Amwal AML & Compliance Training

Money laundering is the process of disguising the origins of illegally obtained money by making it appear as if it came from legitimate sources. It involves a series of transactions and activities that aim to "clean" the money and make it appear legal. This is typically done to hide the illicit activities that generated the funds and to make it difficult for authorities to trace the money back to its illegal source. Money laundering can involve various methods and techniques, such as creating shell companies, using offshore accounts, and engaging in complex financial transactions.

The correct answer is Placement, Layering & Integration. Money laundering involves three main stages: placement, layering, and integration. Placement refers to the process of introducing illicit funds into the financial system, often through cash deposits or transfers. Layering involves complex transactions and movements of funds to obscure the audit trail and make it difficult to trace the origin of the money. Integration is the final stage where the laundered funds are reintroduced into the legitimate economy, appearing as legitimate assets or investments. This three-stage process is commonly used by criminals to disguise the illicit origins of their funds.

CFT stands for Combating the Financing of Terrorism. This term refers to the efforts made by governments and international organizations to prevent and disrupt the financial support provided to terrorist groups. It involves various measures such as monitoring financial transactions, freezing assets, and implementing regulations to prevent money laundering and terrorist financing activities. The goal is to cut off the funding sources of terrorist organizations and hinder their ability to carry out attacks.

All of the above options would cause concern and be considered a 'Red Flag' when starting a business relationship with a client. Unrealistic wealth compared to their profile could indicate potential fraudulent activity or misrepresentation. Trading with no or little benefits and losses without concern may suggest a lack of regard for financial stability or a disregard for risk management. Large or rapid movement of funds could indicate money laundering or other illegal activities. Therefore, all of these scenarios would raise concerns and be considered red flags.

The QFCRA 'Competency and Training' regime coming into effect in January 2014 means that Amwal is required to monitor the ongoing training and competency of its staff. This implies that the firm must ensure that its employees are continuously trained and competent in their respective roles. The regime does not have any relation to driving licenses, CVs, or staff diets.

The correct answer is 'Strange Transaction Record' and inform the MLRO who investigates and reports to the FIU. This is the process of flagging a STR. When a strange or suspicious transaction is identified, it is recorded as a STR. The MLRO (Money Laundering Reporting Officer) is responsible for investigating these transactions and reporting them to the FIU (Financial Intelligence Unit) for further action.

The correct answer includes a comprehensive scope of work that would suffice in reviewing the client. It involves conducting Google/Internet/News searches to gather information about the client, verifying the source of funds, conducting regular reviews, and assessing and checking the immediate family, known colleagues/friends/companies of the politically exposed persons (PEPs) on the board. The MLRO (Money Laundering Reporting Officer) needs to sign off on the findings and a risk rating should be assigned. This approach ensures a thorough evaluation of the client's background and potential risks associated with their involvement with PEPs.

The responsibility for compliance lies with all of the above options, including the Board of Directors, Senior Management & Staff, and the Compliance Office. Compliance is a shared responsibility that involves the entire organization, from top-level executives to frontline employees. The Board of Directors sets the tone at the top and establishes policies and procedures to ensure compliance. Senior Management and staff are responsible for implementing these policies and procedures and ensuring that they are followed. The Compliance Office provides guidance, oversight, and support to ensure that the organization complies with all relevant laws, regulations, and internal policies.

The correct answer is 'Risk Based Approach'. When assessing a client as per QCRA regulations, it is important to follow a risk-based approach. This means that the assessment process should be guided by the level of risk associated with the client or the transaction. This approach allows for a more targeted and efficient assessment, focusing resources on higher-risk areas while minimizing unnecessary scrutiny on low-risk areas. It helps ensure that compliance efforts are proportionate to the level of risk, promoting effective risk management and regulatory compliance.

