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Corporate Sanction Screening Interview Question and Answers

Corporate Sanction Screening Interview Question and Answers

Last Updated on Aug 28, 2025, 2k Views

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Corporate Sanction Screening interview question and answers

1. What are sanctions, and why are they important in corporate compliance?

Answer:
Sanctions are restrictive measures imposed by governments or international bodies such as the UN, EU, or OFAC to prevent business with certain individuals, entities, or countries. They are important because engaging with sanctioned parties exposes the corporation to regulatory, reputational, and financial risks, including heavy fines and loss of banking relationships.

 

2. What types of sanctions do you know?

Answer:

  • Comprehensive sanctions: Broad restrictions on an entire country (e.g., North Korea, Iran).

  • Targeted/Smart sanctions: Specific individuals, entities, or sectors.

  • Sectoral sanctions: Restrictions on particular industries, like oil & gas or finance.

  • Trade sanctions/embargoes: Restrictions on goods/services.

  • Financial sanctions: Freezing of assets and restrictions on financial transactions.

3. Which sanctions lists should corporates check against?

Answer:

  • OFAC SDN List (U.S.)

  • UN Sanctions List

  • EU Consolidated List

  • UK HMT Sanctions List

  • Local regulatory lists (e.g., RBI in India, MAS in Singapore).
    Corporates often use screening tools like World-Check, Dow Jones Risk & Compliance, or in-house screening systems.

 

4. How do you handle a potential sanctions hit in a screening process?

Answer:

  1. Review the match details (name, DOB, location, ownership, etc.).

  2. Differentiate false positives from true matches by analyzing additional data.

  3. Escalate true matches to compliance or the sanctions team.

  4. Document decisions with clear reasoning and evidence.

  5. If confirmed, block/reject the transaction and report to regulators if required.

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5. What’s the difference between AML and Sanctions compliance?

Answer:

  • AML (Anti-Money Laundering): Focuses on detecting illicit funds entering the financial system.

  • Sanctions compliance: Focuses on preventing transactions or business with restricted countries, entities, or individuals.
    They overlap but sanctions breaches are strict liability, meaning even unintentional violations can lead to penalties.

 

6. How would you monitor corporate clients for sanctions risk?

Answer:

  • Conduct onboarding screening against all sanctions lists.

  • Apply ongoing monitoring for changes in ownership, beneficial owners, and counterparties.

  • Review transaction monitoring alerts for dealings with sanctioned jurisdictions.

  • Perform enhanced due diligence (EDD) for high-risk corporates in sectors like defense, shipping, or energy.

7. Can you explain the concept of ‘50% Rule’ in OFAC sanctions?

Answer:
OFAC’s 50% Rule means if one or more sanctioned persons own (directly or indirectly) 50% or more of an entity, that entity is also considered sanctioned, even if it’s not explicitly named on the list. Corporates must monitor ownership structures carefully.

 

8. What steps would you take if a corporate client is found linked to a sanctioned entity?

Answer:

  • Stop transactions immediately.

  • Escalate the case to the sanctions compliance team.

  • Conduct a detailed investigation into ownership and business relationships.

  • File a regulatory report (e.g., STR/SAR) if required.

  • Terminate or restrict the relationship in line with company policy and legal obligations.

9. What are recent global trends in sanctions compliance?

Answer:

  • Russia/Ukraine conflict sanctions – increased complexity and volume of restrictions.

  • Use of AI/automation in sanctions screening.

  • Focus on beneficial ownership transparency.

  • Stricter penalties for sanctions breaches (record fines in 2022–25).

  • Greater cross-border cooperation among regulators.

 

10. Scenario Question:

A corporate client in Europe trades with a partner in the Middle East. Screening flags the partner’s parent company as 51% owned by a sanctioned individual. What would you do?

Answer:

  • Treat the partner company as sanctioned under the 50% Rule.

  • Block or reject transactions.

  • Escalate to the compliance/sanctions team.

  • Report the issue to regulators.

  • Advise the client on potential risks and alternatives.

✅ Tip for you in interviews:

  • Always mention documentation, escalation, and regulatory reporting in your answers.

  • Show awareness of global sanctions regimes (not just OFAC).

  • Use the risk-based approach where applicable.

