ACAMS Module 4 - Conducting and responding to investigations 37 Questions with Answers
AML/CFT source of investigations - CORRECT ANSWER *
... [Show More] Regulatory recommendations or official findings
* Transaction monitoring
* Referrals from customer-facing employees
* Internal hotlines
* Negative media information
* Receipt of a governmental subpoena or search warrant
Regulatory recommendations or official findings - CORRECT ANSWER Financial institutions may initiate investigative efforts based on regulatory findings or recommendations.
Transaction monitoring - CORRECT ANSWER Transaction monitoring rules should be reviewed at a regular cadence and turned accordingly to ensure that they continue to operate as designed. Tuning practices may include evaluating the output of monitoring rules, examining specific thresholds and conducting above and below-the-line testing to determine whether rule adjustments are necessary.
Referrals from customer-facing employees - CORRECT ANSWER Financial institutions may have a mechanism by which customer-facing employees can refer matters to be investigated for potentially suspicious activity. Depending on the size of the institution, there may be manual referral processes via email or telephone, or an internal reporting system that routes the referrals to the appropriate investigative teams.
Internal hotlines - CORRECT ANSWER Internal hotlines are also known as ethics, compliance, or whistleblower hotlines. They allow employees to report a wide range of activity including employee fraud, harassment and discrimination, violations of code of conduct, theft of company property and inappropriate gifts.
Negative Media information - CORRECT ANSWER Investigations may be initiated in response to notable media stories about a financial institution's customer, how a product is used in the market, a geographic location it serves, or a money laundering or terrorist event.
Receipt of a governmental subpoena or search warrant - CORRECT ANSWER Financial institutions may initiate investigations upon receipt of a governmental subpoena or search warrant.
SUBPOENAS are usually issued by grand juries, operating under the purview of a court and empower a law enforcement agency to compel the production of documents and testimony.
A SEARCH WARRANT is a grant of permission from a court for a law enforcement agency to search certain designated premises and to seize specific categories of items or documents. Generally, the requesting agency is required to establish that probable cause exists that evidence of a crime will be located. The warrant is authorized based on information contained in an affidavit submitted by a law enforcement officer.
In either situation, the financial institution maintains two independent obligations:
1. Legally fulfill the requirements of the subpoena or warrant
2. Determine whether the activity of its customer identified in the subpoena or warrant requires the filing of a STR.
Conducting Financial Investigations - CORRECT ANSWER Step 1. Review internal transactions, information obtained from the customer and other relevant internal documentation.
Step 2. Identify and review external information to understand the customer, related entities, and relevant media.
Step 3. Contact business line employees responsible for the account relationship.
Step 4. Generate a written report documenting relevant findings.
STR (Suspicious Transaction Report) Decision to file - CORRECT ANSWER The decision of whether or not to file a STR often involves weighing the aggravating and mitigating factors arising from the research conducted during the investigative process.
Financial institutions should draft procedures that document the factors to consider when determining whether an STR is appropriate.
Filing an STR - CORRECT ANSWER Once the financial institution has decided on filing an STR, it must ensure that the STR filing included not only
1. the details of the suspicious activity and the related demographics, but also
2. why the institution finds the activity suspicious. The recipient of the STR does not have the intimate knowledge of what is expected activity for a particular institutions clients and products, and will only stand to benefit from the inclusion of this information.
In addition, capturing any known typologies identified as part of the review should be added in the STR as well.
Closing the account Based on its internal investigation - CORRECT ANSWER The FI should make an independent determination as to whether to close the account in issue. Some factors to consider:
1. The legal basis for closing an account
2. The bank's stated policies and procedures for closing an acct.
3. The reputational risk to the institution posed by maintaining the account.
4. Correspondence with law enforcement and requests from law enforcement to either cancel or maintain the account.
Decision to prosecute a FI for Money Laundering Violations - CORRECT ANSWER 1. The institution has a criminal history
2. The institution has had a comprehensive and effective AML/CFT program.
3. Deterring wrongdoing by others is needed and will be served by a prosecution.
Law enforcement inquiries - CORRECT ANSWER Ensure Senior Management is informed.
Respond to all law enforcement requests.
Monitor the progress of the investigation.
FIs are required to have an internal reporting mechanism by which customer-facing employee referrals of suspicious activities are automatically routed to the appropriate investigative teams - CORRECT ANSWER False.
Although financial institutions may have a mechanism by which customer facing employees can refer matters to be investigated for potentially suspicious activity, they can be in the form of manual referral processes like via email or telephone.
Upon receipt of a law enforcement inquiry, the financial institution needs to set up a board comprised of senior management to monitor the progress of the investigation and to respond to all law enforcement requests. - CORRECT ANSWER False.
A FI should automatically freeze and then close a customer's account following a maximum of two of STR filing, provided that there is a legal basis for closing the account. - CORRECT ANSWER False.