Amwal LLC should offer to 'opt up' the client if they qualify, which means upgrading their services or products based on their eligibility. If the client meets the criteria, Amwal LLC can provide them with additional financial advice and assistance. However, if the client does not qualify, Amwal LLC can still engage in a 'factual' conversation with them, providing information and answering their queries without offering any specific financial advice.

The basic requirements of KYC (Know Your Customer) and basic CDD (Customer Due Diligence) involve the processes of identifying, verifying, and assessing the customer. This means that financial institutions and other businesses need to gather information about their customers, confirm their identities, and evaluate their potential risks in order to prevent money laundering, fraud, and other illicit activities. By following these requirements, businesses can ensure compliance with regulations and maintain the integrity of their operations.

Charities are not considered "low risk" customers because they typically deal with large amounts of money and donations, making them potential targets for money laundering or fraudulent activities. Unlike other regulated financial institutions, listed companies, and government/public authorities, charities may have less stringent financial controls and oversight, making them more susceptible to financial crimes. Therefore, charities are not categorized as "low risk" customers in terms of financial transactions.

The correct answer is "The ultimate major Beneficial Owner(s)." This means that when conducting Customer Due Diligence (CDD), we stop at the point of identifying and verifying the ultimate major Beneficial Owner(s) of the client. This is important because the ultimate major Beneficial Owner(s) are the individuals who ultimately benefit from or control the client, and knowing their identity is crucial for assessing any potential risks associated with the client's activities.

KYC (Know Your Customer) should be initiated with a new client at an early stage after about the 2nd/3rd meeting. This allows the company to gather necessary information about the client, such as their identity, financial status, and risk profile, in order to assess the potential risks associated with the business relationship. By conducting KYC early on, the company can make informed decisions and ensure compliance with regulatory requirements before entering into a contract or providing any services to the client.

The given correct answer states that "It is a fool proof system" is NOT a benefit of a 'Risk Based Approach'. This means that a risk-based approach is not a foolproof system. A risk-based approach acknowledges that there will always be some level of risk involved and focuses on assessing and mitigating those risks at a more personal level. It is more flexible, effective, and proportionate compared to a 'tick the box' approach. However, it is not a foolproof system, as it cannot completely eliminate all risks.

The correct answer is "A Retail Client who has $1m in net assets and sufficient knowledge to transact." This is because when a client "Opts Up," they are choosing to move from being a retail client to a higher level of service that is typically reserved for clients with a higher net worth and more investment knowledge. Therefore, the client must meet the criteria of having at least $1 million in net assets and the necessary knowledge to engage in transactions at this level.

Customer Due Diligence (CDD) refers to the process of verifying the identity of customers and assessing the potential risks associated with their business relationships. It involves gathering relevant information about customers to ensure compliance with regulations and to prevent money laundering, fraud, and other illicit activities. Customer Facing Staff are responsible for directly interacting with customers and collecting the necessary information for CDD purposes. They play a crucial role in conducting due diligence checks, maintaining accurate records, and reporting any suspicious activities to the compliance or risk departments.

Danielle Chackar is the Deputy MLRO because she is the only name mentioned in the options provided.

A PEPs stockbroker is not considered a 'high risk' customer because PEPs (Politically Exposed Persons) are individuals who hold prominent public positions, such as government officials or heads of state, and their stockbrokers are not inherently high risk. While PEPs themselves are considered high risk due to their potential for corruption or money laundering, their stockbrokers are not automatically categorized as high risk customers. The other options listed in the question, such as cash intensive businesses and customers with complex ownership structures, are considered high risk due to the potential for money laundering or illicit activities.

A retail client can be opted up if they work for a financial institution and have enough skills and experience, or if they have over $1m in liquid assets and the firm is satisfied that they have sufficient knowledge and understanding to invest. This means that both options A and C are correct, as they both satisfy the criteria for a retail client to be opted up. Option B, which states that having over $1m in liquid assets alone is sufficient, is not correct as it does not consider the client's knowledge and understanding of investing.