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    Corporate Transaction Monitoring Questions

    Corporate Transaction monitoring Interview Questions

    Last Updated on Aug 28, 2025, 2k Views

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    Corporate Transaction monitoring Interview Questions

    Corporate Transaction Monitoring interview / practice questions you might expect, especially for AML, compliance, and risk-focused roles. I’ve split them into conceptual, scenario-based, and technical types:

    🔹 Conceptual Questions

    1. What is corporate transaction monitoring and why is it important in AML compliance?

    2. How does transaction monitoring differ for corporate clients vs. retail clients?

    3. What types of risks are higher in corporate banking transactions compared to individual accounts?

    4. Can you explain what a risk-based approach means in transaction monitoring?

    5. What are the most common red flags for suspicious corporate transactions?

    6. How do KYC and CDD feed into transaction monitoring?

    7. What is the role of regulatory bodies (FATF, FinCEN, RBI, EU regulators, etc.) in corporate transaction monitoring?

    8. What are correspondent banking risks and how are they monitored?

    9. How do sanctions and PEP screening integrate with corporate transaction monitoring?

    10. How do you distinguish between legitimate high-value corporate transactions and potential money laundering?

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    🔹 Scenario-Based Questions

    1. A corporate client makes multiple round-dollar transactions to offshore jurisdictions. What steps would you take to investigate?

    2. A company suddenly changes its transaction pattern, e.g., from domestic trading to frequent high-value cross-border wires. How would you assess this?

    3. How would you handle a situation where transaction alerts are frequent but the client is a long-standing corporate customer with legitimate business operations?

    4. A corporate client transacts with a sanctioned country through a third-party vendor. What would be your next step?

    5. You find unusual transactions involving shell companies in tax havens—how do you escalate?

    6. If a corporate account shows transactions inconsistent with its stated business activity (e.g., a textile company receiving cryptocurrency payments), what would you do?

     

    🔹 Technical / Process Questions

    1. What AML systems/tools have you used for transaction monitoring (e.g., Actimize, Mantas, SAS, Oracle FCCM)?

    2. How do you perform Level 1 vs. Level 2 investigations in transaction monitoring?

    3. What is the difference between false positives and true positives in transaction monitoring alerts?

    4. How would you document and escalate an STR (Suspicious Transaction Report)?

    5. What thresholds or rules are usually applied to corporate transaction monitoring?

    6. How do you ensure compliance with multiple jurisdictions when monitoring multinational corporations?

    7. What data sources are crucial for investigating corporate transactions?

    8. How do you balance efficiency with thoroughness when dealing with high alert volumes?

    🔹 Behavioral / Judgment-Based

    1. Tell us about a time when you identified a suspicious corporate transaction—what was your approach?

    2. How do you ensure unbiased judgment when investigating a high-value client?

    3. What steps do you take to stay updated on evolving AML regulations impacting corporate banking?

    4. How do you handle pressure when regulators or auditors review your monitoring cases?

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      Corporate AML KYC interview question and answers

      Corporate AML KYC Interview Question and Answers

      Last Updated on Aug 28, 2025, 2k Views

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      Corporate Aml kyc interview question and answers

      1. What is the purpose of KYC and AML regulations?

      Sample Answer:

      KYC and AML regulations are designed to prevent financial institutions from being used for money laundering, terrorist financing, and other illegal activities. KYC ensures that institutions verify and understand the identity of their clients, while AML involves ongoing monitoring and reporting of suspicious activities. Together, they help maintain the integrity of the financial system.

       

      2. What documents are typically required for KYC compliance for a corporate client?

      Sample Answer:

      For a corporate entity, KYC documentation usually includes:

        • Certificate of incorporation

        • Memorandum and Articles of Association

        • List of directors

        • Shareholder register and ownership structure

        • Proof of address of the business

        • IDs and proof of address for UBOs (Ultimate Beneficial Owners)

        • Board resolution authorizing the signatories
          The exact requirements may vary depending on the jurisdiction and the bank’s internal policies.

      3. How do you identify and verify Ultimate Beneficial Owners (UBOs)?

       

      Sample Answer:

      UBOs are individuals who ultimately own or control more than a certain percentage (often 25%) of a company. To identify UBOs, we review the shareholding structure and request supporting documents like shareholder registers or organizational charts. Verification involves obtaining and validating identity documents and conducting screening for PEP status or negative media.

