IATI Diploma flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Placement
- The first stage of money laundering, where illicit cash is introduced into the financial system through deposits, purchases, or other means.
- Layering
- The second stage of money laundering, involving complex transactions to obscure the source and ownership of illicit funds.
- Integration
- The final stage of money laundering, where laundered funds are reintroduced into the economy as apparently legitimate assets.
- Terrorist financing
- The provision or collection of funds with the intention that they be used to carry out terrorist acts, regardless of whether the funds are from legitimate sources.
- Predicate offence
- The underlying criminal activity that generates proceeds which are then laundered; money laundering is typically defined by reference to such offences.
- FATF Recommendations
- The 40 international standards on AML/CTF and proliferation financing issued by the Financial Action Task Force, forming the basis of national regimes.
- Mutual evaluation
- The FATF process that assesses a country's technical compliance with the Recommendations and the effectiveness of its AML/CTF system in practice.
- Wolfsberg Group
- An association of global banks that publishes voluntary industry guidance on AML/CTF, including CDD and correspondent banking principles.
- Egmont Group
- An international network of financial intelligence units that facilitates cooperation and secure information exchange to combat money laundering and terrorist financing.
- Inherent risk
- The level of money laundering or terrorist financing risk that exists before any controls or mitigation measures are applied.
- Residual risk
- The level of money laundering or terrorist financing risk that remains after controls and mitigation measures have been implemented.
- Business-wide risk assessment
- A documented assessment of an institution's overall ML/TF risk exposure across customers, products, delivery channels, and geographic locations.
- Risk-based approach
- The principle that AML/CTF measures should be proportionate to the assessed risk, with enhanced measures for higher-risk situations and simplified measures for lower-risk ones.
- Customer risk rating
- A classification (e.g., low, medium, high) assigned to a customer based on factors such as occupation, geography, and product use, determining due diligence intensity.
- Beneficial owner
- A natural person who ultimately owns or controls a legal entity or arrangement, often defined by an ownership threshold such as 25% or more.
- Customer due diligence
- The process of identifying and verifying a customer's identity, identifying beneficial owners, and understanding the purpose of the relationship.
- Simplified due diligence
- Reduced CDD measures permitted only where the risk of money laundering or terrorist financing is assessed as low and the basis is documented.
- Ongoing monitoring
- The continuous process of reviewing customer transactions and keeping CDD information up to date to detect activity inconsistent with the customer's profile.
- Politically exposed person
- An individual entrusted with a prominent public function, along with family members and close associates, who presents higher ML/TF risk and requires enhanced due diligence.
- Source of wealth
- The origin of a customer's overall accumulated wealth, such as business ownership, inheritance, or employment income, used in enhanced due diligence.
- Source of funds
- The origin of the specific funds involved in a transaction or relationship, which must be established in enhanced due diligence for high-risk cases.
- Correspondent banking
- A relationship where one bank provides payment and other services to another bank; enhanced due diligence is required due to cross-border and intermediary risk.
- Shell bank
- A bank with no physical presence in any country, which should not be permitted as a correspondent customer due to high ML/TF risk.
- Structuring
- The practice of breaking up transactions into smaller amounts to avoid reporting or record-keeping thresholds, a common money laundering red flag.
- Suspicious activity report
- A report filed with the financial intelligence unit when there are reasonable grounds to suspect money laundering or terrorist financing.
- Tipping off
- Disclosing to a customer or third party that a suspicious activity report has been or will be filed, which is a criminal offence in many jurisdictions.
- Financial intelligence unit
- A national agency responsible for receiving, analysing, and disseminating suspicious transaction reports and other financial intelligence to law enforcement.
- Targeted financial sanctions
- Measures requiring the freezing of funds and economic resources of designated persons and entities, and prohibiting making funds available to them.
- Sanctions screening
- The process of checking customers, beneficial owners, and counterparties against applicable sanctions lists at onboarding and on an ongoing basis.
- Proliferation financing
- The provision of funds or financial services for the proliferation of weapons of mass destruction, addressed through targeted financial sanctions and other measures.
- Compliance officer
- The designated individual responsible for overseeing the AML/CTF programme, receiving internal reports, and filing suspicious activity reports with the FIU.
- Independent testing
- Periodic audits or reviews conducted by an independent function to assess the effectiveness of an institution's AML/CTF programme and controls.