Summary Of Key Points - AML & Cft

Individuals who are found guilty of money laundering offences or tipping-off a money launderer can face imprisonment, a fine, or both. This means that if someone is convicted of these crimes, they may be sentenced to serve time in prison, pay a monetary penalty, or both. This is a serious consequence for engaging in illegal activities related to money laundering, which involves disguising the origins of illegally obtained money. Therefore, the statement is true.

The given statement is false. A politically exposed person (PEP) refers to an individual who holds a prominent public position or has held one in the past, making them vulnerable to corruption and bribery. Being anti-government does not necessarily make someone a PEP. PEPs are typically individuals in positions of power, such as government officials, high-ranking military personnel, or leaders of state-owned enterprises.

The given statement suggests that MAS (Monetary Authority of Singapore) will impose strict measures on financial institutions that violate anti-money laundering laws. These measures include formal warnings, reprimands, restrictions on operations, financial penalties, and even revocation of licenses. Therefore, the correct answer is true.

Government ministers, senior civil or public servants, senior political party officials, and members of international organizations like the World Trade Organization are considered Politically Exposed Persons (PEPs). PEPs are individuals who hold prominent positions and are more susceptible to corruption, bribery, or money laundering due to their influence and access to public resources. Financial institutions and organizations need to exercise extra caution when dealing with PEPs to mitigate the risk of financial crimes. Therefore, the statement that these individuals are examples of Politically Exposed Persons is true.

CDD stands for Customer Due Diligence, which is a process that financial institutions and other regulated entities must undertake to verify the identity of their customers and assess any potential risks associated with them. This process is not a one-time event but rather an ongoing requirement. Once an applicant becomes a customer, the institution must continue to monitor and update their information regularly to ensure compliance with anti-money laundering and counter-terrorism financing regulations. Therefore, the statement that CDD is required on an ongoing basis after an applicant becomes a customer is true.

If a customer is suspected of trying to launder money, it is important to report this immediately to the agency leader and compliance department. Money laundering involves the process of making illegally-gained proceeds appear legal. It is a serious crime that can have severe consequences. By reporting suspicions promptly, the agency can take appropriate action to investigate and prevent any illegal activities from taking place. This helps to maintain the integrity of the organization and ensures compliance with legal and regulatory requirements.

The correct answer is "placement." In the money laundering process, placement refers to the initial stage where illegal funds are introduced into the financial system. This typically involves depositing cash into banks or other financial institutions, often in small amounts to avoid suspicion. By placing the dirty money into the legitimate financial system, criminals can begin the process of disguising its origins and making it appear clean.

The statement is true because terrorists often use methods similar to money laundering to move funds. These methods can include using shell companies, wire transfers, and other illicit financial activities. Additionally, the amounts involved may not always be large, as terrorists may rely on smaller transactions to avoid detection. Overall, this statement highlights the similarities between terrorist financing and money laundering techniques.

Integration is the correct answer because it refers to the stage of the money laundering process where the illegally obtained funds are mixed with legitimate assets, such as real estate and stock investments, in order to make them appear legal and indistinguishable from legitimate income. This stage aims to make it difficult for authorities to trace the origins of the funds and separate them from legitimate sources.

Dirty money refers to illegally obtained money that is often used for illegal activities or to hide the source of the funds. Bribery and insider trading are both forms of illegal activities that can generate dirty money. Bribery involves offering or accepting money or gifts in exchange for influence or favors, while insider trading involves trading stocks based on non-public information. Both activities are illegal and can result in individuals obtaining large sums of money through illicit means.

A direct insurer is required to perform customer due diligence (CDD) measures in multiple situations. Firstly, when the direct life insurer establishes business relations with any customer, CDD measures need to be conducted. Secondly, if there is suspicion of money laundering or terrorism financing, CDD measures are necessary. Lastly, if the direct life insurer has doubts about the accuracy or sufficiency of any information previously obtained, CDD measures must be performed. Therefore, the correct answer is "All of the above."

The stage of the money laundering process that involves placing the illicit funds into the financial system is known as placement. In this stage, the policyholder pays a large amount of premiums in advance in cash, which allows them to introduce their illegal funds into the legitimate financial system. This initial step is crucial for the money launderer to distance themselves from the illegal source of the funds and make it appear as if the money is legitimate.

The answer is correct because to perform enhanced due diligence for politically exposed persons (PEP), it is necessary to obtain approval from senior management to establish or continue business relations with the customer. This ensures that the decision to engage with a PEP is made at a higher level and is in line with the organization's risk appetite. Additionally, conducting enhanced monitoring of business relations with the customer throughout the course of the relationship helps to mitigate any potential risks associated with PEPs. Finally, establishing the source of wealth and source of funds of the customer is crucial in order to assess the legitimacy of their financial activities and prevent money laundering or corruption.

The statement is false. Customer Due Diligence (CDD) is the process of gathering information and conducting verification checks on potential customers before accepting them. It is done to assess the risks associated with the customer and to comply with anti-money laundering regulations. Therefore, CDD is performed before accepting an applicant as a customer, not after.

Enhanced Customer Due Diligence is required for close associates and family members of politically exposed persons (PEPs) because they are considered to have a higher risk of involvement in money laundering or corruption. Additionally, customers who are classified under high-risk occupations are more likely to engage in illegal activities, making enhanced due diligence necessary. Similarly, clients from high tax risk countries are at a higher risk of tax evasion, necessitating enhanced scrutiny. Lastly, negative reports from media or credible sources on a customer indicate potential involvement in illicit activities, warranting enhanced due diligence measures.

Layering refers to the process of creating complex transactions or multiple layers of financial activity to obscure the origin or destination of funds. In this example, the assignment of policies to unrelated or third parties can be seen as a form of layering. By transferring the ownership of insurance policies to unrelated or third parties, individuals or organizations can create a complex web of transactions that make it difficult to trace the true source or purpose of the funds. This can be used as a method for money laundering or other illicit activities.

The given correct answer is "illegally". The activities and processes mentioned in the question are intended to alter the identity of the source of money obtained illegally. This is done in a way that makes it appear as if the money has come from a legitimate source.

The correct answer is a list of information that a direct insurer should obtain from each customer. This includes the customer's full name, including any aliases they may have, their identity card number, residential address, nationality, and date of birth. These details are important for the insurer to accurately identify and assess the customer, as well as to comply with legal and regulatory requirements.