mechanisms of ML and TF.
Certain that FATF 40 recommendations remain effective and relevant.
n n n Institutions boards of directors or senior officer need to certify in how frequent?nAnnual certification
n n n Problem of MLnIncreased exposure to organized crime and corruption
Causes the economic instability due to mis-allocation of resources
Weakening the financial institutions
Dampening the effect on foreign investments
Loss of control on economic policy
Reputation risk for the country
Concentration of risk on some individual banks or FI
n n n Credit Union operations and characteristicsnBest defined as a trade association for credit unions, owned by its own members.
Have to purchase credit in advance
Do no participate in trade based financing
Do no participate in correspondent banking relationships
Do no participate in large corporate relationships, e.g. international banking
Appointed BSA officer
Performing CDD
Transaction monitoring
Training and independent audit
n n n Examples of placementnPlacing illegal cash to locally owned restaurant
Foreign exchange
Breaking up amounts
Currency smuggling
Loans repayment
n n n The focus on Yates MemonProsecutors should focus on individuals who perpetrated the wrongdoing
n n n Focus on final rules for senior managers regimenGave explicit responsibility to a senior manager, such as arrangement of MLRO
n n n Palermo convention defines money laundering asnKnowing its derived form a criminal offense and its from participation in a crime
n n n What makes insurance companies high risknTransacted through intermediaries such as agents or independent brokers.
Can be arranged in cross-border easily.
Decentralized oversight
Sales-driven objectives
Uses it to hide the true operating persons
And used to facilitate violations of sanctions requirement
Fraud
An agreement among countries allowing for mutual assistance in legal proceedings and access
to documents and witnesses and other legal and judicial resources in the respective countries, in
private sectors, for use in official investigations and prosecutions.
Mutual legal assistance treaties
Supervisory agencies for information exchange
FIUs for information exchange
n n n The five group of the Egmont groupnMemories: “ITOOL”
IT
TRAINING
OPERATIONAL
OUTREACH
LEGAL
n n n Name all the FATF 40 recommendations group namesnThe Financial Action Task Force (FATF) has developed a set of 40 recommendations that serve as international standards for combating money laundering and terrorist financing. The recommendations are organized into several groups. Here are the group names for the FATF 40 recommendations:
Group 1: Legal Systems and Operational Issues
Group 2: Preventive Measures – Financial Institutions
Group 3: Preventive Measures – Non-Financial Businesses and Professions
Group 4: Preventive Measures – Legal Professionals
Group 5: Preventive Measures – Regulators and Supervisors
Group 6: Financial Intelligence Units and their Functions
Group 7: Transparency and Beneficial Ownership of Legal Persons
Group 8: Non-Profit Organizations
Group 9: Financial Institutions’ Powers and Responsibilities
Group 10: Customer Due Diligence (CDD) and Record-Keeping
Group 11: Reporting of Suspicious Transactions
Group 12: Politically Exposed Persons (PEPs)
Group 13: Correspondent Banking and Wire Transfers
Group 14: Money or Value Transfer Services
Group 15: New Technologies and Money Laundering/Terrorist Financing
Group 16: Cash Couriers
Group 17: Statistics and the Financing of Terrorism
Group 18: Internal Controls and Foreign Branches and Subsidiaries
Group 19: Higher-Risk Countries
Group 20: Reporting of Unusual Transactions
Group 21: Tipping-Off and Confidentiality
Group 22: Investigation and Prosecution
Group 23: Mutual Legal Assistance
Group 24: Extradition
Group 25: Other Forms of International Cooperation
Group 26: Freezing and Confiscation
Group 27: Role of Financial Intelligence Units (FIUs)
Group 28: Powers of Competent Authorities and Other Institutional Measures
Group 29: Financial Investigations Guidance
Group 30: Sanctions and Other Forms of Intervention
Group 31: National Cooperation and Coordination
Group 32: International Cooperation
Group 33: Technical Assistance and Training
Group 34: Guidance and Feedback
Group 35: Assessing Compliance with the FATF Recommendations and the Effectiveness of AML/CFT Systems
Group 36: Money Laundering and Terrorist Financing Risks and Vulnerabilities Associated with Cryptocurrencies
Group 37: Countering the Financing of Proliferation
Group 38: Mutual Evaluations
Group 39: Criminal Justice Measures and Tools
Group 40: Other Relevant Measures
These group names represent the various areas covered by the FATF 40 recommendations, with each group addressing specific aspects of anti-money laundering and counter-terrorist financing measures.
n n n What is nestingnThe banks offering correspondent facilities to respondent bank and they further offer facilities to other institutions.
n n n Which law requires the US dealers of jewels, stones, precious metals to have AML program?nThe USA Patriot Act
n n n Examples of IntegrationnRe-entry of funds into economy that seems to be normal business:
Purchase of property
Purchase of artwork, jewelry
Financial arrangement for investments
n n n Should filing of STR decision be centralized or decentralizednThe decision on whether the filing of Suspicious Transaction Reports (STRs) should be centralized or decentralized depends on several factors and considerations. Both approaches have their own advantages and disadvantages, and the choice may vary based on the specific context and requirements of the organization or jurisdiction in question. Let’s explore each approach in detail:
Centralized Filing:
In a centralized filing system, all STRs are submitted to and managed by a single central authority or entity. Here are some potential benefits of this approach:a. Consistency and Standardization: Centralizing the filing process ensures that all STRs are subject to the same standards, guidelines, and scrutiny. This can lead to greater consistency in reporting and facilitate the application of uniform anti-money laundering (AML) measures.
