FTT AML/CFT Compliance — Questions and Answers
Question 1: What are the three stages of money laundering?
- Placement, layering, and integration (Correct answer)
- Detection, reporting, and prosecution
- Identification, verification, and monitoring
- Structuring, smurfing, and commingling
Correct answer: Placement, layering, and integration
Money laundering typically occurs in three stages: Placement (introducing illegal funds into the financial system), Layering (conducting complex transactions to obscure the trail), and Integration (reintroducing the laundered funds into the legitimate economy as clean money).
Question 2: What is 'structuring' (also known as 'smurfing') in the context of money laundering?
- Breaking up large cash transactions into smaller amounts to avoid triggering mandatory reporting thresholds (Correct answer)
- Creating complex corporate structures to hide asset ownership
- Using multiple bank accounts across different countries simultaneously
- Converting cash into foreign currencies in small amounts
Correct answer: Breaking up large cash transactions into smaller amounts to avoid triggering mandatory reporting thresholds
Structuring involves deliberately breaking up large transactions into smaller amounts to avoid triggering mandatory reporting thresholds. It is itself a criminal offence under Singapore's CDSA, independent of any underlying money laundering offence.
Question 3: What is a Politically Exposed Person (PEP) under MAS guidelines?
- An individual who is or has been entrusted with a prominent public function, and their immediate family members and close associates (Correct answer)
- Any government employee regardless of their level
- Only foreign heads of state and their families
- Any person who has donated to a political party
Correct answer: An individual who is or has been entrusted with a prominent public function, and their immediate family members and close associates
A PEP is an individual who holds or has held a prominent public function (such as heads of state, senior politicians, government officials, judicial officers, senior military officials, or senior executives of state-owned enterprises) as well as their immediate family members and close associates.
Question 4: Under Singapore's AML/CFT framework, what does Customer Due Diligence (CDD) involve?
- Identifying and verifying customer identity, understanding the nature of the business relationship, and assessing money laundering and terrorism financing risks (Correct answer)
- Only checking whether a customer is on a sanctions list
- Only verifying the source of funds for transactions above S$20,000
- Conducting CDD once at account opening and not thereafter
Correct answer: Identifying and verifying customer identity, understanding the nature of the business relationship, and assessing money laundering and terrorism financing risks
CDD involves identifying and verifying the identity of customers (and beneficial owners), understanding the nature and purpose of the business relationship, and assessing the AML/CFT risk profile. It must be conducted at account opening and on an ongoing basis throughout the relationship.
Question 5: When must Enhanced Due Diligence (EDD) be applied?
- When dealing with Politically Exposed Persons, high-risk customers, or customers from high-risk jurisdictions (Correct answer)
- Only when a transaction exceeds S$20,000
- For all new retail customers regardless of risk profile
- Only when requested by law enforcement
Correct answer: When dealing with Politically Exposed Persons, high-risk customers, or customers from high-risk jurisdictions
EDD must be applied in higher-risk situations, including when dealing with PEPs, customers from high-risk jurisdictions identified by FATF, or others assessed as higher risk. EDD involves more detailed and intrusive checks than standard CDD.
Question 6: Suspicious Transaction Reports (STRs) in Singapore must be filed with:
- The Suspicious Transaction Reporting Office (STRO) under the Singapore Police Force (Correct answer)
- The Monetary Authority of Singapore directly
- The Inland Revenue Authority of Singapore
- The Singapore Exchange
Correct answer: The Suspicious Transaction Reporting Office (STRO) under the Singapore Police Force
STRs must be filed with STRO, which operates under the Singapore Police Force as Singapore's financial intelligence unit (FIU). STRO analyses reports for money laundering and terrorism financing and shares intelligence with law enforcement and regulators.
FTT AML/CFT Compliance
What are the three stages of money laundering?