ACAMS Module 2 Questions and Answers 100% Correct, Exams of Foreign Exchange Law

Download ACAMS Module 2 Questions and Answers 100% Correct and more Exams Foreign Exchange Law in PDF only on Docsity! ACAMS Module 2 Questions and Answers 100% Correct FATF objectives are to set standards and promote effective implementation of _________, ____________, and ___________ for combatting ML, TF and other related threats. - ANSWER-legal, regulatory and operational measures Starting with its own members, FATF: - ANSWER-Monitors countries' progress in implementing the FATF Recommendations Reviews ML/TF techniques and counter-measures Promotes the adoption and implementation of the FATF Recommendations globally. FATF fulfills its stated objects by spreading the spreading the AML message worldwide and monitoring implementation of the FATF Recommendations among its members through _____________ and _________. - ANSWER-Technical Compliance Effectiveness Assessment Both assessments provide FAFT an integrated analysis of the extent to which the country is compliant with the FATF Recommendations & how successful it is in maintaining a strong AML/CFT system. Technical Compliane - ANSWER-Evaluates the specific requirements of the FATF Recommendations including: -how a member relates them to its relevant legal and institutional framework -the powers and procedures of its competent authorities Focus is on the fundamental building blocks of an AML/CFT system Effectiveness Assessment - ANSWER-Seeks to assess the adequacy of a members' implementations of the FATF Recommendations, and identifies the extent to which a member achieves a defined set of outcomes that are central to a robust AML/CFT System Focus is on the extent to which the legal and institutional framework of the member is producing the expected results. The 40 Recommendations provide a complete set of countermeasures against ML and TF, covering: - ANSWER-The identification risks and development of appropriate policies. The criminal justice system and law enforcement. The financial system and its regulation. The transparency of legal persons and arrangements. International cooperation. 2012- the Recommendations were revised again to incorporate _______________ into the 40 Recommendations - ANSWER-the Nine Special Recommendations on TF Group I: Recommendations 1-2 AML/CFT Policies and Coordination - ANSWER-Assessing Risks and applying a risk- based approach National cooperation and coordination Group II: Recommendations 3-4 Money Laundering and Confiscation - ANSWER-ML offenses Confiscation and provisional measures Group III: Recommendations 5-8 Terrorist Financing and Financing of Proliferation - ANSWER-Terrorist Financing offenses Targeted financial sanctions related to terrorism and TF Targeted financial sanctions related to Proliferation Non-Profit Organizations (NPOs) Group IV: Recommendations 9-23 Financial and Non-Financial Institution Preventative Measures - ANSWER-Financial institution secrecy laws CDD and recordkeeping Additional measures for specific customers and activities Reliance, control and financial groups Reporting suspicious transactions Designated non-financial businesses and professions Group V: Recommendations 24-25 Transparency and Beneficial Ownership of Legal Persons and Arrangements - ANSWER-Transparency and beneficial ownership of legal persons Transparency and beneficial ownership of legal arrangements Group VI: Recommendations 26-35 Powers and Responsibilities of Competent Authorities and Other Institutional Measures - ANSWER-Regulation and supervision Operational and law enforcement General requirements Sanctions Group VII: Recommendations 36-40 International Cooperation - ANSWER-International instruments Mutual Legal Assistance Mutual legal assistance regarding freezing and confiscation Extradition Other forms of international cooperation The Third EU Directive extended the scope of the first and second directives by: - ANSWER-Defining "ML" and "TF" as separate crimes - expanded to cover not only the manipulation of money derived from a crime but also the collection of money or property for terrorist purposes Extending customer identification and SAR obligations to trusts and company service providers, life insurance intermediaries and dealers selling good for cash payments of more than EUR 15,000 Detailing a risk-based approach to CDD. -extent of due diligence performed on customers, whether simplified or enhanced, should be dependent on the risk of ML/TF they pose Requiring all financial institutions to identify and verify the "beneficial owner" of all accounts held by legal entities or persons. - beneficial owner refers to the natural person who directly or indirectly controls more than 25% of a legal entity or person Fourth EU Directive (entered into effect on June 26, 2015) repealed the Third Directive and its predecessors. Some of the key changes incorporated into the fourth directive include: - ANSWER- Threshold for entities obliged to report suspicious transactions. - i.e. persons trading in goods or carrying out transaction -decreased from EUR 15,000 to EUR 10,000 The scope of obliged entities was enlarged from just casinos to all "providers of gambling services" CDD is to be applied for transfer of funds exceeding EUR 1,000 EDD should be applied to every PEP whether the individual is a domestic or third- country citizen. The risk these persons pose was extended to 12 months and measure they are subject to must also be applied to their family members and their known close associates T/F: The Third EU Directive defined "ML" and "TF" as separate crimes. - ANSWER-True T/F: The Fourth EU Directive decreed that the CDD was to be applied for all transfers of funds exceeding EUR 10,000. - ANSWER-False. CDD was to applied for transfer of funds exceeding EUR 1,000 Various Financial Intelligence