Basic AML Quiz

Predicate offences refer to criminal activities that serve as the underlying source of funds for money laundering. These offenses are typically serious crimes such as drug trafficking, corruption, fraud, and organized crime. The illicit proceeds generated from predicate offenses are then concealed or disguised through money laundering techniques to make them appear legitimate. Therefore, the correct answer is "criminal activity that leads to money laundering."

Money laundering involves the process of making illegally obtained money appear legitimate by disguising its true source. The funds used in money laundering can only come from criminal activities. On the other hand, terrorist financing refers to the provision of funds or financial support to individuals or groups involved in terrorist activities. The funds used for terrorist financing can come from both legal and illegal sources. Therefore, the statement that the source of funds for money laundering can only be from proceeds of crime while terrorist financing can be from both legal and illegal sources is true.

Money laundering can have a negative effect by providing financial support to terrorist organizations. The process of money laundering allows illegal funds to be disguised as legitimate, making it easier for terrorists to finance their activities without detection. This can lead to an increase in terrorist attacks and threats to national security. Therefore, it can be concluded that money laundering encourages the act of terrorism.

The relationship between financial institutions (FIs) and the Nigerian Financial Intelligence Unit (NFIU) is that FIs report currency transaction reports, suspicious and unusual transactions, and send returns as per CBN regulations to the NFIU. In other words, financial institutions have the responsibility to provide information regarding these various types of transactions to the NFIU.

All of the above options support the fight against AML/CFT in Nigeria. The Money Laundering Prohibition Act, 2011 is a specific law that deals with money laundering and provides legal measures to prevent and combat it. The Central Bank of Nigeria AML/CFT regulations are regulatory measures implemented by the central bank to ensure compliance with AML/CFT standards. BOFIA 2004, which stands for the Banks and Other Financial Institutions Act, 2004, also includes provisions related to AML/CFT measures in the Nigerian financial sector. Therefore, all three options mentioned contribute to the fight against AML/CFT in Nigeria.

The options "Kidnapping for Ransom," "Drug trafficking," and "Robbery" are all examples of money laundering predicate offenses. Money laundering involves the process of making illegally obtained money appear legal by disguising its true origins. Predicate offenses are the underlying criminal activities that generate the illegal funds. In this case, kidnapping for ransom, drug trafficking, and robbery are all crimes that can generate significant amounts of illicit money, making them suitable predicate offenses for money laundering. Vandalism, on the other hand, does not typically involve the generation of substantial illegal funds and is therefore not considered a money laundering predicate offense.