ANFI flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- FATF Recommendations
- The 40 international standards setting the global framework for anti-money laundering, counter-terrorist financing, and counter-proliferation financing that national laws implement.
- Risk-based approach
- A regulatory principle requiring controls proportionate to the assessed money laundering and terrorist financing risk of customers, products, and jurisdictions rather than a uniform standard.
- Independent audit
- A periodic, objective test of the AML program conducted by parties outside the compliance function to verify controls operate as designed.
- AML compliance officer
- The designated individual responsible for implementing and overseeing the institution's anti-money laundering program, with authority and resources to enforce it.
- Beneficial ownership
- The natural persons who ultimately own or control a legal entity, commonly identified at a 25 percent ownership threshold plus any controlling person.
- Customer due diligence
- The process of identifying a customer, verifying identity, and understanding the purpose and intended nature of the business relationship.
- Enhanced due diligence
- Additional scrutiny applied to higher-risk customers such as politically exposed persons, including source of wealth and senior management approval.
- Politically exposed person
- An individual entrusted with prominent public functions, or their family or close associates, who presents elevated corruption and bribery risk.
- Source of funds
- The origin of the specific money used in a transaction or relationship, such as salary, sale proceeds, or a loan.
- Source of wealth
- The origin of a customer's total accumulated assets and net worth, describing how the overall estate was built over time.
- Simplified due diligence
- Reduced verification measures permitted only for demonstrably low-risk customers and never when suspicion of money laundering exists.
- Placement
- The first stage of money laundering, where illicit cash enters the financial system through deposits, purchases, or currency exchange.
- Layering
- The second stage of money laundering, using complex transactions and transfers to obscure the origin and ownership of illicit funds.
- Integration
- The final stage of money laundering, where laundered funds re-enter the legitimate economy appearing as lawful assets or income.
- Structuring
- Deliberately splitting transactions below reporting thresholds to evade currency transaction reporting requirements, which is itself a criminal offense.
- Tipping off
- Disclosing to a customer or third party that a suspicious activity report has been or will be filed, which is prohibited.
- Sanctions screening
- Checking customers and transactions against designated lists, requiring asset freezing and blocking rather than only suspicious activity reporting.
- Terrorist financing
- Providing or collecting funds for terrorist purposes; unlike money laundering, the funds may originate from lawful sources.
- Correspondent banking
- An arrangement where one bank holds accounts for another to process payments, requiring enhanced scrutiny of the respondent's ownership and AML controls.
- Trade-based laundering
- Moving value across borders by mispricing, over- or under-invoicing goods, or documenting phantom shipments in trade finance.
- Prepaid card risk
- Elevated money laundering exposure from reloadable, transferable, or cross-border stored-value instruments that offer anonymity and limited audit trails.
- New product approval
- A pre-launch process requiring risk assessment, documented controls, and compliance sign-off before a product or service is offered.
- Inherent risk
- The level of money laundering or financial crime risk present before any controls or mitigation measures are applied.
- Residual risk
- The risk remaining after controls and mitigation have been applied, compared against the institution's stated risk appetite.
- Risk appetite
- The amount and type of risk an institution is willing to accept in pursuit of its objectives, expressed in documented limits and tolerances.
- Control testing
- Independent verification that a control operates as designed in practice, distinguishing effective controls from those existing only on paper.
- Country risk
- Risk attributed to a jurisdiction based on factors such as FATF listings, sanctions exposure, corruption levels, and quality of AML supervision.
- Confidentiality override
- The principle that customer confidentiality yields to legal obligations to report suspicious activity to the financial intelligence unit.
- Conflicts of interest
- Situations where personal or business interests could improperly influence decisions, requiring identification, disclosure, and management.
- Suspicious activity report
- A confidential filing to the national financial intelligence unit describing transactions suspected of involving illicit funds or criminal activity.
- Currency transaction report
- A filing required for physical cash transactions exceeding a jurisdiction's threshold, commonly set at ten thousand US dollars or euros.
- Record retention period
- The required duration for keeping transaction and due diligence records, typically five years after the transaction or relationship end.