CME-1 Anti-Money Laundering

Question 1

What is the primary Saudi legislation governing anti-money laundering?

Accepted Answer

Anti-Money Laundering Law issued by Royal Decree M/31

Answer

The Anti-Money Laundering Law (Royal Decree M/31) is the primary legislation governing AML in Saudi Arabia. It establishes offenses, penalties, and obligations for financial institutions to prevent money laundering.

Question 2

What does 'Know Your Customer' (KYC) require authorized persons to do?

Accepted Answer

Verify customer identity, assess risk, and maintain updated records

Answer

KYC requires authorized persons to verify customer identity using reliable documents, assess the customer's risk profile, understand the nature and purpose of the business relationship, and maintain updated records.

Question 3

What is a Suspicious Transaction Report (STR) and who must file it?

Accepted Answer

A report filed by financial institutions to the Saudi Financial Intelligence Unit when suspicious activity is detected

Answer

Financial institutions, including CMA-authorized persons, must file STRs with the Saudi Financial Intelligence Unit (SAFIU) when they suspect or have reasonable grounds to suspect that a transaction involves proceeds of crime or is related to money laundering or terrorism financing.

Question 4

What is the penalty for 'tipping off' a customer about a money laundering investigation?

Accepted Answer

Imprisonment for up to 2 years and/or a fine

Answer

Under Saudi AML law, tipping off a customer or any other person about an ongoing investigation or the filing of an STR is a criminal offense punishable by imprisonment for up to 2 years and/or a fine.

Question 5

What is Enhanced Due Diligence (EDD) and when must it be applied?

Accepted Answer

Additional verification measures applied to high-risk customers, PEPs, and complex transactions

Answer

EDD requires additional verification measures beyond standard CDD for high-risk situations, including dealings with Politically Exposed Persons (PEPs), complex or unusual transactions, and customers from high-risk jurisdictions.

CME-1 Practice Test

CME-1 Practice Test

CME-1 Anti-Money Laundering