AML Compliance Interview Question And Answers

AML Compliance Interview Question and Answers

Last Updated on Aug 20 , 2024, 2k Views

AML Compliance

1: Can you explain the importance of AML compliance in the financial industry?

AML compliance is crucial in the financial industry as it helps prevent and detect money laundering and terrorist financing activities. It ensures that financial institutions are not used to facilitate illegal activities, such as drug trafficking, fraud, and other financial crimes.

2: What are the three main goals of AML compliance?

The three main goals of AML compliance are:

To prevent and detect money laundering

To identify and report suspicious transactions

To ensure compliance with regulations and laws

3: How do you identify high-risk customers or transactions?

High-risk customers or transactions can be identified by analyzing factors such as:

Geographic location (e.g., countries with high levels of corruption or instability)

Industry or occupation (e.g., high-risk industries like casinos or real estate)

Transaction patterns (e.g., unusual or large transactions)

Customer profile (e.g., individuals with a history of financial problems)

4: What are the steps you would take to investigate a suspicious transaction?

The steps to investigate a suspicious transaction would include:
Reviewing the transaction details (e.g., date, time, amount, and beneficiary)

Conducting research on the customer and beneficiary

Verifying the customer's identity and source of funds

Determining whether the transaction is suspicious or not

Reporting any suspicious transactions to the appropriate authorities

5: Can you explain the difference between a SAR (Suspicious Activity Report) and a CTR (Currency Transaction Report)?

A SAR is a report filed with the Financial Crimes Enforcement Network (FinCEN) when there is a suspected violation of federal anti-money laundering regulations, while a CTR is a report filed with FinCEN when there is a cash transaction exceeding $10,000.

6: How do you ensure that your organization is compliant with AML regulations?

I ensure that my organization is compliant with AML regulations by:

Reviewing and updating our AML policies and procedures regularly

Providing training to employees on AML regulations and procedures

Conducting regular risk assessments and audits

Reporting suspicious transactions to the appropriate authorities

Maintaining accurate records and documentation

7: What are some common red flags for money laundering?

Some common red flags for money laundering include:

Unusual or large cash transactions

Transactions involving shell companies or anonymous entities

Inconsistent or incomplete customer information

Transactions involving high-risk countries or industries

Suspicious or unusual customer behavior

8: How do you handle conflicts of interest in AML compliance?

I handle conflicts of interest in AML compliance by:
Identifying potential conflicts of interest

Documenting all conflicts of interest

Recusing myself from decisions that may be affected by a conflict of interest

Ensuring that all decisions are made in accordance with company policies and procedures

9: Can you explain the concept of beneficial ownership?

Beneficial ownership refers to the individual or entity that ultimately benefits from the ownership of a company or asset, regardless of who is listed on the corporate records. It is an important concept in AML compliance because it helps identify individuals who may be hiding their involvement in illegal activities.

10: How do you stay up-to-date with changes in AML regulations and guidelines?

I stay up-to-date with changes in AML regulations and guidelines by:
Attending training sessions and conferences

Reading industry publications and newsletters

Subscribing to regulatory alerts and updates

Participating in online forums and discussions

Reviewing regulatory websites and publications regularly

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AML Sanction Screening Question and Answers

Last Updated on Aug 20 , 2024, 2k Views

AML Sanction Screening

What is the purpose of AML sanction screening?

AML sanction screening is a process to identify and prevent transactions with individuals and entities that are subject to economic sanctions, such as those imposed by the US Treasury Department's Office of Foreign Assets Control (OFAC).

2: Who is subject to economic sanctions?

Sanctions can be imposed on individuals, companies, and governments that engage in activities deemed harmful to national security, foreign policy, or other national interests. Examples include:
Terrorist organizations
Drug kingpins
Weapons proliferators
Rogue states
Entities involved in human rights violations

3: How do I perform AML sanction screening?

AML sanction screening involves checking the identities of individuals and entities involved in transactions against a list of sanctioned parties maintained by government agencies, such as OFAC. The screening process typically involves:
Gathering customer information (e.g., name, address, date of birth)
Checking the information against sanction lists (e.g., OFAC's Specially Designated Nationals and Blocked Persons List)
Confirming the results of the search (e.g., checking against secondary sanctions lists)

4: What happens if a match is found during AML sanction screening?

If a match is found, the transaction should be immediately blocked or frozen, and a report should be filed with the relevant authorities. The institution may also need to take further action, such as filing a Suspicious Activity Report (SAR) with FinCEN.

5: Are there any exceptions to AML sanction screening?

Yes, there are some exceptions to AML sanction screening. For example:
Transactions that are exempt from sanctions under specific regulations or licenses
Transactions that involve humanitarian aid or other charitable activities
Transactions that involve government entities or international organizations

6: How often should I update my AML sanction screening process?