       

      4. What is Enhanced Due Diligence (EDD) and when is it required?

       

      Sample Answer:

      Enhanced Due Diligence is a more detailed review process used when a client poses a higher risk, such as a politically exposed person (PEP), a client from a high-risk jurisdiction, or those with complex structures. EDD involves additional steps like deeper background checks, more frequent reviews, and possibly senior management approval.

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      5. How do you perform a risk assessment of a client?

       

      Sample Answer:

      A client risk assessment considers factors such as the type of client (individual, corporate, trust), geographical risk, industry/sector risk, product/service usage, transaction patterns, and the client’s ownership structure. These are evaluated using a risk rating tool or framework to classify the client as low, medium, or high risk.


      6. What is a PEP and how do you handle PEP clients?

       

      Sample Answer:

      A PEP, or Politically Exposed Person, is someone who holds or has held a prominent public position (e.g., government official, judge, military officer). Due to their position, they may pose a higher risk of corruption. When dealing with PEPs, EDD is mandatory, including senior management approval and more frequent monitoring.

      7. What steps do you take when identifying suspicious transactions?

      I look for red flags such as large cash deposits, rapid movement of funds without a clear purpose, transactions inconsistent with the client’s profile, or activity involving high-risk jurisdictions. When suspicious activity is identified, it is documented and escalated to the compliance team for further investigation, and possibly a SAR (Suspicious Activity Report) is filed.

       

      8. What tools or systems have you used for screening or KYC checks?

      Sample Answer:

      I’ve worked with screening and onboarding tools like World-Check, Dow Jones Risk & Compliance, LexisNexis, and internal KYC platforms. These tools help with sanctions, PEP, and adverse media screening. For document verification and workflow tracking, I’ve also used systems like Salesforce, Actimize, or Fenergo, depending on the organization.

      9. How do you stay updated on AML and KYC regulations?

       

      I regularly follow regulatory updates from FATF, FinCEN, OFAC, and local financial regulators. I also subscribe to compliance newsletters, attend webinars, and participate in training provided by ACAMS or internal compliance teams to stay current with global and regional changes.

       

      10. Describe a challenging KYC case you handled and how you resolved it.

       

      Once, we had a corporate client with a multi-tiered ownership structure involving multiple jurisdictions, including offshore entities. It was challenging to trace the UBOs due to lack of transparency in some jurisdictions. I collaborated with our legal team, used registry searches, and engaged external data providers to trace ownership. We finally identified two UBOs and completed EDD. This case underscored the importance of persistence and cross-functional teamwork.

      11. How do you handle conflicting deadlines between onboarding multiple high-risk clients?

       

      I prioritize based on risk level and business impact. High-risk clients may require more time for EDD, so I initiate that process early while continuing with standard KYC reviews for lower-risk clients. I also communicate timelines clearly with internal stakeholders and request additional support if needed.

       

      12. What would you do if a client refuses to provide required KYC documents?

       

      I would explain the regulatory necessity of the documents and offer support in understanding or gathering them. If they still refuse, I escalate the case to compliance and halt onboarding or continue the exit process if they’re an existing client, as per policy.

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        Did any one can switch career for AML KYC

        Did any one can switch career for aml kyc

        Last Updated on Aug 13, 2025, 2k Views

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        Did any one can switch career for aml kyc

        Yes — plenty of people switch into the AML/KYC field from completely different backgrounds.
        It’s actually one of the few compliance-related domains where transferable skills matter as much as direct banking experience.

        1. Common backgrounds of career switchers

        • Customer service / operations → Already familiar with handling client data and documentation.

        • Finance / accounting / audit → Good with numbers, risk assessment, and regulations.

        • IT / cybersecurity → Strong in data analysis, fraud detection systems, and technical compliance tools.

        • Legal / paralegal → Knowledge of regulations, contracts, and compliance frameworks.

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        2. Transferable skills that help

        • Attention to detail — spotting document discrepancies or suspicious transactions.

        • Analytical thinking — piecing together patterns in client activity.

        • Communication — clear reporting and escalation.

        • Tech savvy — using screening tools, databases, and case management systems.

        3. How people actually make the switch

        • Certifications: CAMS (Certified Anti-Money Laundering Specialist), CKYCA, ICA certifications, or local compliance courses.

        • Internal move: Many switch by applying for AML/KYC roles within their current bank or fintech.

        • Project involvement: Joining AML-related projects (client onboarding clean-ups, remediation work).

