Anti-Money Laundering and Financial Crime Flashcards

Which of the following best describes a Politically Exposed Person (PEP) in AML terms?

Answer: An individual who holds or has held a prominent public function, considered higher risk due to potential for corruption

A PEP is someone who holds or has held a prominent public position — such as a head of state, senior politician, or senior military official — and is treated as higher risk due to potential exposure to corruption and bribery.

In which circumstances is Enhanced Due Diligence (EDD) required under UK AML regulations?

Answer: For customers identified as higher risk, such as PEPs and those from high-risk third countries

EDD is required in higher-risk situations, including dealings with PEPs, customers connected to high-risk third countries identified by FATF, and other circumstances indicating elevated money laundering risk.

What is 'smurfing' (also known as structuring) as used by money launderers?

Answer: Breaking large sums of money into smaller deposits to avoid transaction reporting thresholds

Smurfing or structuring involves deliberately breaking down large sums into smaller transactions, typically below reporting thresholds, to avoid detection by financial institutions and authorities.

What is the primary role of the UK Financial Intelligence Unit (UKFIU) in the AML framework?

Answer: Receiving, analysing, and disseminating financial intelligence derived from SARs submitted to the NCA

The UKFIU sits within the National Crime Agency and is the central body responsible for receiving, analysing, and sharing SAR intelligence with law enforcement and other relevant agencies.

Which of the following is a placement technique rather than a layering technique in money laundering?

Answer: Depositing cash through a currency exchange bureau

Using a currency exchange bureau to convert cash is a placement technique, introducing physical currency into the financial system; the other options involve disguising existing electronic funds, which is layering.

Under the Money Laundering Regulations 2017, which of the following is NOT part of the regulated sector subject to AML obligations?

Answer: Supermarket chains

Supermarket chains are not subject to the Money Laundering Regulations; the regulated sector covers financial institutions, legal and accounting professionals, estate agents, and high-value dealers, among others.

What is the maximum custodial sentence for a principal money laundering offence under the Proceeds of Crime Act 2002?

Answer: 14 years

The maximum sentence for the principal money laundering offences under POCA 2002 is 14 years' imprisonment, reflecting the severity with which the UK treats financial crime.