CAMS International AML Standards and FATF 3

Question 1

What is 'correspondent banking' under FATF standards, and what specific Recommendation addresses it?

Accepted Answer

Recommendation 13, requiring financial institutions to apply specific EDD measures for cross-border correspondent banking relationships, including assessing the respondent's AML controls

Answer

Recommendation 10, requiring basic CDD for all correspondent relationships

Answer

Recommendation 16, requiring Travel Rule compliance for correspondent transfers

Answer

Recommendation 20, requiring SARs to be filed for all correspondent transactions

Question 2

What is the FATF 'black list' (formally the 'High-Risk Jurisdictions Subject to a Call for Action')?

Accepted Answer

The highest-risk category of FATF's country assessments, identifying jurisdictions with severe AML/CFT deficiencies where FATF calls on all member countries to apply counter-measures

Answer

A list of countries that FATF has expelled from membership

Answer

A list of countries whose financial institutions are banned from U.S. correspondent banking

Answer

A confidential list of countries where FATF believes money laundering is state-sponsored

Question 3

How has FATF addressed the AML risks associated with Designated Non-Financial Businesses and Professions (DNFBPs)?

Accepted Answer

FATF extended its AML Recommendations to DNFBPs including lawyers, accountants, real estate agents, and dealers in precious metals, requiring them to implement AML controls similar to financial institutions

Answer

FATF excluded DNFBPs from its Recommendations, leaving their regulation entirely to domestic law

Answer

FATF recommended that banks refuse to serve DNFBPs due to their elevated risk

Answer

FATF created a separate, simplified set of Recommendations exclusively for DNFBPs

Question 4

What is 'proliferation financing' and how does FATF address it?

Accepted Answer

The provision of funds to persons or entities involved in the development, manufacture, or acquisition of weapons of mass destruction, addressed through FATF Recommendation 7 and targeted financial sanctions

Answer

The financing of rapidly growing financial institutions

Answer

The proliferation of fraudulent financial products across multiple jurisdictions

Answer

The expansion of money laundering typologies to new sectors

Question 5

Under the FATF framework, what is the difference between 'technical compliance' and 'effectiveness' in a mutual evaluation?

Accepted Answer

Technical compliance measures legal framework quality; effectiveness measures whether that framework produces real-world AML outcomes

Answer

Technical compliance applies to bank examiners; effectiveness applies to law enforcement

Answer

Technical compliance is assessed every 5 years; effectiveness is assessed annually

Answer

There is no meaningful difference — they measure the same thing using different metrics

Question 6

What is the role of the U.S. Financial Intelligence Unit (FIU), FinCEN, in the international FATF framework?

Accepted Answer

FinCEN serves as the U.S. FIU and FATF member, administering the BSA reporting system, exchanging intelligence through the Egmont Group, and representing U.S. AML interests in international standard-setting

Answer

FinCEN is not part of any international framework and operates exclusively under domestic U.S. law

Answer

FinCEN coordinates global investigations but does not participate in FATF standard-setting

Answer

FinCEN implements FATF standards but is supervised by FATF, which can override its decisions