        • Contract/temporary roles: Short-term AML remediation projects often hire people from other fields.

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        How challenging the aml kyc role will be for bankers

        How challenging the aml kyc role will be for bankers

        Last Updated on Aug 13, 2025, 2k Views

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        How challenging the aml kyc role will be for bankers

        For bankers—especially those used to relationship management, lending, or branch operations—moving into an AML/KYC role can feel both rewarding and challenging. The challenge level really depends on three factors:

        1. How steep the learning curve is for compliance concepts

        2. How comfortable you are with analytical, investigative work

        3. How fast-paced and high-volume the environment is

        1. Mindset Shift: From Selling to Scrutinizing

        • Banking role: Often focuses on customer service, business development, and sales targets.

        • AML/KYC role: Prioritizes regulatory compliance, risk assessment, and saying “no” when risk is high.

        • Challenge: You’re no longer trying to make a deal happen—you’re trying to decide if it should happen at all.

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        2. Technical & Regulatory Complexity

        • You’ll need to quickly learn regulations like FATF, OFAC, EU AMLD, PMLA (India), and internal compliance policies.

        • KYC isn’t just “collecting documents”—it’s about understanding customer behavior, beneficial ownership, and source of funds.

        • Challenge: Regulations are constantly updated, so learning never stops.

        3. Analytical & Investigative Skills

        • Tasks like reviewing transaction patterns, identifying red flags, and escalating suspicious cases require attention to detail and pattern recognition.

        • For bankers used to general account management, the shift to deep-dive investigations can be mentally demanding.

        4. High Volume, Tight Deadlines

        • In large banks, you may handle dozens of alerts a day with strict SLA timelines.

        • Missing deadlines or overlooking a risk could lead to regulatory penalties—so the pressure is real.

        5. Documentation & Audit Trail

        • Everything you do must be well-documented to satisfy regulators and internal audit teams.

        • Challenge: Bankers who are used to verbal decision-making may find the paperwork discipline intense.

        ✅ Why bankers succeed in AML/KYC:

        • Familiarity with customer profiles and products.

        • Understanding of banking transactions.

        • Strong interpersonal skills for communicating with clients during remediation or additional information requests.

        🚀 Tip for Transitioning Bankers:

        • Get trained on AML red flags, typologies, and screening tools early.

        • Practice writing clear, concise investigative notes—a crucial AML skill.

        • Remember: in compliance, accuracy outweighs speed.

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          What are the questions we expect in aml kyc interview

          What are the questions we expect in aml kyc interview

          Last Updated on Aug 13, 2025, 2k Views

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          What are the questions we expect in aml kyc interview

          In an AML/KYC interview, you can expect a mix of technical, scenario-based, and regulatory knowledge questions, along with a few about your experience and soft skills.

          1. Basic AML/KYC Knowledge

          These test your understanding of fundamental concepts.

          • What is AML and why is it important?

          • Can you explain the difference between AML, CFT, and KYC?

          • What is CDD and EDD? Give examples of when each is required.

          • What are PEPs and how do you identify them?

          • Can you name some global sanction lists used in AML checks?

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          2. Regulatory Frameworks

          Checks your familiarity with laws and standards.

          • What is the FATF and what is its role?

          • What is the purpose of the 5th/6th EU AML Directive?

          • Can you explain the USA PATRIOT Act’s relevance to AML?

          • What are OFAC sanctions? How do they affect onboarding?

          • Difference between AML regulations in your country and internationally.

          3. Practical KYC/Onboarding Process

          Tests your operational knowledge.

          • Walk me through the KYC process for a new corporate client.

          • How do you verify the Ultimate Beneficial Owner (UBO)?

          • How would you handle missing or inconsistent customer documents?

          • What’s the difference between onboarding an individual vs. a corporate client?

          4. Transaction Monitoring & Red Flags

          Looks at your investigative and analytical thinking.

          • Name 5 red flags for money laundering in transactions.

          • How do you investigate a suspicious transaction alert?

          • How do you differentiate between a false positive and a true hit in screening?

          • What are typologies of terrorist financing?

          5. Sanctions & Screening

          Focuses on handling matches and escalations.

          • What steps do you take if a customer matches a sanctions list?

          • What’s the difference between a hard match and a soft match?

          • How would you investigate a PEP match?

