ICA TBML Specialist Cert flashcards

33 cards. Read the term and the definition here. The deck at the top of this page is optional.

Placement stage

The first money laundering stage, in which illicit cash or value enters the financial system through deposits, purchases, or trade payments, separating the funds from their criminal origin.

Layering stage

The second laundering stage, using multiple transactions, accounts, entities, or trade deals to obscure the audit trail and distance funds from their source.

Integration stage

The final laundering stage, where laundered funds re-enter the legitimate economy as apparently lawful assets, investments, or business revenue.

Over-invoicing

A TBML technique where goods are invoiced above their true value, so the importer pays excess funds abroad to the exporter, moving value out of the importing country.

Under-invoicing

A TBML technique where goods are invoiced below true value, so the importer pays less than fair value and the difference is settled offshore, leaving capital outside the jurisdiction.

Multiple invoicing

A TBML technique in which the same shipment is invoiced more than once through different banks or channels, generating several payments for a single consignment.

Carousel trade

Circular trading of goods among related parties across borders to create a documented payment trail that gives illicit funds an appearance of legitimate trade proceeds.

Trade mispricing red flag

Invoice prices that deviate sharply from world market benchmarks for the same goods, especially when no commercial rationale explains the difference.

Short shipping

Declaring a larger quantity of goods than is actually shipped, so payment exceeds the value of goods delivered and the surplus is transferred abroad.

Letter of credit

A bank undertaking to pay an exporter on presentation of compliant documents; used in trade finance and exploitable for TBML when documents are falsified.

FATF Recommendations

The international AML/CFT standard comprising 40 Recommendations covering policy, criminalization, preventive measures, and international cooperation among jurisdictions.

Risk-based approach

An AML principle under which control intensity is calibrated to assessed customer, product, channel, and geographic risk rather than applied uniformly.

Suspicious transaction report

A filing to the financial intelligence unit disclosing activity suspected of involving criminal proceeds; tipping off the customer about the filing is prohibited.

Tipping off

Disclosing to a customer or third party that a suspicious transaction report has been filed or that an investigation is underway, an offense in most regimes.

Politically exposed person

An individual entrusted with prominent public functions, plus close associates and family, who requires enhanced due diligence due to corruption risk.

Record retention period

The minimum time CDD records and transaction data must be kept, set by national law, commonly five years after the relationship ends.

Structuring

Splitting transactions into amounts below reporting thresholds to avoid triggering reports; detection requires aggregating linked transactions across accounts and time.

Sanctions screening

Checking customers, beneficial owners, counterparties, vessels, and payment messages against sanctions lists to freeze assets and block prohibited transactions.

False positive

A screening or monitoring alert that on review does not represent genuine risk; excessive false positives erode analyst capacity and require tuning.

Dual-use goods

Items with both civilian and military applications whose export requires end-user and end-use verification to prevent proliferation financing.

AIS dark period

A gap in a vessel's automatic identification system transmission, a trade-finance red flag suggesting concealment of a sanctioned port call or ship-to-ship transfer.

Transaction monitoring

Automated or manual review of customer activity against thresholds, scenarios, and behavioral baselines to detect activity inconsistent with the expected profile.

Beneficial owner

The natural person who ultimately owns or controls a customer or the funds in a transaction, commonly identified at a 25 percent ownership threshold.

Enhanced due diligence

Additional CDD measures such as source-of-wealth evidence and senior sign-off, mandatory for PEPs, high-risk jurisdictions, and complex ownership structures.

Simplified due diligence

Reduced CDD measures permitted only where risk is demonstrably low, never available for suspected activity or mandatory EDD categories.

Source of funds

The origin of the specific money used in a particular transaction, distinct from the customer's broader accumulated wealth.

Source of wealth

The origin of a customer's total accumulated assets and income over time, used to assess whether wealth is consistent with the stated profile.

Ongoing monitoring

Continuous review of a relationship including periodic KYC refresh, event-driven review, and transaction monitoring aligned to the customer's risk rating.

Nominee director

A director acting on another person's instructions; combined with layered offshore ownership, a red flag that beneficial ownership is being concealed.

CDD inability rule

Where customer due diligence cannot be completed, the institution should not establish or continue the relationship and should consider a suspicious transaction report.

Third-party reliance

Using an intermediary to perform CDD elements; the regulated entity retains ultimate responsibility for the adequacy of the due diligence outcome.

Customer risk rating

A score assigned from customer, product, channel, and geographic factors that determines the level of due diligence and monitoring applied.

Trade-based red flag

A trade pattern indicator such as unexplained third-country routing, cash payment for goods, or goods inconsistent with the customer's stated business.