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- Approved by executive management or the board of directors. This research guide, or source tool, is a compilation of key AML laws, rules, orders, and guidance applicable to broker-dealers. The Bank Secrecy Act applies to all broker-dealers. What is the legal threshold transaction amount for a qualifying payment, Which are the 3 stages of money laundering, Who are the two Money Laundering Reporting Officers, By Mylene.mislan127 | Updated: Apr 4, 2022. Members are required to provide to FINRA the name, title, mailing address, email address, telephone number, and facsimile number of the AML compliance person. This demonstrates the power and utility of having this quick, daily study tool in your pocket at all times. Money Laundering - Definition, Examples, Meaning, and Cases Any other individual who regularly performs similar functions. 17. See FinCENsGuidance on Obtaining and Retaining Beneficial Ownership InformationandSIFMAs suggested due diligence practices for hedge fundsfor additional information. report suspicious transactions related to terrorist activity [3] Note that, since NTM 02-21 was issued, there have been a number of changes to AML requirements. 5326 - Records of certain domestic transactions, [31 U.S.C. Quiz: Which Anime Character Are You Most Like. Therefore anti-money laundering compliance is not a serious issue for other types of businesses, Is it imperative to comply with AML requirements despite the common knowledge that it is relatively hard to launder money via online gaming sites. Trivia Questions Quiz On Anti-money Laundering! Click the card to flip Money laundering has been defined as a criminal activity that occurs when money from illegal activity is moved through the financial system to make it appear that funds come from legitimate sources. The safe harbor provision, added to the BSA by Section 314(b) of the USA PATRIOT Act, protects financial institutions, including broker-dealers, from certain liabilities in connection with sharing certain AML related information with other financial institutions for the purposes of identifying and reporting activities that may involve terrorist acts or money laundering activities. Messages Related to Cross-Border Wire Transfers, Sound Management of Risks Related to Money Laundering and You can continue to browse, but some functionality of the site may be limited. 5324 - Structuring transactions to evade reporting requirement prohibited You might have even noticed your local pizza place or other businesses accepting certain forms of cryptocurrency as payment. [9] FinCEN staff have indicated that the responses to Questions 17 and 18 in this Advisory are no longer completely accurate due to the expiration on July 1, 2004, of an exception relating to coded names and pseudonyms, at which time FinCEN confirmed the prohibition of the use of coded names and pseudonyms, but determined that the Travel Rule should be read to allow the use of mailing addresses. The Financial Crimes Enforcement Network (FinCEN), a bureau within Treasury, has regulatory responsibilities for administering the BSA. A correspondent account is defined as an account established for a foreign financial institution to receive deposits from, or to make payments or other disbursements on behalf of, the foreign financial institution, or to handle other financial transactions related to such foreign financial institution. 31 U.S.C. 4. For example, for entity accounts, such as a foundation, charity, or non-profit, would regulators expect to see member firms document the source of funds as part of its CIP requirements or general account due diligence, or would this be a best practice based on the firm's risk assessment of the account/entity? Browse our If a trust owns directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, 25 percent or more of the equity interests of a legal entity customer, the beneficial owner shall mean the trustee. Covered financial institutions are required to establish and maintain written procedures that are reasonably designed to identify and verify beneficial owners of legal entity customers and to include such procedures in their anti-money laundering compliance program required under 31 U.S.C. (See 12 USC 1829b, 12 USC 1951-19600, 31 USC 5311-5314, 5316-5336 . ], 31 U.S.C. If you want to brush up on your knowledge, why not read the GBG guide to AML. The broker-dealer's AML procedures should address these types of red flags, how red flags will be detected, and what due diligence and actions will be performed if such red flags are detected. include appropriate risk-based procedures for conducting ongoing customer due diligence, including (i) understanding the nature and purpose of customer relationships for the purpose of developing a customer risk profile; and (ii) conducting ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information, including information regarding the beneficial owners of legal entity customers. Procedures We at AML101 have spent years in the anti-money laundering industry and consulted with some of the best and FinCENs implementing rule requires a broker-dealers CIP to include, at a minimum, procedures for: The CIP rule provides that, under certain defined circumstances, broker-dealers may rely on another financial institution to fulfill some or all of the requirements of the broker-dealers CIP. The Adopting Release explains that in acquisitions, mergers, purchases of assets, or assumptions of liabilities, customers do not initiate these transfers and, therefore, the accounts do not fall within the scope of Section 326 of the USA PATRIOT Act. 31 U.S.C. - The internal technology or tools the financial institution utilizes to ensure the AML/CFT program is functioning as intended and within predefined parameters. C: The use of wire transfers from, to, and through one jurisdiction, D: The competitive and commission-driven environment. On-going employee training; and . 