Financial Crime Prevention Flashcards

What is the role of a Money Laundering Reporting Officer (MLRO)?

Answer: To receive internal disclosures of suspicious activity and decide whether to submit SARs to the NCA

The MLRO is responsible for receiving internal reports of suspicious activity from employees, evaluating them, and if appropriate, submitting SARs to the NCA. The MLRO must be a senior person within the firm.

What is a Politically Exposed Person (PEP)?

Answer: A person entrusted with a prominent public function, or their family members and close associates

A PEP is an individual entrusted with a prominent public function (such as heads of state, ministers, judges, or senior military officers), plus their family members and known close associates. PEPs present a higher risk of corruption.

What are the main money laundering offences under the Proceeds of Crime Act 2002?

Answer: Concealing, arranging, and acquiring/using/possessing criminal property

POCA creates three principal money laundering offences: concealing criminal property (s.327), arranging the acquisition, retention, use, or control of criminal property (s.328), and acquiring, using, or possessing criminal property (s.329).

What is 'reliance' in the context of CDD?

Answer: Relying on another regulated person to apply CDD measures, while remaining liable for any failure

Under the MLR 2017, a firm can rely on another regulated person to apply CDD measures. However, the firm relying on the other person remains liable for any failure to apply adequate CDD.

What is the purpose of ongoing monitoring in AML compliance?

Answer: To scrutinise transactions and keep CDD information up to date to detect suspicious activity

Ongoing monitoring involves scrutinising transactions to ensure they are consistent with the firm's knowledge of the customer and their risk profile, and keeping CDD information up to date throughout the business relationship.

What is 'smurfing' in money laundering?

Answer: Breaking large amounts of cash into smaller deposits below reporting thresholds

Smurfing (also called structuring) involves breaking a large sum of money into smaller amounts and making multiple deposits or transactions to avoid triggering reporting thresholds and detection.