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International AML Standards and FATF Flashcards

6 cards from real CAMS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 International AML Standards and FATF flashcards as text

  1. What does the FATF Recommendation 16 (the 'Travel Rule') require?

    Answer: Wire transfer originators and beneficiary institutions to pass along and retain specific information about the parties to a transaction

    The Travel Rule (Recommendation 16) requires financial institutions initiating wire transfers to include originator and beneficiary information (name, account number, address) with the transfer, and requires receiving institutions to retain this information.

  2. How does FATF's approach to virtual assets (cryptocurrencies) differ from its approach to traditional finance?

    Answer: FATF extended the Travel Rule and other key Recommendations to Virtual Asset Service Providers (VASPs), requiring them to meet the same AML/CFT standards as traditional financial institutions

    Through 2019 and 2021 revisions, FATF extended its Travel Rule, customer due diligence, and other Recommendations to VASPs (exchanges, wallet providers), requiring them to implement the same standards as banks and money services businesses.

  3. What is a FATF-Style Regional Body (FSRB)?

    Answer: An associate member of FATF that performs similar functions (mutual evaluations, typologies) for non-FATF member jurisdictions in a particular region

    FSRBs (such as MONEYVAL in Europe, CFATF in the Caribbean, APG in Asia-Pacific) are associate members of FATF that conduct mutual evaluations and develop AML standards for their regional members who are not full FATF members.

  4. What is 'de-risking' and why has FATF raised concerns about it?

    Answer: The practice of banks exiting entire customer segments or correspondent relationships due to perceived AML risk, which FATF warns undermines financial inclusion and can push transactions to less regulated channels

    FATF has expressed concern that wholesale de-risking (exiting entire geographies or customer categories) is not consistent with a risk-based approach, reduces financial inclusion, and can drive transactions to less-regulated and less-monitored channels.

  5. Under FATF Recommendation 24, what must countries do to improve transparency of legal persons?

    Answer: Require countries to maintain adequate, accurate, and timely information on the beneficial ownership of companies and make it accessible to competent authorities

    FATF Recommendation 24 requires countries to ensure they have mechanisms to identify and access beneficial ownership information for legal persons, either through company registries, financial institutions, or other means, to prevent misuse for money laundering.

  6. What is FATF's approach to the risk-based approach (RBA) in the context of financial institutions?

    Answer: FATF endorses the RBA as the foundation of an effective AML/CFT system, requiring institutions to identify, assess, and understand their specific risks and apply commensurate controls

    FATF's risk-based approach, articulated throughout its Recommendations, requires that AML controls be proportionate to identified risks — more resources and controls for higher risks, with simplified measures permissible for genuinely low-risk situations.