5331 - Reports relating to coins and currency received in nonfinancial trade or business Supplemental information related to safe-and-sound He has verified the identity of the person opening the account. Why is it so important to know that your client is the person thy claim to be? Take our quiz to ensure you're up-to-date. - The seriousness of the underlying conduct. Anti-money laundering involves all policies and pieces of legislation that force financial institutions to proactively monitor their clients in order to prevent money laundering and corruption. Anti Money laundering Quiz 4.0 (1 review) Flashcards Learn Test Match What are the 4 elements of fraud? 5325 - Identification required to purchase certain monetary instruments Under the Bank Secrecy Act (BSA) and related anti-money laundering laws, banks must Establish effective BSA compliance programs Establish effective customer due diligence systems and monitoring programs Screen against Office of Foreign Assets Control (OFAC) and other government lists 5318A - Special measures for jurisdictions, financial institutions, international transactions, or types of accounts of primary money laundering concern (See NASD Notice to Members 03-34.). Chapter X, Interpretative Release No. Statutes that include AML-related provisions may be amended from time to time, and new statutes may be enacted which include AML-related provisions. See Treasury, National Money Laundering Risk Assessment, December 20, 2018 . Before 10, Question 5 of wires or checks, etc.) FINRA Rule 4517 requires firms, via Contacts in Firm Gateway, to update designated contact information promptly, but in any event no later than 30 days following any change in the contact information. real estate) A. If they do not, then the broker-dealer remains solely responsible for applying its own CIP to each customer in accordance with the rule. ); and between customers and registered representatives, including the hand-delivery of checks. The Federal Deposit Insurance Corporation (FDIC) is an Examples of due diligence could include, but not be limited to, contacting the customer, getting a signed Letter of Authorization from the customer, and/or obtaining a written statement from the customer regarding the reason for the third party wire. There are three stages involved in money laundering: placement, layering and integration. 31 U.S.C. Anti Money Laundering Exam Quiz 15 Questions | By Mylene.mislan127 | Updated: Apr 4, 2022 | Attempts: 14084 Share Settings Start Create your own Quiz Money laundering enables the rich to grow even richer. Some of the guidance from OFAC applicable to the securities industry can be found at the following links: FINRA IS A REGISTERED TRADEMARK OF THE FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. FINRA operates the largest securities dispute resolution forum in the United States, To report on abuse or fraud in the industry. Treasury and the SEC emphasize that a firm must take further steps to identify customers that pose a heightened risk of not being properly identified. These publications include: statistics regarding SAR filings and trends; an industry forum highlighting compliance issues and practices prepared by private sector members of the Advisory Group; and guidance regarding practical issues relevant to SAR filing and reporting. 1959 - Administrative procedure In addition to the blocking sanctions described above, OFAC maintains several sanctions programs that prohibit U.S. persons, including broker-dealers, from dealings in equity and debt of, and extension of credit to, certain sanctions targets. Specifically, the act requires financial institutions to keep records of cash purchases of negotiable instruments, file reports of cash transactions exceeding $10,000 (daily aggregate amount), and to report suspicious activity that might signify money laundering, tax evasion, or other criminal activities. 11. Introducing and clearing firms are both responsible for filing SARs for suspicious transactions "conducted or attempted by, at, or through" the firm. The Bank Secrecy Act | FinCEN.gov Reference: Reputational Risk: The potential that adverse publicity regarding an organization's business In addition, records made about information that verifies a customer's identity only have to be retained for five years after the record is made. A: The international nature and exposure B: The speed of transactions C: The use of wire transfers from, to, and through one jurisdiction D: The competitive and commission-driven environment Reference: Financial intelligence units (FIUs) are mandatory national agencies that handle financial intelligence. 5333 - Safe harbor with respect to keep open directives Adopting Release for Rules for Confidentiality of Suspicious Activity Reports, 75 Fed. - Call the financial institution's in-house or outside counsel and/or designated officer in charge of security, risk management, or similar area. Are all broker-dealers subject to the Bank Secrecy Act? Under this definition, "customer" does not refer to persons who fill out account opening paperwork or who provide information necessary to set up an account, if such persons are not the accountholder as well. STAY CONNECTED report any suspicious activity, including transactions involving senior foreign political figures that may involve proceeds of foreign corruption. These should include, but not be limited to procedures to: (1) identify and verify the identity of customers, (2) understand the nature and purpose of customer relationships to be able to develop a risk profile and (3) conduct ongoing monitoring to identify and report suspicious transactions as well as maintain and update customer information, including beneficial ownership information for legal entity customers. OFACs Sanctions List Search Tool is a free tool that assists the public in complying with sanctions programs by facilitating the use of the Specially Designated National and Blocked Persons list (the SDN list) and other sanctions lists administered by OFAC. 12 U.S.C. (See NASD Notice to Members 03-34.). - Remain present while the agents make an inventory of all items they seize and remove from the premises. Because the relationship is based on the integrity of the representations The CIP rule does not include persons with trading authority over accounts in the definition of "customer." 