Institutions should regularly update their AML sanction screening processes to ensure compliance with changing regulations and sanctions. This may involve:

Updating sanction lists and databases
Re-training staff on AML/CFT procedures
Conducting internal audits and testing

7: Are there any penalties for non-compliance with AML sanction screening?

Yes, non-compliance with AML sanction screening can result in significant penalties, including fines, imprisonment, and damage to reputation. In addition, institutions may be required to implement corrective actions to address any deficiencies identified during an audit or examination.

8: Can I rely solely on third-party providers for AML sanction screening?

While third-party providers can be useful in supporting AML sanction screening, institutions should not solely rely on them for compliance. Institutions should maintain their own knowledge and expertise in AML/CFT and regularly review the results of third-party searches.

9: How do I handle false positives or false negatives during AML sanction screening?

Institutions should have procedures in place for handling false positives (i.e., matches that are not actual sanctions) and false negatives (i.e., misses that result in non-compliance). This may involve:
Reviewing matches carefully before making a decision
Conducting additional research or due diligence
Filing SARs or other reports as necessary

10: Are there any best practices for AML sanction screening?

Yes, some best practices for AML sanction screening include:Maintaining accurate and up-to-date customer information
Using multiple sources and databases for screening
Implementing regular training and testing programs for staff
Conducting regular internal audits and reviews

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KYC Interview Question and Answers

Last Updated on Aug 06 , 2024, 2k Views

Know Your Customer

KYC (Know Your Customer) interviews are crucial for organizations, particularly in the financial sector, to ensure compliance with regulatory requirements and to prevent fraud, money laundering, and other illicit activities.

1.What is KYC, and why is it important?

KYC stands for "Know Your Customer." It is a process by which banks and financial institutions verify the identity, suitability, and risks involved with maintaining a business relationship. KYC is important because it helps prevent money laundering, fraud, and the financing of terrorism by ensuring that the institution knows who their clients are.

2.What are the key components of KYC?

The key components of KYC include Customer Identification Program (CIP), Customer Due Diligence (CDD), Enhanced Due Diligence (EDD), and ongoing monitoring. These components ensure the institution properly identifies the customer, assesses the risk they may pose, and continues to monitor their activities.

3.Explain the difference between Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD).

CDD is the standard level of due diligence that must be performed on all customers to assess their risk level and verify their identity. EDD is a more rigorous level of scrutiny required for high-risk customers, involving additional information and documentation to thoroughly understand the customer's activities and the potential risks involved.

4.What are some common documents used in the KYC process?

Common documents include government-issued photo IDs (e.g., passport, driver’s license), utility bills, bank statements, and other official documents that verify the customer's identity and address. For corporate clients, documents might include business registration certificates, articles of incorporation, and financial statements.

5.How do you handle a situation where a customer is reluctant to provide KYC information?

It's important to explain the necessity of the KYC process and the regulatory requirements that mandate it. If the customer remains reluctant, the institution may need to decline or terminate the business relationship, as non-compliance with KYC procedures can pose significant legal and financial risks.

6.What steps would you take if you identify a suspicious transaction?

If a suspicious transaction is identified, it should be reported to the relevant authorities in accordance with the institution's policies. This typically involves filing a Suspicious Activity Report (SAR), documenting the details of the transaction, and possibly escalating the issue to senior compliance officers or legal counsel for further investigation.

7.Describe a time when you had to deal with a difficult customer during the KYC process. How did you handle it?

Share a specific example where you remained calm and professional, explained the regulatory requirements, and worked with the customer to gather the necessary information. Highlight any steps you took to ensure the customer felt understood and respected while also adhering to compliance standards.

8.How do you stay updated with the latest KYC regulations and industry best practices?

I stay updated by regularly attending industry conferences, participating in training programs, reading relevant publications and updates from regulatory bodies, and being an active member of professional organizations related to compliance and financial services.

9.Can you give an example of how you contributed to improving the KYC process at your previous job?

Provide a specific example of an initiative or improvement you led or contributed to, such as implementing new software, streamlining procedures, or enhancing training programs for staff to ensure better compliance and efficiency in the KYC process. Scenario-Based Questions

10.Imagine you have discovered that a long-time customer of your bank is now involved in activities that raise red flags. What steps would you take?

I would conduct a thorough review of the customer's account and transaction history, gather any additional necessary documentation, and perform Enhanced Due Diligence (EDD). I would then report the findings to the compliance department and file a Suspicious Activity Report (SAR) if required, while ensuring all actions are documented appropriately.

11.How would you handle a situation where your team is under significant pressure to complete a large number of KYC reviews in a short period?

Prioritize tasks based on risk levels, ensure clear communication within the team, and possibly delegate tasks to manage the workload effectively. It might also involve streamlining processes or seeking additional temporary resources to meet the deadlines without compromising the quality and accuracy of the reviews.