          6. Scenario-Based Problem Solving

          Tests your judgment under realistic conditions.

          • A client refuses to provide their source of funds — what do you do?

          • You notice a large transaction inconsistent with the client’s profile — what’s next?

          • You get a hit on a sanctions list during ongoing monitoring — how do you handle it?

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            7. Tools & Systems

            Checks if you’ve used AML/KYC software.

            • Which KYC/AML platforms have you worked with? (e.g., World-Check, Actimize, Dow Jones, LexisNexis)

            • How do you conduct adverse media screening?

            8. Soft Skills & Compliance Culture

            Assesses your integrity, communication, and teamwork.

            • How do you handle pressure during high-volume alert periods?

            • How do you ensure compliance with tight deadlines?

            • Give an example of when you identified a risk others missed.

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            What are skills required to land in aml kyc domain.

            What are skills required to land in aml kyc domain.

            Last Updated on Aug 13, 2025, 2k Views

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            What are skills required to land in AML KYC domain.

            1. Regulatory & Compliance Knowledge

            • AML/CFT Regulations – Understanding laws like FATF Recommendations, USA PATRIOT Act, EU AMLDs, Indian PMLA, etc.

            • KYC/Customer Due Diligence (CDD) – Process of verifying customers, risk categorization, and ongoing monitoring.

            • Sanctions Compliance – Familiarity with OFAC, UN, EU, HMT lists and how to screen for them.

            • PEP & Adverse Media Checks – Screening processes for politically exposed persons and negative news.

            • Risk Assessment Frameworks – High-risk jurisdictions, products, services, and transaction patterns.

            2. Analytical & Investigation Skills

            • Transaction Monitoring – Identifying suspicious patterns, unusual spikes, or layering activity.

            • Alert Review & Escalation – Deciding whether to close, escalate, or investigate alerts.

            • Case Management – Documenting findings clearly for audit/regulatory review.

            • Data Interpretation – Using financial data, account statements, and SWIFT/transaction records to find anomalies.

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            3. Technical & Tool Proficiency

            • Screening Tools – World-Check, Dow Jones Risk & Compliance, Accuity, Refinitiv, ComplyAdvantage, etc.

            • Transaction Monitoring Systems – Actimize, SAS AML, Fiserv, Oracle Mantas, etc.

            • Banking Platforms – Core banking systems and CRM tools.

            • Excel & Data Handling – Pivot tables, filtering, and analysis for large datasets.

            4. Communication & Documentation

            • Report Writing – Drafting clear Suspicious Transaction Reports (STR/SAR).

            • Regulatory Liaison – Communicating with regulators or internal compliance teams.

            • Client Interaction – Gathering KYC documents and clarifying information without breaching confidentiality.

            5. Soft Skills

            • Attention to Detail – Missing small red flags can have major compliance consequences.

            • Problem-Solving – Assessing complex cases where rules may be unclear.

            • Time Management – Handling high alert volumes within strict deadlines.

            • Ethical Judgment – Making compliance decisions without bias or pressure.

            6. Qualifications & Certifications (Bonus)

            • Certifications –

              • CAMS (Certified Anti-Money Laundering Specialist)

              • CKYCA (Certified KYC Associate)

              • CFE (Certified Fraud Examiner)

              • ICA Certificates in AML/KYC

            • Academic Background – Finance, Law, Economics, Accounting, or Risk Management.

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              Increasing AML Compliance Obligations in the Cryptocurrency Industry

              Increasing AML Compliance Obligations in the Cryptocurrency Industry

              Last Updated on Aug 12, 2025, 2k Views

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              Increasing AML Compliance Obligations in the Cryptocurrency Industry

              1. Why AML Compliance in Crypto is Tightening

              The cryptocurrency industry has seen a rapid increase in regulatory oversight due to:

              • Rising illicit use of digital assets for money laundering, terrorist financing, and ransomware.

              • Global pressure from the Financial Action Task Force (FATF) to implement the “Travel Rule” and other AML standards.

              • High-profile enforcement cases involving exchanges and crypto service providers.

              • Mainstream adoption by institutional investors and banks, driving alignment with traditional finance rules.

              2. Key Areas of Increasing AML Obligations

              A. Regulatory Expansion

              • Travel Rule Compliance
                FATF now expects Virtual Asset Service Providers (VASPs) to collect, verify, and transmit sender and receiver information for transactions over a certain threshold.

