Anti-Money Laundering and Counter-Terrorist Financing
Domain overview
This domain tests a risk-based AML/CFT programme for virtual assets: customer due diligence, beneficial ownership, ongoing monitoring, the travel rule, suspicious-transaction reporting, sanctions, and recordkeeping. The exam expects FATF-style concepts applied to exchanges, custodians, and other VASPs, including the boundary between custodial and non-custodial services.
Core concepts
- CDD/KYC: identify the customer and beneficial owner, verify using reliable sources, understand purpose and intended nature of the relationship, and apply enhanced due diligence for higher risk, including PEPs and high-risk jurisdictions.
- Travel rule: originating and beneficiary VASPs must exchange required originator and beneficiary information for transfers above the applicable threshold; the FATF threshold is USD/EUR 1,000.
- Monitoring: screen wallets and transactions, assess mixer or tumbler exposure, and document risk rationale. Wallet screening is evidence, not a substitute for analysis.
- Reporting: file SARs or STRs promptly, avoid tipping off, and keep records for the required period.
Worked example
An exchange customer deposits funds traced to a mixer and then buys a low-risk token. The mixer exposure is a red flag, not automatic guilt. The exam answer should require enhanced due diligence, source-of-funds evidence, senior approval, ongoing monitoring, and a SAR if suspicion remains. It should not rely only on a wallet-score vendor or close the account automatically without documented reasoning.
Traps that cost marks
Calling crypto anonymous. Treating a wallet score as a compliance decision. Failing to identify the beneficial owner behind a corporate customer. Ignoring the travel rule for unhosted-wallet transfers. Tipping off the customer.