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AML Question and Answers

Last Updated on Aug 06 , 2024, 2k Views

Anti Money Laundering

1. What is Anti-Money Laundering (AML)?

Anti-Money Laundering (AML) refers to a set of laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. AML policies focus on identifying and reporting suspicious activities to prevent financial crimes, including money laundering and terrorist financing.

2. Can you explain the process of money laundering?

Money laundering typically involves three stages:

Placement: Introducing illicit funds into the financial system.
Layering: Conducting complex transactions to obscure the origin of the funds.
Integration: Reintroducing the laundered money into the economy as legitimate funds.

3. What is Know Your Customer (KYC)?

Know Your Customer (KYC) is a process used by financial institutions to verify the identity of their clients. This involves collecting and verifying personal information such as name, address, date of birth, and identification documents. KYC is essential for assessing risk and ensuring compliance with AML regulations.

4. What are some common red flags in AML?

Common red flags include:
Large and frequent cash deposits.
Transactions involving high-risk jurisdictions.
Unusual patterns or sudden changes in account activity.
Structuring transactions to avoid reporting thresholds.
Use of multiple accounts to obscure the source of funds.

5. How would you conduct an AML risk assessment?

An AML risk assessment involves:

Identifying potential risks: Assessing customer types, products, services, and geographies.

Analyzing risks: Evaluating the likelihood and impact of identified risks.

Implementing controls: Establishing policies and procedures to mitigate risks.

Monitoring and reviewing: Continuously monitoring transactions and reviewing the effectiveness of
controls.

6. What is a Suspicious Activity Report (SAR)?

A Suspicious Activity Report (SAR) is a document that financial institutions must file with regulatory authorities when they detect suspicious activity that may indicate money laundering or other financial crimes. SARs help authorities investigate and combat illegal activities.

7. How do you stay updated with AML regulations and trends?

Staying updated involves:

Regularly reviewing regulatory updates from bodies like FATF, FinCEN, and OFAC.
Attending AML training sessions and conferences.
Participating in industry forums and professional networks.
Subscribing to relevant newsletters and publications.

8. Describe your experience with AML software and tools.

AML software and tools are essential for monitoring transactions, screening customers, and generating reports. My experience includes:

Using transaction monitoring systems to identify suspicious patterns.
Utilizing KYC tools for customer verification and risk assessment.
Working with SAR filing systems to report suspicious activities.
Leveraging data analytics tools to enhance AML investigations.

9. What steps would you take if you identified a suspicious transaction?

Steps include:

Conducting a preliminary investigation: Gathering details about the transaction.

Documenting findings: Recording all relevant information.

Reporting internally: Escalating the issue to the AML compliance team.

Filing a SAR: If deemed necessary, submitting a Suspicious Activity Report to the appropriate authorities.

10. Why do you want to work in AML?

I am passionate about maintaining the integrity of the financial system and preventing financial crimes. Working in AML allows me to use my analytical skills and attention to detail to detect and prevent money laundering activities, contributing to a safer and more transparent financial environment.

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AML Interview Question and Answers

Last Updated on Jul 22 , 2024, 2k Views

Anti Money Laundering

1. What is AML, and why is it important?

AML stands for Anti-Money Laundering. It’s essential because it aims to prevent criminals from disguising the illegal origins of their money by making it appear as if it came from legitimate sources. AML regulations protect the financial system from being used for illicit activities.

2. Can you explain the KYC process?

KYC, or Know Your Customer, is a process by which financial institutions verify the identity of their clients to ensure they are who they claim to be. This involves collecting information and documentation, assessing risks, and monitoring transactions.

3. What are the primary objectives of AML regulations?

The primary objectives of AML regulations are to prevent money laundering, detect and report suspicious activities, and ensure compliance with relevant laws and regulations.

4. How does AML compliance relate to KYC?

AML compliance includes various processes, one of which is KYC. KYC is a subset of AML that focuses on identifying and verifying customers’ identities and assessing their risk levels.

5. What are the consequences of non-compliance with AML regulations?

Non-compliance can lead to severe penalties, including fines, reputational damage, and legal actions against individuals and organizations involved. It can also result in loss of business and regulatory restrictions.

6.Describe the AML regulatory landscape in [specific country/region].

The answer to this question will vary depending on the country or region you’re discussing. Be prepared to provide an overview of the AML laws, regulatory bodies, and recent developments.

7.What is the difference between AML and CFT (Countering the Financing of Terrorism)?

AML focuses on preventing money laundering, whereas CFT specifically targets the financing of terrorism. Both aim to prevent the misuse of the financial system for illegal activities.

8.What is the role of a Compliance Officer in AML/KYC?

