Anti-money Laundering ( questions & 100% verified correct answers)

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Anti-money Laundering ( questions & 100% verified correct answers)Describe the three phases of money laundering. - ✔✔• Placement is the physical disposal of cash or other assets derived from cr... iminal activity. • Layering is the separation of illicit proceeds from their source by layers of financial transactions intended to conceal the origin of the proceeds. • Integration is supplying apparent legitimacy to illicit wealth through the re‐entry of the funds into the economy in what appears to be normal business or personal transactions. What are the two main reasons correspondent banking is vulnerable to money laundering? - ✔✔•By their nature, correspondent banking relationships create a situation in which a financial institution carries out financial transactions on behalf of customer of another institution. This indirect relationship meas that the correspondent bank provides services for individuals or entities for which it has neither verified the identities nor obtained any first‐hand knowledge, and • The amount of money that flows through correspondent accounts can pose a significant threat to financial institutions, as they process large volumes of transactions for their customers' customers. This makes it more difficult to identify the suspect transactions, as the financial institution generally does not have the information on the actual parties conducting the transaction to know whether they are unusual. Describe four types of risk associated with money laundering faced by a financial institution. - ✔✔• Reputational risk is described as the potential that adverse publicity regarding an organization's business practices and associations, whether accurate or not, will cause a loss of public confidence in the integrity of the organization. • Operational risk is described as the potential for loss resulting from inadequate internal processes, personnel or systems or from external events. • Legal risk is the potential for lawsuits, adverse judgments, unenforceable contracts, fines and penalties generating losses, increased expenses for an organization, or even the closure of the organization. • Concentration risk is the potential for loss resulting from too much credit or loan exposure to one borrower or group of borrowers. Identify and describe the three sections of the USA Patriot Act concerning due diligence U.S. financial institutions need to perform for relationships with foreign correspondent banking customers. - ✔✔Section 312 requires institutions must set up risk based due diligence to mitigate the money laundering risks posed by foreign financial institutios Section 313, which prohibits U.S. financial institutions from opening or maintaining correspondent accounts for foreign shell banks and requires them to take "reasonable steps" to ensure that a correspondent account of a foreign bank is not being used indirectly to provide banking services to a shell bank. Section 319, which [Show More]

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