CAMS Chapter 2 Key Notes

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n 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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n What is the major objectives for FATF?n

Set standards and promote the effectiveness of implementation of legal and regulatory

n Things that FATF will do to fulfills objectivesn

Spreading the AML message worldwide

Monitoring implementation of the FATF recommendations among its members

Evaluates the specific requirements of the FATF recommendations

n Name the three outcomes that represent major thematic goals of AML CFT measuresn

Policy, cooperation and coordination to mitigate ML and TF

Prevention of proceeds of crime

Detection and disruption of ML/TF threats

n Name the three major focus of FATFn

Standard settings

Ensuring effective compliance with the standards

Identifying ML and terrorist financing threats

n Areas that FATF includes in its 40 recommendationsn

Uses of risk based approach

PEPs

Tax crimes is included in the scope of designated categories

n When should enhanced due diligence is required?n

Handling of PEPs

Cross border correspondent banking

Money or value transfer services (MVTS)

New technologies and new products

n What is the requirement to become a FATF member?n

Has to be strategically important

Size of GDP

Population

Size of banking, insurance and securities sectors

Participation in FSRB

Level of AML CFT risks faced

Where it can help to enhance geographic balance

Agree to undergo mutual evaluation during the membership process

Within a maximum of three years after being invited, to conduct mutual evaluation

n What is the ultimate goal of non-cooperative countries and territories (NCCTs)?n

Loopholes in financial regulations

Obstacles raised by other regulatory requirements

Obstacles to international cooperation

Inadequate resources for preventing and detecting ML activities

Goal:

Reduce the vulnerability of the financial system to ML to ensure that the measure for the prevention, detection and punishment of ML according to internationally recognized standards.

n The goal of basel committee on banking supervisionn

To set global standard-setter for the prudential regulation of banks and provides a forum for cooperation on banking supervisory matters

n What are the four key elements of a KYC programn

Customer identification

Risk management

Customer acceptance

Monitoring

n Name clients that are inherently with higher riskn

Trust, nominee and fiduciary accounts

Corporate vehicles

Introduced businesses

Politically exposed persons

Non-face to face customers

Correspondent banking

Accounts opened by professional intermediaries

Mutual funds

Pension funds

Money funds

n The correct practices that bank should do for training and to their employeen

Take appropriate action against officers who fail to follow KYC procedures

Regularly monitor staff performance and adherence to KYC procedures

Arrange bank wide employee training

Use standard identification procedures for non face to face customers

Develop clear and concise descriptions of who is the acceptable customer

n Name three lines of defensen

1st: Line of business

2nd: Compliance and internal control functions (Contact point for internal and external authorities and responsible for reporting suspicious transactions).

3rd: Internal audit

n Describe EU first directiven

Require member states to achieve its directives even if required to amend national law

Require members to enact legislation to prevent their financial systems for used as ML

EU have the force of law even without the approval of the national parliaments of the various member states

EU law prevails over national law in the case of directives

EU law only applies to EU member states and not the other countries

n Describe EU second directiven

Much more stricter ML controls across the continent

Knowledge of criminal conduct can be inferred from objective factual circumstances

More precise of ML that knowing ( knowledge ) that it is derived from criminal activity or from participation in that activity.

Require report to authorities any fact that might indicate ML, including auditors, external accountants, tax advisers, real estate agents, notaries and legal professionals.

n Describe EU third directiven

Defined ML and TF as separate crimes

Expanded the customer identification and suspicious activity reporting to trusts, company service providers, life insurance, dealers of more than EUR15k.

Protected employees who report suspicions of ML or TF. Prevent their employee from being threatened.

Defined UBO as more than 25% of ownership.

Close associates of PEP is publicly known or when the FI suspects there is a relationship

PEP should not be considered as a PEP after one year not being in a prominent position

n Describe EU fourth directiven

Threshold for reporting lowered to EUR10k.

CDD for transfer of funds over EUR1k

PEP member are now equals to close associates

Submit the findings of the risk assessment of ML and TF every two years

Penalties are at least EUR5m or 10% of the total annual turnover for entities.

n What is the definition of PEPn

Close associates must be identified only when their relationship with a PEP is publicly known or
when the institution suspects there is a relationship

n Relationship between FSRB and FATFn

1. FSRB plays a role for identifying and addressing AML CFT technical assistance needs
2. Autonomy – They are free standing organization and share the common goals of combating money laundering
3. Reciprocity, operate on the basis of mutual or joint or common recognition of their work

FSRB and FATF shares a lot of same members.

n The key points related to APG (Asia Pacific Group)n

APG is voluntary and cooperative in nature

APG and FATF have reciprocal rights of attendance

APG encourages jurisdictions to implement AML CFT initiatives with more effective mutual legal assistance

n Describe committee of experts on the evaluation of AML measuresn

MONEYVAL is an associate member of FATF and is established for mutual assessment exercises of the AML measures.

n Describe the EURASIAN group of combating ML and TFn

The EAG group is founded for member that is not currently FSRB.

Mainly to:

Based on FATF recommendations, conduct mutual evaluations of members

Coordinating international cooperation and technical assistance programs

Analyzing ML and TF trends

n Describe the Egmont group and its key functionsn

Expanding and systematizing cooperation in the reciprocal exchange of information

Increase effectiveness of FIU via training and promoting personnel exchanges

Five sub groups: ( ITOOL )

IT, Training, Operational, Outreach, Legal

n Things to consider when conducting due diligencen

Geographic risk

Ownership and management structure of the correspondent banking client

Clients products and services

Clients AML controls

Visits to the clients business

Clients dealings with shell banks

n US due diligence program must be in which three principles?n

Appropriate

Specific

Risk-based

n Regarding private banking accounts, US institutions must take reasonable steps ton

Ascertain the identity of all nominal and BO

Check whether the owner is a senior foreign political figure

Check the source of the funds in the account and the purpose and expected use of the account

n Elaborate correspondent accounts for foreign shell banksn

It prohibits US banks and securities brokers and dealers from maintaining correspondent accounts for foreign, unregulated shell banks that have no physical presence.

n The power of forfeiture from US correspondent accountn

If funds have been deposited with a foreign bank, it permits the US government to seize funds in the same amount from a correspondent bank account in the US that has been opened and maintained for the foreign bank

n In how many days the FI is required to produce info requested by federal banking agencyn

Within 120 hours (five days). And the request of records relating to the account

n Describe the OFAC powern

Impose controls on transactions and to freeze foreign assets under US jurisdiction

All US citizens and permanent resident aliens need to comply with the OFAC regulations regardless of where they locate