A Compliance Officer is responsible for ensuring that an organization adheres to AML/KYC regulations and policies. This includes developing and implementing compliance programs, conducting risk assessments, and training staff.

9.How do you stay updated on changes in AML regulations?

Staying updated involves regularly monitoring regulatory websites, attending industry conferences, subscribing to AML news alerts, and participating in professional associations dedicated to AML/KYC.

10.Can you name some international AML regulatory bodies?

Some international AML regulatory bodies include the Financial Action Task Force (FATF), the Basel Committee on Banking Supervision, and the Egmont Group of Financial Intelligence Units.

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Basic AML / KYC Interview Question and Answers

AML / KYC Interview Question and Answers

Basic AML / Kyc Interview Question and Answers

Last Updated on Jul 22 , 2024, 2k Views

Anti Money Laundering

AML and KYC roles, this article will provide you with valuable insights, interview tips, and essential knowledge to help you stand out in a highly competitive market. So, fasten your seatbelt as we delve into the world of AML and KYC compliance, unraveling the secrets to success in your job search journey.

Here are some detailed interview questions and answers regarding Anti-Money Laundering (AML) and Know Your Customer (KYC) from a banking or financial institution perspective:

1. What are the main components of an effective AML/KYC program?

An effective AML/KYC program typically consists of the following components:

a. Customer Identification Program (CIP): Procedures to verify and document the identity of customers during onboarding.

b. Customer Due Diligence (CDD): Ongoing monitoring of customer activities and risk assessment based on their transactions, source of funds, and background.

c. Enhanced Due Diligence (EDD): Additional scrutiny and monitoring for higher-risk customers or transactions.

d. Transaction Monitoring: Real-time monitoring of customer transactions for detecting suspicious or unusual activities.

e. Reporting: Reporting suspicious transactions to the relevant authorities, such as the Financial Intelligence Unit (FIU).

f. Training and Awareness: Ongoing training programs to educate employees about AML regulations and emerging risks.

2. How do you verify a customer's identity during the KYC process?

During the KYC process, customer identity verification can be done through various means, such as:

a. Document Verification: Collecting and verifying official documents like passports, driver's licenses, or national ID cards.

b. Address Verification: Confirming the customer's residential or business address through utility bills, bank statements, or government-issued documents.

c. Biometric Verification: Using biometric data such as fingerprints or facial recognition for identity verification.

d. Database Checks: Checking customer information against reliable databases, government registers, or watchlists to identify potential risks or suspicious individuals.

3. What are some red flags or indicators of potential money laundering activities?

Red flags or indicators of potential money laundering activities can include:

a. Large cash deposits or withdrawals that are inconsistent with a customer's profile or known business activities.
b. Frequent transactions just below the reporting threshold to avoid detection.
c. Unusual patterns of transactions, such as structuring transactions to avoid reporting requirements.
d. Transactions involving high-risk countries or jurisdictions known for money laundering or terrorist financing.
e. Rapid movement of funds through multiple accounts or complex financial structures.
f. Unexplained or sudden changes in a customer's transactional behavior or business activities.

4. How do you ensure compliance with AML and KYC regulations in your day-to-day activities?

To ensure compliance with AML and KYC regulations in day-to-day activities, I would:
a. Adhere to internal policies and procedures established by the institution.
b. Conduct thorough customer due diligence and maintain up-to-date customer records.
c. Continuously monitor customer transactions for suspicious activities.
d. Report any suspicious transactions promptly to the appropriate authorities.
e. Stay updated on regulatory changes and attend regular training sessions to enhance knowledge of AML/KYC practices.f. Foster a culture of compliance and ethical behavior within the organization.

5. What are the consequences of non-compliance with AML and KYC regulations?

Non-compliance with AML and KYC regulations can have severe consequences for financial institutions, including reputational damage, monetary penalties, legal actions, loss of licenses, and restrictions on business operations. Additionally, non-compliance can lead to increased risk exposure to money laundering, terrorist financing, and other illicit activities.

6. How do you ensure that your AML/KYC processes are up to date with changing regulations?

To ensure AML/KYC processes remain up to date with changing regulations, I would regularly review regulatory updates, guidelines, and industry best practices. Additionally, I would participate in training programs, attend conferences or seminars, and engage in knowledge-sharing with industry peers. Establishing strong communication channels with regulatory bodies and compliance professionals within the organization would also help in staying informed about regulatory changes.

7. How do you assess the risk level of a customer during the KYC process?

Assessing the risk level of a customer during the KYC process involves evaluating factors such as their geographic location, nature of business, source of funds, expected transaction volume, and past financial behavior. This risk assessment allows financial institutions to categorize customers as low, medium, or high risk. It helps determine the extent of due diligence required and the frequency of monitoring for each customer.

