Anti-Money Laundering Flashcards

What are the red flags for potential money laundering?

Answer: Unusual transaction patterns, reluctance to provide information, and use of shell companies

Red flags include unusual or inconsistent transaction patterns, reluctance to provide identification, use of shell companies, and transactions with no apparent economic purpose.

What is a shell company in the context of money laundering?

Answer: A company with no significant assets or operations used to disguise the source of funds

A shell company has no significant operations, assets, or employees but exists on paper. It can be used to hide the true ownership or source of funds.

What is the 'travel rule' in AML regulations?

Answer: Requirements to share originator and beneficiary information in cross-border wire transfers

The travel rule requires financial institutions to include and transmit originator and beneficiary information with cross-border wire transfers for traceability.

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

Answer: To oversee the AML programme and handle suspicious transaction reporting

The MLRO is responsible for overseeing the institution's AML compliance programme, receiving internal suspicious reports, and filing STRs with STRO.

What is beneficial ownership?

Answer: The natural person(s) who ultimately own or control a legal entity

The beneficial owner is the natural person who ultimately owns or controls a customer entity, or on whose behalf a transaction is conducted, even if the legal ownership is in another name.

What is trade-based money laundering?

Answer: Using international trade transactions to move value and disguise proceeds of crime

Trade-based money laundering involves manipulating trade transactions (through over/under-invoicing, false descriptions, or phantom shipments) to transfer value and disguise criminal proceeds.