Financial Crime Prevention Flashcards

What are economic sanctions in the context of financial crime prevention?

Answer: Restrictions imposed by governments on financial dealings with certain countries, entities, or individuals

Economic sanctions are restrictions imposed by governments and international bodies on financial and trade dealings with specific countries, entities, or individuals to achieve foreign policy and national security objectives.

Which UK body is responsible for implementing and enforcing financial sanctions?

Answer: The Office of Financial Sanctions Implementation (OFSI) within HM Treasury

OFSI, part of HM Treasury, is responsible for implementing and enforcing financial sanctions in the UK. It maintains the UK sanctions list and can impose monetary penalties for breaches.

What is 'de-risking' and why is it problematic?

Answer: Firms terminating relationships with entire categories of customers to avoid AML risk, which can drive activity underground

De-risking occurs when firms indiscriminately terminate relationships with entire categories of customers (e.g., money service businesses) rather than managing risks. This can exclude legitimate customers and drive financial activity into less regulated channels.

What is a 'proliferation financing' risk?

Answer: The risk of providing financial services that could contribute to the spread of weapons of mass destruction

Proliferation financing involves the provision of financial services that could contribute to the proliferation of weapons of mass destruction. Firms must assess and manage this risk as part of their AML/CTF framework.

What is the Criminal Finances Act 2017?

Answer: Legislation that introduced Unexplained Wealth Orders and corporate offences of failing to prevent tax evasion

The Criminal Finances Act 2017 introduced several new tools including Unexplained Wealth Orders (UWOs), extended information sharing powers for SARs, and corporate criminal offences for failing to prevent the facilitation of tax evasion.

What is an Unexplained Wealth Order (UWO)?

Answer: A court order requiring a person to explain the lawful origin of property worth over £50,000 where there are reasonable grounds for suspecting involvement in serious crime

A UWO, introduced by the Criminal Finances Act 2017, requires a person to explain how they obtained property worth over £50,000 if there are reasonable grounds to suspect the property was obtained through unlawful conduct or the person is a PEP.