8. Describe the steps you would take if you suspect a customer's involvement in money laundering activities.

If I suspect a customer's involvement in money laundering activities, I would follow the institution's established protocols, which typically include:
a. Documenting and preserving all relevant information and evidence.
b. Reporting the suspicious activity to the institution's designated AML officer or compliance department.
c. Coordinating with the AML officer to file a suspicious activity report (SAR) with the appropriate regulatory authority or Financial Intelligence Unit (FIU).
d. Cooperating with law enforcement or regulatory agencies during investigations, if required.

9. How do you ensure the privacy and confidentiality of customer data while conducting AML/KYC processes?

Ensuring the privacy and confidentiality of customer data during AML/KYC processes is crucial. I would ensure this by:
a. Adhering to data protection laws and regulations.
b. Limiting access to customer information only to authorized personnel on a need-to-know basis.
c. Utilizing secure systems and technologies to store and transmit sensitive data.
d. Conducting regular audits to identify and address any vulnerabilities in data security.

10. Can you provide an example of how you have effectively identified and prevented a potential money laundering risk?

In a previous role, I encountered a customer whose transactions showed sudden, significant increases in cash deposits. Upon further investigation and analysis of the customer's source of funds, it became apparent that the customer's declared income did not align with the deposited amounts. Recognizing this as a potential money laundering risk, I promptly escalated the case to the compliance department, providing all relevant evidence and documentation. As a result, the institution initiated enhanced due diligence procedures, which ultimately led to the identification and prevention of a money laundering scheme.

Some tips and advices from experts:

For job seekers in the compliance field, particularly in AML and KYC, the demand for skilled professionals continues to grow as financial institutions place a high priority on maintaining regulatory compliance and combating financial crime. By preparing effectively and showcasing your knowledge and expertise during interviews, you can increase your chances of securing a position in this dynamic and critical field.

Tips :

1. Stay updated: Keep yourself informed about the latest AML and KYC regulations, industry trends, and emerging technologies. Continuous learning and staying ahead of regulatory changes will demonstrate your commitment to the field.

2. Showcase your skills: Highlight your experience in conducting customer due diligence, risk assessments, transaction monitoring, and suspicious activity reporting. Emphasize your ability to interpret complex regulations and apply them effectively in real-world scenarios.

3. Demonstrate your analytical abilities: A strong understanding of data analysis and pattern recognition is crucial in identifying potential risks and detecting suspicious activities. Highlight any experience you have with data analysis tools and techniques.

4. Communicate effectively: Compliance professionals need to collaborate with various stakeholders, including regulators, law enforcement agencies, and internal teams. Demonstrate your ability to communicate complex concepts clearly and work effectively in a team environment.

5. Highlight your attention to detail: A strong eye for detail is essential in AML and KYC roles, as it involves meticulous examination of customer information and transactional data. Showcase your ability to identify anomalies and potential red flags.

6. Showcase your ethical mindset: Emphasize your commitment to maintaining the highest ethical standards and your understanding of the importance of protecting the integrity of the financial system.

7. Be prepared for behavioral questions: Expect questions that assess your decision-making skills, ability to handle pressure, and adherence to ethical standards. Use concrete examples from your past experiences to demonstrate your competencies.

8. Network and seek mentorship: Connect with professionals in the AML and KYC field through networking events, industry conferences, and online communities. Seeking mentorship from experienced professionals can provide valuable guidance and insights.

9. Gain relevant certifications: Consider obtaining industry-recognized certifications such as the Certified Anti-Money Laundering Specialist (CAMS) or the Certified KYC Professional (CKYC) to enhance your credibility and demonstrate your commitment to professional development.

10. Be adaptable and open to learning: The compliance landscape is ever-evolving, and regulations can change rapidly. Show your willingness to adapt to new requirements and technologies, and demonstrate a proactive approach to learning and self-improvement.

Use these tips and you can position yourself as a strong candidate for AML and KYC roles and increase your chances of success in the compliance field.

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Transaction Monitoring Top Interview Questions

Home > Blogs > Transaction Monitoring Top Interview Questions

Transaction Monitoring Top Interview Questions

Last Updated on Dec 18 , 2023, 2k Views

Transaction Monitoring

1.What is Transaction Monitoring?

Transaction Monitoring is a process of reviewing the transactions of the customer to identify if there are any suspicious transactions and recommend SAR (Suspicious Activity Report) {Tool used in Transaction Monitoring by most banks is Actimize)

2.What is SAR/ STR/ SMR?

SAR (Suspicious Activity Report) or STR (Suspicious Transaction Report) or SMR (Suspicious Matter Report) is a tool used by financial institutions to file suspicious activity to the FIU (Financial Intelligence Unit).

3, Tell me about a few thresholds?

- Rapid Movement of Funds/ Wash Transactions
- Structuring of funds
- Large Incoming of funds
- Large Outgoing of funds
- Negative Keyword
- Burst in customer activity
- Round dollar amounts

4.Tell me about Rapid movement of funds?