Units (FIUs) and banks collaborate formally or informally in groups or associations to - ANSWER-improve cooperation in the fight against ML There are nine _____________ that have similar form and functions to those of FATF. - ANSWER-FATF-Style Regional Bodies (FSRBs) FSRBs play an essential role in identifying and addressing AML/CFT Technical assistance needs for their - ANSWER-individual members Many FATF member countries are also members of the nine FSRBs. - ANSWER-Asia/Pacific Group on ML (APG) Carribbean FATF (CFATF) Council of Europe Committee of Experts on the Evaluation of AML Measure and the Financing of Terrorism (MONEYAL, formerly PC-R-EV) Eurasian Group (EAG) Eastern and South African AML Group (ESAAMLG) Intergovernmental Action Group against ML in West Africa (GIABA) Middle East and North Africa FATF (MENAFATF) Task Force on ML in Central Africa (GABAC) FATF of Latin America (GAFILAT) (Formerly known as FATF on ML in South America (GAFISUD)) A number of national financial intelligence units (FIUs) work together in an informal organization known as the - ANSWER-Egmont Group Group was named for the location of the first meeting, the Egmont-Arenberg Palace in Brussels. Goal of the Egmont Group - ANSWER-is to provide a forum for FIUs around the world to improve cooperation in the fight against ML/TF and to foster the implementation of domestic programs in this field The support the Egmont Group provides in the fight against ML/TF includes: - ANSWER-Expanding and systematizing cooperation in the reciprocal exchange of information Increasing the effectiveness of FIUs by offering training and promoting personnel exchanges to improve the expertise and capabilities of personnel employed by FIUs Fostering better and secure communication among FIUs through the application of technology, such as the Egmont Secure Web (ESW) Promoting the operational autonomy of FIUs Promoting the establishment of FIUs in conjunction with jurisdictions with an AML/CFT program in place, or in areas with a program in the early stages of development The ___________________ is an association of 13 global banks that aims to develop financial service industry standards and guidance related to KYC, AML, and Counter- Terrorist Financing policies. - ANSWER-Wolfsberg Group Wolfsberg AML Principles for Private Banking, was published in October 2000 and revised in May 2002 and in June 2012, recommends controls for private banking that range from - ANSWER-Basic (such as customer identification) to Enhanced Due Diligence (EDD) (such as heightening scrutiny of individuals who "have or have had positions of public trust" such as PEPs). Wolfsberg principles states that banks must - ANSWER-"Endeavor to accept only those clients whose source of wealth and funds can be reasonably established to be legitimate." Highlight the need to identify the beneficial owner of funds "for all accounts" when that person is someone other than the client, and urge private bankers to perform due diligence on "money mangers and similar intermediaries" to determine that the middlemen have "satisfactory" due diligence process for their clients or a regulatory obligation to conduct such due diligence. Recommend that "at least one person other than the private bank" should approve all new clients and accounts. The Wolfsberg Group also issued guidelines in early 2000 on "The Suppression of the Financing of Terrorism" outlining the rolls of the financial institutions in the fight against ML/TF. The recommendations include: - ANSWER-Providing official lists of suspected terrorists on a globally coordinated basis by relevant authorities Including adequate information in the lists to help institutions search customer databases efficiently Providing prompt feedback to institutions following circulation of the official lists Providing information on the manner, means and methods used by terrorists Developing government guidelines for business sectors and activities identified as high- risk for TF Developing uniform global formats for funds transfers that assist in the detection of TF. Protecting financial institutions w/safe harbor immunity to encourage them to share information and to report to authorities. Perform EDD for "business relationships w/remittance businesses, exchange houses, casas de cambio, bureaux de change and money transfer agents" and other high-risk customers or those in high-risk sectors, and activities "such as underground banking businesses or alternative remittance systems." Summary of FATF: - ANSWER-Members: Group countries and international organizations Important Document: 40 Recommendations Topic: Criminalization, role of financial system, international cooperation Mandatory: No Summary of Regional FATF Bodies: - ANSWER-Members: Caribbean, Asia-Pacific Countries USA PATRIOT Act: Section 312 Key Aspects of Section 312: - ANSWER-Due Diligence Program Due Diligence Measures Enhanced Due Diligence Private Banking Rule Covered Private Banking Accounts Section 312: Due Diligence Program: - ANSWER-must be "appropriate, specific and risk-based", include enhanced policies, procedures and controls reasonably designed to identify and report suspected ML in a correspondent account maintained in the U.S. - the due diligence program must also be included in the institution's AML/CFT program Section 312: Due Diligence Measures: - ANSWER-Due Diligence Program must address 3 measures: Determining whether EDD is necessary Assessing the ML risk presented by the correspondent account. Applying risk-based procedures and controls reasonably designed to detect and report suspected ML. Section 312: Enhanced Due Diligence (EDD): - ANSWER-EDD must be implemented in these situations involves conducting enhanced scrutiny for possible ML and suspicious transactions, including: Obtaining information related to the foreign bank's AML/CFT