Anti-Money Laundering and Compliance
This domain tests the AML/CFT obligations of capital market intermediaries under the AMLATFPUAA 2001 and SC guidance. Expect scenario questions on customer due diligence, suspicious transaction reporting and record keeping.
Core rules
- Firms must adopt a risk-based approach: identify, assess and mitigate money laundering and terrorist financing risk.
- Customer due diligence (CDD) includes identifying the customer, beneficial owner and purpose of the relationship. Enhanced due diligence (EDD) applies to higher-risk customers, including politically exposed persons.
- Sanctions and adverse media screening must be performed and documented.
- Suspicious transactions must be reported to the Financial Intelligence Unit without delay; tipping off the customer is prohibited.
- Records must be kept for at least six years after the relationship ends or the transaction is completed.
- Reliance on third-party CDD is permitted only under conditions, and the firm remains responsible.
Worked example
A client asks to fund an account using a third party's bank account and cannot explain the source of funds. The firm should verify identity, identify the beneficial owner, obtain source-of-funds evidence and apply EDD. If suspicion remains, it should submit a suspicious transaction report and consider whether to continue the relationship, without tipping off the client.
Traps
Treating CDD as a one-off onboarding step; ignoring beneficial ownership; tipping off; assuming small transactions are exempt; closing an account without reporting suspicion.