10, Question 2 of important initiatives, and more. FINRA Rule 3310 (Anti-Money Laundering Compliance Program) requires that members develop and implement a written anti-money laundering (AML) program reasonably designed to comply with the requirements of the BSA and its implementing regulations. 1. Social Costs 12 U.S.C. Additionally, if there is a change in senior management, the AML program should be re-approved by the new management. FINRA has produced a Customer Identification Program Notice to assist members in fulfilling the notification requirement in the CIP Rule. determine the identity of all nominal and beneficial owners of the private banking accounts; determine whether any such owner is a senior foreign political figure and therefore subject to enhanced scrutiny that is reasonably designed to detect transactions that may involve the proceeds of foreign corruption; determine the source of funds deposited into the private banking account and the purpose and use of such account; review the activity of the account as needed to guard against money laundering; and. system. 15. 6. First Quiz For Training On Anti-money Laundering, Bartlesville Area Habitat For Humanity Anti Money Laundering Quiz, Vandyk Mortgage's Anti-money Laundering Exam. 31 U.S.C. Several acts, including provisions in Title III of the USA PATRIOT Act of 2001, and the Anti-Money Laundering Act of 2020, have been enacted up to the present to amend the BSA. The procedures must be based on the broker-dealer's assessment of the relevant risks, including those presented by the various types of accounts maintained by the broker-dealer, the various methods of opening accounts, the various types of identifying information available and the broker-dealer's size, location and customer base. This source tool represents the views of the staff of the Division of Examinations. 14. 5318 - Compliance, exemptions, and summons authority 1. Among other things, it authorizes the Secretary of the Treasury to issue regulations requiring financial institutions (including broker-dealers) to keep records and file reports on financial transactions that may be useful in investigating and prosecuting money laundering and other financial crimes. Federal government websites often end in .gov or .mil. Among other things, the USA PATRIOT Act amended and strengthened the BSA. Hemp-Related Businesses, Joint Statement on Risk-Focused BSA/AML Supervision, Joint Statement on Innovative Efforts to Combat Money Every employee should know that a search warrant is not usually an open-ended demand. 1, Question Does the AML compliance person have to be a registered principal? 31 U.S.C. A CIP must include risk-based procedures for verifying the identity of each customer to the extent reasonable and practicable. 12 U.S.C. 5317 - Search and forfeiture of monetary instruments The USA PATRIOT Act was enacted by Congress in 2001 in response to the terrorist attacks on September 11, 2001. Reports of Currency or Monetary Instruments (CMIRs): Broker-dealers must report any transportation of more than $10,000 in currency or monetary instruments into or outside of the U.S. on a Report of International Transportation of Currency or Monetary Instruments, FinCEN Form 105 (formerly Customs Form 4790). 23. 6. Reported suspicions must be go through the Team Manager prior to escalating it directly to the MLRO. Key laws and regulations that pertain to FDIC-supervised institutions; note that other laws and regulations also may apply. See FINRA Regulatory Notice 18-19. - The reputational risk to the institution posed by maintaining the account. They include: Currency Transaction Reports (CTRs): Broker-dealers are required to file with FinCEN a CTR (Form 112, formerly IRS Form 4789) for any transaction over $10,000 in currency, including multiple transactions occurring during the course of the same day. Please contact your local FINRA Coordinator directly with any questions relating to AML requirements. So you are ready to try our sample practice quiz! 31 U.S.C. 5332 - Bulk cash smuggling into or out of the United States Try Insurance Companies Required to Establish Anti-Money Laundering Question 1 of Reg. (See NASD Notice to Members 03-34 and the Adopting Release for the broker-dealer CIP rule.). In all other respects, the records must be maintained pursuant to the provisions of SEC Rule 17a-4. The introducing broker is a customer of the clearing firm, although a registered US broker-dealer is exempt from CIP. At a minimum, the anti-money laundering program should include: 1. Are there any exceptions from the SAR reporting requirement? Is it appropriate to rely on the fact that a potential customer is a personal acquaintance of a registered representative to meet identity verification obligations? Reputation Risk for the Country In addition, the Adopting Release notes that the rule is sufficiently flexible to make identity verification for personal acquaintances as unobtrusive as possible. FinCEN has also determined that a fully-disclosed introduced account is not a customer of the clearing firm for CIP purposes so long as the firms enter into a clearing agreement under which the functions of opening and approving customer accounts and directly receiving and accepting orders from the introduced customer will be allocated exclusively to the introducing firm and the function of extending credit, safeguarding funds and securities and issuing confirmations and statements will be allocated to the clearing firm. Keep up with FDIC announcements, read speeches and In order to implement a properly risk-based AML compliance program, a member firm may document the source of funds as part of general account due diligence based on the firms risk assessment of the account or the entity. Question 1 of 10 Ch. Find out how much you know about this sensitive topic by taking this anti-money laundering exam! Does a member of senior management also have to approve any subsequent material changes to the AML program? Yes. Examination Manual, Financial Crimes Enforcement Network (FinCEN), Financial institutions must use the electronic, The Office of National Drug Control Policy coordinates the drug control Learn about the FDICs mission, leadership, The site is secure. 