Rapid movement of funds is quick incoming and outgoing of funds within a week’s time, also known as wash transactions.

5. Tell me about Structuring of funds.

Structuring of funds are transactions which fall below the reporting threshold, for example in the US, transactions below 10000 USD fall under the structuring pattern. *Structuring is a process of breaking a large amount of funds in smaller transactions below the reporting requirement to avoid regulatory reporting.

6. Tell me a scenario where you had identified a potential Suspicious activity?

There was a case that was closed by the operations team based on complimentary line of business, but when it came for QA review, I was able to identify through open search that the focal entity had a subsidiary in Iran, which is a Sanctioned country, and hence we reopened the alert and escalated to Level 2 team, and later during the onsite calibration call, it was informed that a SAR has been raised on the FE, and I received an appreciation from the US stakeholder.

7. Who is the India, US and UK financial regulator?

- RBI – Reserve Bank of India
- OCC – Office of the Comptroller of Currency for US
- FCA – Financial Conduct Authority for UK

8. What is BSA Act?

BSA Act also known as Bank Secrecy Act of 1970 states that financial institutions should record and report financial transactions. BSA Act has five pillars, which every financial institution should implement – 1) Development of internal policies and procedures; 2) Appointment of designate compliance officer; 3) Employee ongoing training program; 4) An independent Audit review; 5) Customer Due Diligence

9. What is the full-form USA Patriot Act?

- USA Patriot Act of 2001 also referred as “United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism”.

-Section 313 – refers to prohibition of doing business with shell banks.

-Section 314 (a) – refers to sharing information with law enforcement and regulators. 314 (b) – refers to sharing information with other financial institutions.

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KYC and Screening Top Interview Questions

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KYC and Screening Top Interview Questions

Last Updated on Dec 18 , 2023, 2k Views

KYC

1.What is KYC and key elements of KYC? (Interviewer may not ask for whole answer mentioned below, but may ask in bits and pieces)

KYC (Know your customer) is a process of knowing the customer details. KYC process involves six key critical components provided below-

1) Identity and Verification (ID&V) – In this bank collect the identity information of the customer. (If individual, banks collect ID and Address verification document; and if company, bank collects document like Articles of Association, Memorandum of Association and Incorporation Certificate, Beneficiary Ownership Certificate, Recent audited financial statement, for Partnership companies – Partnership deed/ for Trust – Trust deed); to prove legal existence of company; status of the company; date of incorporation; registration number; entity legal name.

2) Customer Profile – In this step, bank identifies (for Company) - ultimate beneficial owner (UBO); - nature of business (including identifying primary supplier and dealers and their operational activities to make sure no sanctions risk involvement); - nature of relationship to be established with the bank (including understanding the amount and volume/ number of expected transaction in a period of time); - SOF & SOW- Identification of source of funds and source of wealth; - Key Individuals or Principals (basically, a CEO, CFO and COO of the company). (for Individual) – Customer type (normal, HNI or PEP); - Employment details; - nature of relationship to be established with the bank; - Identification of source of funds and source of wealth.

3) Screening- In this step, Customer name is screened through three types of screening, 1) Negative media - (Tools used - World Check/ Factiva) – to identify negative news; 2) Sanctions screening (tool used- Actimize) – Customer name is screened against the SDN list; 3) PEP screening (tool used- Actimize) – Customer name is screened against the PEP list.

4) Risk Rating & Acceptance – In this step, Customer risk is determined based on three primary factors, 1) Customer type; 2) Geographical Risk; & 3) Product type & Industry, and is accepted with relevant risk of High, Medium or Low.

5) Monitoring and Investigation – In this step, banks monitor the unusual transactions or pattern, and appropriate investigation is done to understand the purpose of the transactions deviating from the customer KYC profile.

6) Documentation- In this step – Bank documents the finding for the investigation as evidence of investigation performed.

2.What is customer KYC review/ KYC Refresh?

1) Periodic Review and 2) Event based KYC Review. In Periodic review, for Low-risk customer – every 5 years review is performed, for Medium risk customer – every 3 years review is performed, and for High risk customer – every 1 year review is performed. In Event based review/ Event Driven Review – KYC review is performed, whenever customer transactional/ business activity/ geography deviates the KYC of the customer.

3.What are corporate registries, and name a few?

Corporate registries are government website which has centralized information of corporates registered under their jurisdiction. Few corporate registries are as mentioned below –
For India – MCA (Ministry of Corporate Affairs)
For UK – Company House
For US – SOS (Secretary of State) + State name

4.What is EDD and why bank perform EDD?