b. Expertise and Specialization: Centralized units can develop specialized expertise in analyzing and investigating suspicious transactions. This concentration of knowledge and resources can enhance the effectiveness and efficiency of the AML efforts.
c. Collaboration and Information Sharing: A centralized system can foster collaboration and information sharing among different reporting entities, enabling the identification of patterns, trends, and potential connections across multiple reports.
d. Oversight and Quality Control: Centralization allows for better oversight and quality control of the reporting process. It facilitates monitoring, audits, and the implementation of corrective measures, ensuring the accuracy and completeness of the filed reports.
However, there are also potential drawbacks to a centralized filing system:
a. Bottlenecks and Delays: A centralized authority may struggle to handle a large volume of reports, potentially leading to bottlenecks and delays in processing and responding to STRs. This could hinder timely action against suspected money laundering activities.
b. Lack of Local Context: Centralized units might lack the local knowledge and context required to fully understand the implications of certain transactions. This could result in the potential misinterpretation or underestimation of suspicious activities.
c. Increased Vulnerability: A centralized repository of STRs could become a prime target for cyberattacks or unauthorized access, potentially compromising the confidentiality and integrity of sensitive information.
Decentralized Filing:
In a decentralized filing system, reporting entities submit STRs directly to their respective regulatory or supervisory authorities, without a centralized intermediary. Here are some potential advantages of this approach:a. Local Expertise: Decentralization allows reporting entities to leverage their specific industry knowledge and expertise when identifying and reporting suspicious transactions. This can enhance the accuracy and relevance of the filed reports.
b. Prompt Action: By eliminating the need for central processing, decentralized systems may enable faster response times and more immediate action against suspected money laundering activities.
c. Flexibility: Decentralized approaches can accommodate variations in reporting requirements and formats, tailoring the process to the specific needs and capabilities of different reporting entities.
However, there are also potential challenges associated with decentralized filing:
a. Inconsistency and Fragmentation: Without centralized oversight, the quality and consistency of STRs may vary across different reporting entities. This could hinder the ability to identify broader patterns and connections.
b. Coordination and Information Sharing: In a decentralized system, ensuring effective coordination and information sharing among multiple reporting entities becomes crucial. Mechanisms need to be in place to facilitate collaboration and the exchange of insights.
c. Resource Allocation: Decentralization may require significant resources and capacities at each reporting entity’s level to handle the filing process, including staff training, technological infrastructure, and ongoing support.
In summary, the decision of whether to centralize or decentralize the filing of STRs depends on factors such as the size and complexity of the jurisdiction or organization, the need for consistency and standardization, the availability of resources, and the importance of local expertise. Striking the right balance between centralized and decentralized elements, such as establishing a centralized repository for information sharing while allowing decentralized reporting, could be a viable option in certain cases. Ultimately, the chosen approach should prioritize the efficient detection and prevention of money laundering activities while considering the specific needs and capabilities of the stakeholders involved.
n n n Examples of layeringnConverting proceeds of crime to another form and making complex layers:
TT movement
Movement within same accounts
Converting cash into monetary instruments
Reselling goods
Purchase of property
Purchase of stocks, bonds or life insurance
Use of shell companies to hide the UBO
n n n What is down trading in vehicle businessnTrading of his expensive cars to a lower model and request to be paid in the difference by checks.
n n n what function is mostly used for potential ML via lawyers, notaries and accountants?ncreating and managing corporate vehicles or other complex legal arrangements, e.g. trust
buying or selling property
uses of professionals to perform various financial operations
undertaking certain litigation
setting up and managing a charity
n n n What is Omnibus accountsnaccounts that is held under one futures commission merchant (FCM) for another.
Their identities are unknown to the holding FCM.
n n n What is the definition and operation of reverse flip in real estate MLnThe money launderer finds a seller that agrees to sell if for under the values and then settle the payment under the table.
The launderer then hold it for a while and resell it in a market price and gain legitimate values
n n n What is the characteristic of ML in real estatenNot complicated compare to other ML method
Can be purchased in cash
UBO can be disguised
Uses of loans and mortgages as a cover for laundering
Uses of rental income to legitimize illicit funds
n n n Explains the cycle of black market peso exchangenMoney in the United States derived from illegal activity is purchased by Colombian peso
brokers and deposited in US bank accounts that the brokers have established. The brokers sell
checks and wire transfers drawn on those accounts to legitimate businesses, which use them to
purchase goods and services in the US.
The peso broker exchange the USD using columbian pesos.
The brokers places the USD in their banking system
The broker offers he USD to a columbian importer for exchange for columbian pesos
n n n Difference of TF and MLnThe origin of the funds. TF uses funds for an illegal political purpose but the money is not necessarily derived from illicit proceeds.