19. Anti Money Laundering Exam Quiz - ProProfs Quiz Dampening Effect on Foreign Investments In addition, broker-dealers must obtain records in the United States of foreign bank owners and agents for service of process (Sections 313 and 319 of the USA PATRIOT Act). 5329 - Staff commentaries In accordance with our money laundering procedures your account has been locked to maintain the integrity of our fraud detection system, Your query is being considered by management and we will revert back to you shortly, Unusual volume of payment destinations, often with the same provider, Player wagers on both casino and sportsbook, Numerous withdrawals, just under the qualifying threshold, Multiple and frequent deposits followed by multiple and frequent withdrawals, either shortly afterwards or overlapping further deposits. or securities from customers to third party accounts; from customer accounts to outside entities (e.g., banks, investment companies, etc. Test is 10 questions. Don't forget to share this quiz with all your friends so they can stay aware of anti-money laundering practices as well! FALSE 3. The CIP rule defines "customer" as: (a) a person that opens a new account; and (b) an individual who opens a new account for an individual who lacks legal capacity or for an entity that is not a legal person. Rule 17a-8 under the Securities Exchange Act of 1934 (Exchange Act) requires broker-dealers to comply with the reporting, recordkeeping, and record retention rules adopted under the BSA. 13. Eighteen other countries are also monitored jurisdictions. See http://www.fatf-gafi.org/countries/#high-risk. Anti-Money Laundering - Ethical Decision Making for Insurance Producers A person breaks a large cash deposit into several smaller deposits with the intention of evading the filing of a Currency Transaction Report. In addition, the regulations set forth certain minimum requirements for the required due diligence program with respect to private banking accounts and require enhanced scrutiny to any such accounts where the nominal or beneficial owner is a senior foreign political figure.. According to TheUnited Nations Office on Drugs and Crime (UNODC), between 2 and 5% of global GDP is laundered each year. Another method of placing large amounts of illicit cash into the financial system is microstructuring. - Alerts compliance to potential outliers or deviations from normal policy that may need to be reviewed. Jojo's Bizarre Adventure: Which Stand do you have? Roll up your sleeves and get ready to become familiar with all the ways in which you can work on preventing Anti-money laundering involves all policies and pieces of legislation that force financial institutions to proactively monitor their clients in order to prevent money laundering and corruption. Registered representatives can fulfill Continuing Education requirements, view their industry CRD record and perform other compliance tasks. The no-action relief is conditioned on meeting the other provisions of the CIP rule and the Beneficial Ownership Requirements, respectively, as well as the other conditions described in the no-action relief. bankers, analysts, and other stakeholders. 2. The due diligence program must include appropriate, specific, risk-based policies, procedures, and controls reasonably designed to enable the broker-dealer to detect and report, on an ongoing basis, any known or suspected money laundering conducted through or involving any foreign correspondent account (Section 312 of the PATRIOT Act). Find out how much you know about this sensitive topic by taking this anti-money laundering exam! [4] As of the date of this guide, there are no designated government lists to verify specifically for CIP purposes. A designated AML compliance officer; 3. conferences and events. OFAC is an office within Treasury that administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign countries, terrorism sponsoring organizations, international narcotics traffickers, and those engaged in activities related to the proliferation of weapons of mass destruction. What are the CIP requirements if the customer is a trust or omnibus account? Beneficial owner means each of the following: Overview: Sections 312, 313, and 319 of the USA PATRIOT Act, which amended the BSA, are inter-related provisions involving correspondent accounts. These inter-related provisions include prohibitions on correspondent accounts that are maintained for foreign shell banks, as well as requirements for risk-based due diligence of foreign correspondent accounts more generally. 103 to the 31 C.F.R. It looks like you're using an old version of Internet Explorer. Think your knowledge is up to scratch? Loss of Tax Revenue reject prohibited, unlicensed trade and financial transactions, including those with OFAC-sanctioned countries. The amount of time may depend on various factors, which are part of a firm's risk assessment. The term "reasonable time" is not defined by the rule. Anti Money laundering Quiz Flashcards | Quizlet

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