              • Beneficial Ownership Transparency
                More jurisdictions are requiring disclosure of ultimate beneficial owners (UBOs) for crypto businesses and accounts.

              • KYC for DeFi & NFTs
                Regulators are expanding AML/KYC rules beyond centralized exchanges to cover decentralized platforms, NFT marketplaces, and stablecoin issuers.

              B. Enhanced Customer Due Diligence (CDD)

              • Risk-based onboarding for individuals and corporate clients, especially those from high-risk jurisdictions.

              • Ongoing monitoring for suspicious wallet addresses and blockchain activity.

              • Screening against sanctions lists (OFAC, EU, UN) and PEP lists.

              C. Blockchain Transaction Monitoring

              • Advanced analytics tools like Chainalysis, TRM Labs, Elliptic are becoming essential for:

                • Detecting suspicious transaction patterns.

                • Identifying mixers, tumblers, and high-risk wallets.

                • Flagging links to darknet markets or sanctioned entities.

              • Regulators expect continuous and retrospective monitoring.

              D. Reporting Obligations

              • Suspicious Activity Reports (SARs) must be filed for questionable transactions, just as in traditional banking.

              • Cross-border transaction reporting is increasingly required.

              • Recordkeeping requirements are being harmonized with traditional finance — in many countries, crypto firms must keep records for 5–10 years.

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              3. Enforcement Trends

              • Hefty penalties: In 2024–2025, several crypto exchanges faced fines exceeding $1B for AML failures.

              • Licensing revocations: Regulators have shut down VASPs failing to meet AML standards.

              • Executive liability: More cases are holding CEOs and compliance officers personally accountable.

              4. Global Developments

              RegionKey Update
              USFinCEN expanding AML rules to include mixers, privacy coins, and certain DeFi operators.
              EUNew AMLA authority to directly supervise large crypto entities under AMLD6.
              UKFCA tightening registration and ongoing compliance checks for crypto firms.
              Asia-PacificSingapore, Japan, and Hong Kong enforcing Travel Rule and licensing requirements.
              Middle EastUAE and Bahrain enhancing crypto AML audits under VARA and CBB rules.

              5. Industry Impact

              • Higher compliance costs for crypto firms.

              • Shift toward regulated, transparent operations to maintain banking relationships.

              • Innovation in RegTech — more firms integrating AI-powered KYC and blockchain analytics.

              6. Strategic Recommendations for Crypto Businesses

              • Adopt Travel Rule-ready solutions.

              • Implement real-time blockchain monitoring.

              • Enhance risk-based KYC procedures.

              • Conduct independent AML audits.

              • Train staff regularly on emerging crypto risks.

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                AML/CFT Guide For Digital Bank

                AML/CFT Guide for Digital Bank

                Last Updated on Aug 12, 2025, 2k Views

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                AML/CFT Guide For Digital Bank

                1. Introduction

                Purpose:
                To outline the Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) compliance framework for a digital bank, ensuring adherence to global and local regulations while leveraging technology for efficiency.

                Regulatory Basis:

                • FATF Recommendations – International standards.

                • Local AML/CFT Laws – Example: India’s PMLA, EU’s AMLD, U.S. BSA/USA PATRIOT Act.

                • Regulator Guidelines – e.g., RBI, MAS, FCA.

                2. Governance & Responsibility

                • Board of Directors – Sets AML/CFT policy and risk appetite.

                • Compliance Committee – Oversees implementation, reviews reports, approves escalation protocols.

                • Money Laundering Reporting Officer (MLRO) – Senior officer responsible for suspicious activity reporting.

                • Operational Teams – KYC onboarding, transaction monitoring, and investigation teams.

                3. Risk Assessment

                Key Risk Categories for a Digital Bank:

                • Customer Risk – High-risk jurisdictions, politically exposed persons (PEPs), complex structures.

                • Product/Service Risk – Cross-border payments, instant transfers, virtual assets.

                • Channel Risk – Fully online onboarding, mobile app transactions.

                • Geographic Risk – Sanctioned countries, FATF high-risk jurisdictions.

                Methodology:

                • Conduct Enterprise-Wide Risk Assessment (EWRA) annually.

                • Use Risk Scoring Models for customers and transactions.

                4. Customer Due Diligence (CDD) & eKYC

                Onboarding Requirements:

                • Digital Identity Verification – Facial biometrics, liveness detection, OCR document scanning.