Mutual Legal Assistance Treaties (MLATs) - CORRECT ANSWER provide a legal basis for transmitting evidence that can be used for prosecution and judicial proceeding.
Financial intelligence unites (FIUs) - CORRECT ANSWER are mandatory national agencies that handle financial intelligence.
FIUs combat money laundering by: - CORRECT ANSWER 1. Receiving reports of suspicious transactions from financial institutions.
2. Analyzing the reported suspicious transactions.
3. Disseminating the resulting intelligence to local law enforcement agencies.
Information exchange between FIUs - CORRECT ANSWER The Principles of information exchange describe practices that maximize cooperation between FIUs and can be useful to government authorities when considering anti-money laundering legislation. Principle of information exchange:
1. Basis of reciprocity and spontaneous exchange
2. Differences in the definition of offenses
3. Informal and rapid information exchange
4. Need for a Memorandum of Understanding
5. Communication without intermediaries
6. Consent to disseminate information
Basis of reciprocity and spontaneous exchange - CORRECT ANSWER The Egmont principle of free exchange of information at the FIU level should be possible on the basis of reciprocity, including spontaneous exchange.
Differences in the definition of offenses - CORRECT ANSWER Differences in the definition of offenses that fall under the competence of FIUs should not be an obstacle to free exchange of information at the FIU level.
Informal and rapid information exchange - CORRECT ANSWER The exchange of information between FIUs should take place as informally and as rapidly as possible and with no excessive formal prerequisites, while guaranteeing protection of privacy and confidentiality of the shared data.
Need for a memorandum of Understanding - CORRECT ANSWER Should an FIU still need a Memorandum of Understanding to exchange information, it should be negotiated and signed by the FIU without undue delay. To that end, the FIU should have the authority to sign MOUs independently.
Communication without intermediaries - CORRECT ANSWER It should be possible for communication between FIUs to take place directly and without intermediaries.
Consent to disseminate information - CORRECT ANSWER Providing an FIU's consent to disseminate the information for law enforcement or judicial purposes should be granted promptly and to the greatest extend possible.
If there is a difference in the definition of an offense, then free exchange of information at the FIU level is not possible; in such a situation, the FIU providing the information may deny permission to disseminate the information . - CORRECT ANSWER False.
Differences in the definition of offenses that fall under the competence of FIUs should not be an obstacle to free exchange of information at the FIU level.
All FIUs should submit requests for information in compliance with the Principles for Information Exchange set out by the Egmont Group. - CORRECT ANSWER True.
Although the exchange of info between FIUs should take place as informally and as rapidly as possible with no excessive formal prerequisites, all FIUs should submit requests for information in compliance with the Egmont principle.
The Egmont principle of free exchange of information at the FIU level makes it possible to exchange information spontaneously, without the need for a formal Memorandum of Understanding (MOU) - CORRECT ANSWER False.
Although the Egmont principle of free exchange of information at the FIU level makes it possible to exchange information spontaneously, some FIUs might still require a MOU to exchange info. In such as situation, the MOU should be negotiated and signed by the FIU without undue delay.
All of the following are methods that law enforcement may use to request information from a financial institution during the course of a criminal investigation, EXCEPT: - CORRECT ANSWER Asking the AML officer to hand over all account records of the targeted suspect.
A financial institution may initiate investigations in response to notable media storied like the following : EXCEPT: - CORRECT ANSWER A story about corporate takeover of one of its customer's companies.
Diane, the AML compliance officer for a large financial institution, uncovers a serious case of potential money laundering being conducted through a number of related accounts. Diane should consider all following factors in deciding whether or not to close the accounts, EXCEPT: - CORRECT ANSWER Whether or not the account holder is a close associate of any of the members of the Board of Directors.
Ravi, the compliance officer of a financial institution, has just received an extensive law enforcement subpoena focusing on the potential inadequacy of the institution's AML Program. Ravi should consider doing all of the following, EXCEPT: - CORRECT ANSWER Advise the institution's employees to maintain the confidentiality of all STRs.
Carol has been given the responsibility of conducting an internal investigation into a suspicious financial activity. Carol should consider all of the following activities to carry out an effective investigation , EXCEPT: - CORRECT ANSWER File a suspicious transaction report (STR) before commencing a thorough investigation.
When considering whether - or to what extent - to bring a case against an institution involving money laundering - related charges, prosecutors will consider all of the following factors, EXCEPT: - CORRECT ANSWER The number of years that the institution has been in business.
____________provide a legal basis for transmitting evidence that can be used for prosecution and judicial proceedings. - CORRECT ANSWER MLATs
Which of the following statements related to the "Principles of Information Exchange Between Financial Intelligent Units" is FALSE? - CORRECT ANSWER The exchange of info between FIUs should take place w. formal prerequisites and necessary pre-authorizations, thereby guaranteeing protection of privacy and confidentiality of the shared Data. [Show Less]