Chapter 2 (Part 2)

Question 1

What is the Wolfsberg Group

Answer 1

an association of 13 global banks that aims to develop financial services industry standards and guidance related to KYC/AML and counter terrorist financing policies

Question 2

what do the wolfsberg anti-money laundering principles for private banking state

Answer 2

banks must “endeavor to accept only those clients whose source of wealth and funds can be reasonably established to be legitimate.”

Question 3

what are 3 situations that the principles list that require EDD

Answer 3

1. PEPs
2. people residing in and/or having funds from high-risk countries
3. people involved in types of economic or business activities or sectors known to be susceptible to ML

Question 4

when also may clients require greater scrutiny (4 situations)

Answer 4

1. info gained from monitoring their activities
2. external inquiries
3. negative news
4. other factors that may expose the bank to rep risk

Question 5

what was one of the key revisions made in 2001 for the wolfsberg principles related to

Answer 5

the prohibiton of the use of internal non client accounts to keep clients from being linked to the movement of funds on their behalf

Question 6

what are these accounts called

Answer 6

concentration accounts

Question 7

what are the first 4 of 8 recommendations from wolfsberg regarding terrorism

Answer 7

1. providing official lists of suspected terrorists on a globally coordinated basis by relevant authorities
2. including adequate information in the lists to help institutions search customer databases efficiently
3. providing prompt feedback to institutions following circulation of the official lists
4. providing information on the manner, means, and methods used by terrorists

Question 8

what are 5-8

Answer 8

5. developing government guidelines for business sectors and activities identified as high risk for terrorism financing
6. developing uniform global formats for funds transfers that assist in the detection of terrorism financing
7. protecting financial institutions with safe harbor immunity to encourage them to share information and to report to authorities
8. performing EDD for business relationships with remittance businesses, exchange houses, casas de cambia, bureax de change and money transfer agents

Question 9

in 2002 wolfsberg issued guidelines on AML principles for correspondent banking, what is recommended

Answer 9

due diligence should be risk based and on an ongoing basis

Question 10

what elements should be considered when conducting due diligence

Answer 10

1. geographic risk
2. branches, subsidieres and affiliates of correspondent banking clients and of the institution
3. ownership and management structures of the correspondent banking client
4. clients customer base and business
5. clients products and services
6. clients regulatory status and history
7. clients anti money laundering controls
8. clients dealings with shell banks
9. visits to the clients business
10. EDD regarding the involvement of PEPs with the correspondent banking client and downstream correspondent (nested) relationships the correspondent provides
11. The principles should be part of a financial institution’s larger AML program including anti bribery and corruption, fraud and evasion of sanctions

Question 11

What is the deal with the world bank and international monetary fund

Answer 11

These organizations work together and in conjunction with FATF to encourage countries to have adequate anti-money laundering laws and to review AML laws and procedures of FATF member countries.

Question 12

what premise do key provisions of the USA Patriot Act stem from

Answer 12

international access points to the US financial system must be controlled

Question 13

what does section 311 do

Answer 13

provides the US treasury department with the authority to apply graduated, proportionate measures against a foreign jurisdiction, foreign financial institution, a type of international transaction or a type of account that the treasury secretary determined to be a “primary money laundering concern”

Question 14

by designating a country or financial institution as a primary ML concern, what can the government do

Answer 14

force US banks to halt many of their financial dealings with the designee

Question 15

once designated, the US government can force a bank to follow one or more 5 special measures, what are those

Answer 15

1. keep records and/or file reports on certain financial transactions
2. obtain info on the BO of any account opened or maintained in the US by a foreign person or a foreign person’s representative
3. identify and obtain information about customers who are permitted to use, or whose transactions are routed through, a foreign banks payable through account
4. identify and obtain information about customers permitted to use, or whose transactions are routed through, a foreign bank’s correspondent account
5. close certain payable through or correspondent accounts