ICA TBML Specialist Cert cheat sheet

TBML moves value through trade transactions rather than through wire transfers, exploiting the gap between the declared price/quantity of goods and their true price/quantity.

Core TBML techniques: over-invoicing, under-invoicing, multiple invoicing, short-shipping/over-shipping, falsely described goods, and misrepresented quality or origin.

Over-invoicing shifts value out of the importing country: the importer pays more than the goods are worth and the excess is deposited abroad.

Under-invoicing shifts value in the opposite direction: the importer pays less than fair value and settles the difference offshore, leaving capital outside the home country.

Multiple invoicing: the same shipment is invoiced more than once through different banks, allowing several payments for one consignment.

Red flags: shipments inconsistent with the customer's stated business, goods priced far from world market benchmarks, repeated round-sum invoice values, and trade routes through unrelated third jurisdictions.

Trade finance instruments used to layer value include letters of credit, documentary collections, open account terms, and back-to-back or transferable LCs.

Carousel or circular trade: goods are traded repeatedly among related parties across borders to create a documented payment trail for funds of illicit origin.

Three stages of money laundering: placement (entering the financial system), layering (obscuring the trail), and integration (returning funds as apparently legitimate assets).

FATF Recommendations are the international standard; the 40 Recommendations cover AML/CFT policy, criminalization, preventive measures, and international cooperation.

Risk-based approach: controls and monitoring intensity are calibrated to assessed customer, product, channel, and geographic risk, not applied uniformly.

Record-keeping and reporting obligations typically include suspicious transaction/activity reports (STR/SAR), currency transaction reports above set thresholds, and retention of CDD records for a defined period.

Four-eyes or independent review of high-risk relationships reduces the chance that a single officer can suppress an alert or override a risk rating.

PEPs, correspondent banking, and new technologies are treated as higher-risk categories requiring enhanced measures under FATF guidance.

Tipping off - disclosing an STR or the fact of an investigation to the customer - is itself a criminal offense in most regimes.

Sanctions screening differs from AML monitoring: sanctions require asset freezing and transaction blocking, while AML focuses on suspicious activity reporting.

Financial crime prevention combines AML, counter-terrorist financing, sanctions compliance, fraud controls, anti-bribery and corruption, and market abuse surveillance.

Sanctions screening should cover customers, beneficial owners, counterparties, vessels, and payment messages, with list updates applied on a defined frequency.

Name screening produces false positives; effectiveness is measured by tuning thresholds and reviewing alert disposition quality, not by alert volume alone.

Transaction monitoring rules are typically threshold-based, scenario-based (structuring, rapid pass-through), or behavior-anomaly based against a customer baseline.

Structuring or smurfing: splitting transactions to stay below reporting thresholds; pattern detection requires aggregating linked transactions across accounts and time.

Vessel and trade route screening: flag ships with dark-period AIS gaps, flag-hopping, or calls at sanctioned ports when financing trade.

Dual-use goods are items with both civilian and military applications; their export requires end-use and end-user verification to prevent proliferation financing.

Whistleblower and internal escalation channels, plus a documented investigation file, support defensible outcomes when regulators review a case.

CDD components: identify the customer, verify identity using reliable independent sources, identify beneficial owners, and understand the purpose and intended nature of the relationship.

Beneficial ownership threshold commonly used is 25% ownership or control, with a lower or zero threshold applied in some jurisdictions for specific entity types.

Simplified due diligence is permitted only for demonstrably lower-risk situations; enhanced due diligence is mandatory for PEPs, high-risk jurisdictions, and complex ownership structures.

Ongoing monitoring is part of CDD: periodic KYC refresh, event-driven review on trigger changes, and transaction monitoring aligned to the customer risk profile.

Layers of ownership should be traced to natural persons; nominee directors, bearer shares, and offshore chains are red flags requiring source-of-wealth evidence.

Source of funds explains the money used in a specific transaction; source of wealth explains the origin of the customer's total accumulated assets.

Reliance on third parties for CDD does not transfer ultimate responsibility - the regulated entity remains accountable for the CDD outcome.

If CDD cannot be completed, the rule is to not establish the relationship, not continue it, and consider filing an STR where suspicion exists.