EDD is Enhanced Due Diligence, which is performed on high-risk customer, to mitigate the higher risk the customer may bring to the bank. The risk is mitigated by doing additional due diligence like, doing site visits to verify the customer existence, verifying banking reference, calling and email on the provided details to check whether they are actually assigned, verifying the financial documents of the entity and all other steps involved in customer due diligence.

5.What is “Ultimate Beneficial Owner” structure threshold percentage for Low, Medium and High-risk customers, while doing KYC profiling?

For Low and Medium risk customers, any UBO holding 25% or more ownership in a company will undergo KYC process. For High-Risk customers, any UBO holding 10% or more ownership in a company will undergo KYC process.

Screening

1.What are Sanctions?

Sanctions are trade and official restrictions imposed to economically disable those who are involved in committing illegal activities and have broken the international law impacting human rights. Sanctions are imposed by global bodies like the UN (United Nations), EU (European Union), Interpol, OFAC (Office of Foreign Asset & Control) in the US, HMT (Her Majesty’s Treasury) in the UK and others.

2.What are the types of Sanctions?

There are three types of sanction screening

1) List/ Target Based Sanctions - list based sanctions will have names of individuals also known as (SDN Specially Designated Nationals), organizations and vessels (mostly ships).

2) Sectoral Sanctions – Sanctions imposed on certain sector of an economy/ country (for example – Financial sector, Defence Sector and Energy Sector of Russia is sanctioned)

3) Comprehensive Sanctions – These are complete sanctions imposed on countries to disable economic strength, by restricting trade relations. Examples of comprehensive sanction countries are, Iran, North Korea, Syria, Cuba, Crimea Region

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AML Top Interview Questions

Anti Money Laundering Training in Bangalore

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AML Top Interview Questions

Last Updated on Dec 18 , 2023, 2k Views

Anti Money Laundering

What are your roles and responsibilities? (Pick any one as per your profile in the resume and your ease of explaining the interviewer)

For Sanction/ PEP Screening – Responsible for screening the customer name against the Sanctions and PEP watchlist provided by the global sanctioning bodies (UN; EU; OFAC, HMT, Interpol and etc). I am primarily involved in processing the alerts as false positive for customer who are identified to be mismatch with match party details, and escalate for further review to next level if customer and match party details are matching with each other. Time taken to review each alert is 10 mins, and case management tool used is Actimize.

For KYC Review – Responsible for reviewing and verify customer KYC information on new account documents, and perform appropriate client profiling by understanding the customer and the associated parties (like UBO and key signatories (CEO; CFO and COO)), and documenting the findings along with performing negative media screening to make sure there is no relevant AML related negative news. Follow-up with the customer, if additional document is required for completion of KYC review. Time taken to review each KYC profile is 90 mins, and case management tool used is Fenergo

For Transaction Monitoring - Responsible for reviewing transactions to identify any Money Laundering or Terrorist Financing red flags and rapidly dispositioning the alerts/cases with no risk identified during investigation, or escalating alerts/cases which requires further review by the next level team. I am responsible for identifying the transaction pattern and mitigate ML and TF risk with clear and concise narrative writing on the findings during investigation. Time taken to review each KYC profile is 90 mins, and case management tool used is Actimize

What is Money Laundering and three stages of Money Laundering?

Money Laundering is a process of converting illegal funds to legal funds. The three stages of money laundering are 1- Placement (Placing the money in the financial system); 2- Layering (creating complex web of transactions to lose banking trail) and 3- Integration (in this stage, money can be introduced back to the economy).

What in AML and its impact to the financial institution?

AML (Anti Money Laundering) is a program to fight the financial crime like Money laundering and terrorist financing. An effective AML program, helps the financial institutions to avoid the criminal abusing the financial system.

What is structuring?

Structuring is a process of breaking down large amount of funds to small portions below the threshold amount to avoid filing of regulatory reporting. (for example – In USA, anyone who transacts for $10000 or more in cash should file a CTR ).

Who are Gatekeepers?

Gatekeepers in ML (Money Laundering) refers to professions such as Lawyers, Notaries, Accountants and Auditors, as they are considered to have experience and expertise in managing the illegal funds, and hence acting as gatekeepers by helping the money launderers.

What is Correspondent Banking and risk faced by correspondent banking?

Corresponding Banking also known as clearing house, facilitates cross-border payments. Three risks faced by correspondent banking are – 1) Correspondent bank do not have first-hand information of the end customers; 2) Geographical risk (as payments are usually cross border); 3) Amounts involved are high.

What is PTA?

PTA (Payable Through Account) is a sub account of correspondent bank provided to the respondent bank, who in turn provide these PTA account to their customers to directly avail facilities of correspondent bank.

What is a PEP & RCA and what is the risk with PEP?

