Study Notes

Table of Contents

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Risks & Methods of Money Laundering and Terrorist Financing

  Classic Money Laundering Process

  Effects of Money Laundering

Money Laundering Techniques

  Electronic Transfers

  Correspondent Banking

  Payable Through Accounts (PTAs)

  Concentration Accounts

  Private Banking

  Structuring or Smurfing


  Cuckoo Smurfing

  Bank Complicity

  Credit Unions and Building Societies

  Credit Cards

  Money Remitters and Money Exchange Houses

  Insurance Companies

  Securities and Futures Broker-Dealers

  Casinos and Gaming

  Internet Casinos

  Dealers in High Value Items

  Travel Agencies

  Vehicle Sellers

  Gatekeepers: Accountants, Auditors, Lawyers, Notaries, Company Formation Agents

  Investment and Commodity Advisors

  Trust and Company Service Providers

  Real Estate Industry

  Reverse Flip

  Loan Back

  Manipulation of import and export prices

  Letters of Credit

  Black Market Peso Exchange (BMPE)

  Online or Internet Banking

  Prepaid Cards and E-cash

Structures Designed to Hide Beneficial Ownership

  Shell Companies

  Front Companies

  Buying a Company Already Owned by the Criminal

  Double Invoicing


  Bearer Bonds, Securities and Cheques

  Terrorist Financing

  Informal Value Transfer Systems

  Charities & Not-for-profits

Compliance Standards for AML and Combating Financing of Terrorism

  FATF 40 Recommendations

  Overview of the 40 recommendations

  Key highlights of the 40 recommendations

  Non-Cooperative Counties

  Basel Committee on Banking Supervision

EU Directives on Money Laundering

  First Directive

  Second Directive

  Third Directive

Regional FATF-Style Bodies and FATF Associate Members

Other AML initiatives

  Other International Organizations

Key US Legislation and Regulation relevant to International Transactions

  OFAC: Office of Foreign Assets Control

  Key Groups

Chronological AML Developments

Anti-Money Laundering Compliance Program

  Assessing Risk and Developing a Risk Scoring Model

  Levels of risk

  Geographical Location

  Customer Type

  Products and Services Risk

  The Elements of an AML Program

    Internal policies, procedures and controls

      Designated compliance officer with day-to-day oversight of the program

      On-going employee training

      Independent audit function to test the program

  Compliance Culture

  Customer Due Diligence

    Account opening guidelines from Basel 2003

    Name lists

    Arabic Names

  Know Your Employee

  Suspicious/Unusual Transaction Monitoring and Reporting

  Red Flags


    Cash transactions

    Non-cash deposits


    Safe deposit activity

    Credit transactions

    Commercial account activity

    Trade finance

    Investment accounts


    Money remitter/ currency exchange house

    Insurance companies


    Black Market Peso Exchange Indicators

  Electronic AML Solutions

Conducting and responding to an investigation

  Law enforcement investigations

    Decision to prosecute the institution

    Responding to a law enforcement investigation

    Summonses and Subpoenas

    Search Warrants

    Orders to restrain or freeze accounts or assets

    Dealing with Investigators and Prosecutors

    Obtaining Counsel for the Investigation

    Notices to Employees

    Media Relations

  Internal Investigations

  Closing the Account

  Conducting the Investigation


    Interviewing Employees

  Attorney-Client Issues

  International Cooperation

    Mutual Legal Assistance Treaties

    Financial Intelligence Units

    The Supervisory Channel