AML/Ctf Training & Quiz - December 2016

1. Which of the following is a regulatory requirement of Corporate Service Provider employees?

Reporting a suspicious transaction

Reporting corruption

Reporting a crime

A regulatory requirement of Corporate Service Provider employees is to report a suspicious transaction. This means that if an employee suspects any transaction to be potentially involved in criminal activities or money laundering, they are obligated to report it to the appropriate authorities. This requirement ensures that Corporate Service Providers are actively involved in preventing illegal activities and maintaining the integrity of the financial system.

Explanation

A regulatory requirement of Corporate Service Provider employees is to report a suspicious transaction. This means that if an employee suspects any transaction to be potentially involved in criminal activities or money laundering, they are obligated to report it to the appropriate authorities. This requirement ensures that Corporate Service Providers are actively involved in preventing illegal activities and maintaining the integrity of the financial system.

2. One of the important steps of money laundering is:

Depositing; withdrawing

Placement; layering

Backward; forward integration

Organisation; controlling

Money laundering is a process of making illegally obtained money appear legitimate. The first step in this process is placement, where the illicit funds are introduced into the financial system. This can be done by depositing the money into bank accounts or making cash purchases. The second step is layering, which involves disguising the source of the funds through complex transactions and transfers. This can include moving the money between different accounts, countries, or investments to make it difficult to trace. Therefore, the correct answer is "Placement; layering".

Explanation

Money laundering is a process of making illegally obtained money appear legitimate. The first step in this process is placement, where the illicit funds are introduced into the financial system. This can be done by depositing the money into bank accounts or making cash purchases. The second step is layering, which involves disguising the source of the funds through complex transactions and transfers. This can include moving the money between different accounts, countries, or investments to make it difficult to trace. Therefore, the correct answer is "Placement; layering".

3. Mr. Smith came to your office and asked to set up a trust for charitable purposes. The aim is to help poor children in Africa with their education. After the trust is formed, donations were received from overseas countries and money was sent to various African countries for building schools. A few months later, Mr. Smith instructed you to transfer US$100,000 to a personal bank account opened in a country known to be of a terrorist concern / under sanctions. Mr. Smith said that the money is to buy material to build schools in Africa.What should you do?

Proceed with the transaction which you consider is relevant to the purpose of the trust

Refuse the transaction but do not report

Make a STR because the transaction relates to a country under terrorist concern / sanctions

The transaction may be related to terrorist activities. A report should be made to the Competent Authority.

Explanation

The transaction may be related to terrorist activities. A report should be made to the Competent Authority.

4. Which of the following acts is not considered to be a money laundering offence?

Dealing with any assets, knowing the property is proceeds of a crime

Dealing with any assets, believing the property is proceeds of a crime

Dealing with any assets, not knowing the property is proceeds of a crime

Dealing with any assets, not knowing the property is proceeds of a crime is not considered to be a money laundering offense because money laundering involves knowingly dealing with assets that are known or believed to be the proceeds of a crime. In this case, the person is unaware that the property is derived from criminal activities, therefore it does not meet the criteria for money laundering.

Explanation

Dealing with any assets, not knowing the property is proceeds of a crime is not considered to be a money laundering offense because money laundering involves knowingly dealing with assets that are known or believed to be the proceeds of a crime. In this case, the person is unaware that the property is derived from criminal activities, therefore it does not meet the criteria for money laundering.

5. Which of the following is not normally required for Customer Due Diligence (CDD)?

Know the spouse of the customer

Know the customer

Know the transaction

Customer Due Diligence (CDD) is a process that financial institutions undertake to verify the identity of their customers and assess the potential risks associated with their business relationship. This involves gathering information about the customer, such as their name, address, and identification documents. Knowing the customer is an essential part of CDD as it helps in understanding their background and assessing the risks involved. However, knowing the spouse of the customer is not normally required for CDD as it is not directly relevant to the identification and risk assessment process.

Explanation

Customer Due Diligence (CDD) is a process that financial institutions undertake to verify the identity of their customers and assess the potential risks associated with their business relationship. This involves gathering information about the customer, such as their name, address, and identification documents. Knowing the customer is an essential part of CDD as it helps in understanding their background and assessing the risks involved. However, knowing the spouse of the customer is not normally required for CDD as it is not directly relevant to the identification and risk assessment process.

6. Mr Roberts now has succeeded in opening a bank account and transferring funds into this account. Further to Q.8, Mr. Roberts sent you a letter from the UAE saying that as the Cyprus property market seemed to go down, he had decided to change his investment plan. He requested your company to transfer the money to his friend's bank accounts in the UAE.What is the best course of action?

