CAMS International AML Standards and FATF 2

Question 1

What does the FATF Recommendation 16 (the 'Travel Rule') require?

Accepted Answer

Wire transfer originators and beneficiary institutions to pass along and retain specific information about the parties to a transaction

Answer

Financial institutions to report all cross-border travel by customers to their FIU

Answer

Customers to disclose travel plans when conducting foreign currency transactions

Answer

Financial institutions to block funds transfers to countries that do not comply with FATF standards

Question 2

How does FATF's approach to virtual assets (cryptocurrencies) differ from its approach to traditional finance?

Accepted Answer

FATF extended the Travel Rule and other key Recommendations to Virtual Asset Service Providers (VASPs), requiring them to meet the same AML/CFT standards as traditional financial institutions

Answer

FATF has exempted virtual assets from all AML requirements as they are not legal tender

Answer

FATF requires all virtual assets to be converted to fiat currency before they can be transferred

Answer

FATF only applies its standards to virtual assets used in cross-border transactions

Question 3

What is a FATF-Style Regional Body (FSRB)?

Accepted Answer

An associate member of FATF that performs similar functions (mutual evaluations, typologies) for non-FATF member jurisdictions in a particular region

Answer

A regional law enforcement body that enforces FATF standards within its jurisdiction

Answer

A regional development bank that funds AML capacity building programs

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A subgroup of FATF members focused on a specific regional money laundering threat

Question 4

What is 'de-risking' and why has FATF raised concerns about it?

Accepted Answer

The practice of banks exiting entire customer segments or correspondent relationships due to perceived AML risk, which FATF warns undermines financial inclusion and can push transactions to less regulated channels

Answer

A risk reduction technique FATF recommends for all financial institutions

Answer

A FATF-endorsed process for removing countries from the grey list

Answer

A technique for reducing AML risk by automating transaction monitoring

Question 5

Under FATF Recommendation 24, what must countries do to improve transparency of legal persons?

Accepted Answer

Require countries to maintain adequate, accurate, and timely information on the beneficial ownership of companies and make it accessible to competent authorities

Answer

Ban all shell companies and nominee shareholding arrangements

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Require all companies to list their shares on a public stock exchange

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Mandate that all companies file annual reports with their national FIU

Question 6

What is FATF's approach to the risk-based approach (RBA) in the context of financial institutions?

Accepted Answer

FATF endorses the RBA as the foundation of an effective AML/CFT system, requiring institutions to identify, assess, and understand their specific risks and apply commensurate controls

Answer

FATF mandates a uniform, rule-based approach for all institutions to ensure consistency

Answer

FATF's RBA applies only to banks; other financial institutions use prescriptive rules

Answer

The RBA is optional under FATF standards and only recommended for large institutions