                • Sanctions & PEP Screening – Against OFAC, UN, EU, HMT, and local lists.

                • Beneficial Ownership Checks – For entities, identify and verify individuals with >25% ownership.

                CDD Tiers:

                • Simplified Due Diligence (SDD) – Low-risk accounts (e.g., small savings).

                • Standard CDD – Regular retail customers.

                • Enhanced Due Diligence (EDD) – High-risk customers such as PEPs, offshore entities, crypto-related businesses.

                5. Ongoing Monitoring

                • Automated Transaction Monitoring – AI/ML models to detect anomalies, pattern recognition, and rule-based alerts.

                • Behavioral Profiling – Compare actual activity to expected customer behavior.

                • Periodic KYC Updates – Risk-based frequency (e.g., high-risk: annually, low-risk: every 3–5 years).

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                6. Sanctions & Watchlist Screening

                • Real-Time Screening – For customer onboarding and transactions.

                • Batch Screening – Daily re-screening of existing customer base.

                • List Sources – OFAC, UN, EU, HMT, domestic watchlists, and adverse media feeds.

                7. Suspicious Activity Reporting (SAR/STR)

                • Internal Escalation – Alerts → Investigator → MLRO review.

                • Reporting Timelines – As per jurisdiction (e.g., 24–72 hours).

                • Confidentiality – Prohibition on “tipping off” customers.

                8. Record Keeping

                • Maintain KYC documents, transaction records, investigation notes for at least 5–10 years depending on regulation.

                • Ensure secure, encrypted storage with audit trail.

                9. Training & Awareness

                • Mandatory Annual Training – AML/CFT, sanctions, typologies, red flags.

                • Role-Specific Modules – Onboarding staff, investigators, developers.

                • Testing & Certification – Post-training assessments to ensure understanding.

                10. Technology & RegTech Integration

                • Identity Verification Tools – Onfido, Jumio, Trulioo.

                • Transaction Monitoring Systems – Actimize, Feedzai, ComplyAdvantage.

                • Adverse Media Screening – Dow Jones, World-Check, Refinitiv.

                • Machine Learning Models – Adaptive to evolving typologies and fraud patterns.

                11. Reporting to Regulators

                • Regular Returns – STRs/SARs, CTRs, threshold transactions, and AML compliance reports.

                • Audit Support – Provide system logs, case files, and compliance dashboards during inspections.

                12. Continuous Improvement

                • Annual Policy Review and updates.

                • Implement lessons from internal audits, regulatory feedback, and enforcement cases.

                • Monitor emerging threats – crypto laundering, AI-based fraud, mule accounts.

                Appendix – Common AML/CFT Red Flags for Digital Banks

                • Frequent small deposits followed by large withdrawals.

                • Account activity inconsistent with stated income or occupation.

                • Use of multiple accounts with no clear business purpose.

                • Rapid movement of funds through multiple countries.

                • Transactions involving high-risk jurisdictions or sanctioned entities.

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                  What is a Sanction list?

                  What is a Sanction List?

                  Last Updated on Aug 12, 2025, 2k Views

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                  What is Sanction list ?

                  A sanctions list is an official list of individuals, companies, organizations, vessels, or countries that are subject to restrictions or prohibitions imposed by a government, international body, or regulatory authority.

                   

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                  These restrictions are usually put in place for reasons like:

                  • National security (preventing threats or hostile actions)

                  • Foreign policy (pressuring governments or regimes)

                  • Human rights protection (punishing those involved in abuses)

                  • Counter-terrorism (blocking funding or support to terrorist groups)

                  • Anti–money laundering (AML) and counter–terrorist financing (CFT)

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                  What’s in a sanctions list:

                  • Names of sanctioned entities (people, businesses, groups)

                  • Aliases (other names they use)

                  • Identifiers (passport numbers, dates of birth, addresses)

                  • Sometimes reasons for the sanction

                  Examples of major sanctions lists:

                  • OFAC SDN List (U.S. Treasury – Office of Foreign Assets Control)

                  • United Nations Consolidated List

                  • European Union Sanctions List

                  • UK OFSI Sanctions List

                  Impact:
                  If someone or something is on a sanctions list, financial institutions and businesses are generally prohibited from doing business with them, must freeze their assets, and report the activity to relevant authorities.

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