PEP is Politically exposed person, who holds or has held a prominent political position is consider as PEP. RCA – Relatives and close associates, those who are closely associated with PEP (for e.g., Parent, Spouse, Children and close friends). There are two risk factors with PEP – 1) PEPs have access to huge amount of public funds; and 2) PEPs have the power to influence high level decisions.

What is a MSB and risks with MSB?

MSB known as Money Services Business facilitates services like currency exchange, money transmitting, and provides monetary instruments like cashier’s check, prepaid cards and money orders. Risk that MSB’s pose, Banks are not aware of the end customer, and MSB also deal in cash, which is a risk to the bank, as source of funds is not available in cash deals.

Difference between Private/ Public and Government companies?

Public company is a company that is listed in the well-known stock exchange and can be traded freely in the stock exchange, and ownership remains with the general public.

Private limited company is not listed on a stock exchange and it is held privately by the members of the company.

Government company is one where at least 51% of the company is held by the Central and/or a state government

What is a Trust and parties involved in the Trust. ?

A trust is a fiduciary relationship in which a trustor (also known as Settlor) gives another party, known as the (Trustee), the right to hold title to property or assets for the benefit of a third party (beneficiary).

What is Terrorist Financing?

Terrorist Financial is financing the terrorist groups for spreading terrorism.

What is the difference between Money Laundering and Terrorist Financing?

Two major differences of ML & TF are

1 – In Money laundering, the source of funds is always illegal; and in Terrorist financing sources of funds are both legal and illegal.

2 – In Money laundering the objective is to make dirty money to clean, and in Terrorist financing the objective is to spread terrorism.

What is FATF?

FATF is Financial Action Task Force, combats Money Laundering and Terrorist financing by providing- 1) Guidance and Recommendation to the member countries; 2) Monitor the effective implementation of recommendations; and 3) Effective assessment. There are 40 recommendations provided by FATF to fight ML & TF.

What is FIU and who is FIU of US and UK?

FIU is the Financial Intelligence Unit which is responsible for 1) Collection of information (through SAR/ STR submitted by financial institutions); 2) Analysing the information and 3) Dissemination or distribution of information to the relevant regulator and law enforcement. FIU of US is FinCEN (Financial Crime Enforcement Network) and FIU of UK is NCA (National Crime Agency)

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RPA Transforms Process Automation

Home > Blogs > RPA Transaforms Process Automation

RPA Transaforms Process Automation

Last Updated on Sep 12, 2023, 2k Views

Robotics Process Automation

Robotic software, often referred to as Robotic Process Automation (RPA) Course , has indeed transformed process automation in various industries over the past decade. RPA Course technology uses software robots or bots to automate repetitive, rule-based tasks, and it has had a profound impact on business operations for several reasons:

Efficiency and Accuracy: RPA Course software can perform tasks around the clock without breaks, ensuring consistent and accurate results. This eliminates human errors caused by fatigue or distractions, leading to improved data quality and reduced operational costs.

Cost Reduction: By automating routine tasks, organizations can reduce labor costs associated with manual data entry and other repetitive processes. This allows employees to focus on more valuable and creative tasks while reducing the need for additional hires.

Scalability: RPA Course solutions are highly scalable. Businesses can deploy additional software robots as needed to accommodate increased workloads, making it easier to adapt to changing market conditions and growth.

Integration: RPA Course can integrate with existing software systems and applications, allowing organizations to leverage their current technology investments. This compatibility enables a seamless flow of data and information across different departments and systems.

Rapid Implementation: Implementing RPA Course does not require extensive changes to existing infrastructure. It can be deployed relatively quickly, which is crucial for organizations looking to achieve immediate process improvements.

Compliance and Audit Trails: RPA Course systems provide detailed logs of every action performed by the bots, offering a clear audit trail for compliance purposes. This feature is especially valuable in highly regulated industries like finance and healthcare.

Improved Customer Experience: Automating routine tasks enables faster response times and more efficient customer service. RPA Course can help streamline processes related to customer inquiries, order processing, and complaint resolution, leading to improved customer satisfaction.

Enhanced Decision-Making: RPA Course generates valuable data and insights, which can be used for analytics and informed decision-making. By collecting and processing data from various sources, RPA Course helps organizations identify trends and opportunities.

Flexibility: RPA Course software can be customized to suit the specific needs of an organization. It can handle a wide range of tasks, from data extraction and validation to document processing and report generation.

Competitive Advantage: Companies that adopt RPA Course early gain a competitive edge by reducing costs, improving efficiency, and delivering better customer experiences. As RPA Course technology continues to evolve, staying ahead of the curve can be a significant advantage.

However, it's essential to note that while RPA Course has transformed process automation in many ways, it is not a panacea. Successful RPA Course implementation requires careful planning, ongoing monitoring, and a clear understanding of the processes being automated. Moreover, organizations must consider the potential impact on the workforce and address any concerns about job displacement through reskilling and upskilling initiatives.