program Monitoring transactions in and out of the correspondent account in a manner reasonably designed to detect possible ML and suspicious activity Obtaining information about the correspondent account that is being used as PTA. Section 312: Private Banking Rule: - ANSWER-Under the rule, a private banking account is defined as: An account w/a minimum aggregate deposit of $1 mil For one or more non-US persons, and Which is assigned to a bank employee acting as a liaison with the non-US person Section 312: Covered Private Banking Accounts: - ANSWER-For covered private banking accounts, US institutions must take reasonable steps to: Ascertain the identity of all nominal and beneficial owners of the accounts Ascertain whether any such owner is a "senior foreign political figure." Ascertain the source of funds in the account and the purpose and expected use of the account Monitor the account to ensure the activity in the account is consistent with the information provided as to the source of funds and the purpose and expected use of the account, as needed to guard against ML and to report any suspected ML or suspicious activity. USA PATRIOT Act: Section 313 Prohibition on correspondent accounts for foreign shell banks (31 U.S.C.538(j)) - ANSWER-Prohibits US banks and securities brokers and dealers from maintaining correspondent accounts for foreign, unregulated shell banks that have no physical presence anywhere. USA PATRIOT Act: Section 319(a) Forfeiture from US Correspondent Account (18 U.S.C. 981(k)) - ANSWER-In situations where funds have been deposited with a foreign bank, this section 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. The US government is not required to trace the funds, as they are deemed to have been deposited into the correspondent account. USA PATRIOT Act: Section 319(b) Records relating to Correspondent Accounts for Foreign Banks (31 U.S.C.5318(k)) - ANSWER-Allows the appropriate federal banking agency to require a financial institution to produce w/in 120 hours (5 days) records or information related to the institution's AML compliance or related to a customer of the institution or any account opened, maintained, administered or managed in the US by the financial institution. Also requires foreign banks to designate a registered agent in the US to accept service of subpoenas pursuant to this section. US banks and securities brokers and dealers that maintain correspondent accounts for foreign banks must keep records of the identity of the 25% owners of the foreign bank, unless it is publicly traded, as well as the name of the correspondent bank's registered agent in the U.S. Office of Foreign Asset Control (OFAC) - ANSWER-administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries, terrorists, international narcotics traffickers and those engaged in activities related to the proliferation of WMD. has the power to impose significant penalties on those who are found to be in violation of blocking orders w/in each of the sanction programs All US personas must comply with OFAC regulations, including: All US citizens and permanent resident aliens, regardless of where they are located. OFAC Sanctions - ANSWER-are based on UN and other international mandates that are multilateral in scope and involve close cooperation with allied governments. OFAC Sanction Programs prohibit - ANSWER-transactions and require the blocking of assets of persons and organizations that appear on one of a series of lists that OFAC issues periodically. T/F: Section 311 of the USA PATRIOT Act provides the US Treasury Department with the authority to obtain information on the beneficial ownership of any account opened or maintained in the US by a foreign person or a foreign person's representative. - ANSWER-True T/F: In situations where funds have been deposited with a foreign bank, the USA PATRIOT Act 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. - ANSWER-True Section 319(a) FATF fulfills its stated objectives by monitoring implementation of the FATF Recommendations among its members through ____________ and _______________. A. Risk assessment; compliance assessment B. International cooperation; law enforcement C. Technical compliance assessment; institutional framework assessment D. Technical compliance assessment; effectiveness assessment - ANSWER-D. Technical Compliance Assessment; Effectiveness Assessment Which of the following statements is TRUE? A. The Egmont Group membership comprises national FIUs B. The Wolfsberg Group membership comprises central bank governors of the G10. C. The European Union recommends legislation to be passed in the member countries. D. The Basel Committee levies fines on the member countries for non-compliance with AML laws. - ANSWER-A. The Egmont Group membership comprises national FIUs. The FATF 40 Recommendations are organized into Seven Groups. All of the following are valid FATF 40 Recommendations, EXCEPT: A. International Cooperation and Economic Sanctions B. Money Laundering and Confiscation C. Financial and Non-Financial Institution Preventative Measures D. Powers and Responsibilities of Competent Authorities and Other Instructional Measures - ANSWER-A. International Cooperation and Economic Sanctions All of the following statements related to actions of the OFAC are true, EXCEPT: A. Imposition of economic and trade sanctions based on US foreign policy B. Freezing or blocking of foreign assets of persons and organizations under US jurisdiction. C. Imposition of significant penalties on those who are found to be in violation of the blocking orders w/in each of the sanction programs D. Restriction of travel by US citizens to certain countries based on sanctions lists that OFAC issues periodically. - ANSWER-D. Restriction of travel by US citizens to certain countries based on sanctions lists that OFAC issues periodically.