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


  Microstructuring


  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


  Trusts


  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


    Customers


    Cash transactions


    Non-cash deposits


    Wires


    Safe deposit activity


    Credit transactions


    Commercial account activity


    Trade finance


    Investment accounts


    Employees


    Money remitter/ currency exchange house


    Insurance companies


    Broker-Dealers


    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


    Documents


    Interviewing Employees


  Attorney-Client Issues


  International Cooperation


    Mutual Legal Assistance Treaties


    Financial Intelligence Units


    The Supervisory Channel