Proceed with the transfer as the money belongs to Mr. Roberts and do not make a STR

Refuse the request as you suspect that it is a money laundering scheme

Make a STR to the Competent Authorities to explain the suspicion you have in this case

Make a report to the Competent Authority so that the case can be referred to the appropriate law enforcement agency for follow up action. Following the case study of Mr Roberts from the beginning, the money laundering scheme was to (1) take cash - supposedly from company dividends (2) to place it in a Cyprus company bank account, and (3) to transfer it out to a "friend's account" in the UAE.

Explanation

Make a report to the Competent Authority so that the case can be referred to the appropriate law enforcement agency for follow up action. Following the case study of Mr Roberts from the beginning, the money laundering scheme was to (1) take cash - supposedly from company dividends (2) to place it in a Cyprus company bank account, and (3) to transfer it out to a "friend's account" in the UAE.

7. Following upon Q.6, you interviewed Mr. Roberts with a view to conducting Customer Due Diligence (CDD). He stated that he was a company director in the UAE (with no further details provided) and claimed that he had not had his passport or picture ID with him. His wife was busy in the UAE and could not travel to Cyprus to sign the documents for setting up the company. Mr. Roberts stated that a "Power of Attorney" will be sent to your office by courier tomorrow so that he is properly authorised to act for his wife. He requested that action be taken now to set up a company in Cyprus.What should you do?

Ask Mr. Roberts to be patient and come back tomorrow with the proof of ID of himself and his wife as well as documentary proof of his directorship in the UAE company

Refuse the transaction as the circumstances are suspicious

Make a Suspicious Transaction Report in order to report your suspicion

You should continue to conduct “CDD” with a view to getting more information on Mr. Roberts. It may be a bit too early to say that the case is so suspicious that a STR should be made.

Explanation

You should continue to conduct “CDD” with a view to getting more information on Mr. Roberts. It may be a bit too early to say that the case is so suspicious that a STR should be made.

8. When should a Suspicious Transaction Report (STR) be made to the Authorities when you deal with your customer?

Whenever there are suspicious activity indicators making the transaction with the customer suspicious

Whenever there are suspicious activity indicators and the transaction with the customer remains suspicious, after all the information has been reviewed and attempt to clarify the issues with the customer has failed

For all transactions of US$1,000,000 and above

An STR should be made to the authorities when there are suspicious activity indicators and the transaction with the customer remains suspicious, even after reviewing all the information and attempting to clarify the issues with the customer. This ensures that any potential illegal activities or money laundering schemes are reported and investigated by the authorities. Simply having suspicious activity indicators alone may not be enough to trigger an STR, as further investigation and attempts to clarify the issues are necessary to confirm the suspicions.

Explanation

An STR should be made to the authorities when there are suspicious activity indicators and the transaction with the customer remains suspicious, even after reviewing all the information and attempting to clarify the issues with the customer. This ensures that any potential illegal activities or money laundering schemes are reported and investigated by the authorities. Simply having suspicious activity indicators alone may not be enough to trigger an STR, as further investigation and attempts to clarify the issues are necessary to confirm the suspicions.

9. Following upon Q.7, Mr. Roberts told you that he came from the UAE and would stay in Cyprus for a few days only. He claimed that he wanted to deposit the funds of a declared dividend he obtained in the UAE and invest in real estate in Cyprus.As he is too busy to open a bank account, he requested to deposit the money in cash into the bank account of our company so that the money could be transferred to the bank account of Company A for property investment.What should you do?

Ask your staff to deposit the cash into the bank account and wait for further instruction from Mr. Roberts

Make a STR as the circumstances are suspicious

Refuse to proceed with the transaction but no need to make a STR

The circumstances (e.g. dividend in the form of cash; request the money to go through our company's account) are suspicious enough to warrant a STR to be made to the Competent Authority.

Explanation

The circumstances (e.g. dividend in the form of cash; request the money to go through our company's account) are suspicious enough to warrant a STR to be made to the Competent Authority.

10. A walk-in customer, Mr. Roberts, came to our company and asked to set up a limited company, Company A. He asked this to be done quickly because he will be returning to the UAE soon. He provided the name of his wife as another shareholder of the company to be set up. He claimed that he would supply copies of both his and the wife's passport at a later stage.What is the most appropriate course of action?

Refuse Mr. Roberts’ business as the circumstances are suspicious

Proceed with the business and conduct CDD on Mr. Roberts and his wife

Proceed with the business but make a suspicious transaction report because it looks suspicious

You need to conduct “CDD” when establishing business relationship with your customers. If after CDD is conducted and you found it suspicious, then you should make a STR to the Competent Authorities (in Cyprus: MOKAS / in BVI: FIU).

Explanation

You need to conduct “CDD” when establishing business relationship with your customers. If after CDD is conducted and you found it suspicious, then you should make a STR to the Competent Authorities (in Cyprus: MOKAS / in BVI: FIU).