Lecture on Financial Crime and Compliance

Practice flashcards covering key concepts discussed in the lecture about financial crime, compliance, and the role of international standards.

What are the military-related financial crime risks mentioned in the lecture?

Bribery and corruption, arms embargo and export control evasion, and financing of terrorism and weapons of mass destruction (WMD).

What is an arms embargo?

A type of international sanction that bans a targeted jurisdiction from importing or exporting military or dual-use goods and services.

What requirements do export controls impose?

Exporters must obtain a license to sell specific military goods and services.

What are the red flags related to military organizations and goods?

Links to high-ranking military officials, purchasing military or dual-use goods without a license, trade transactions involving high-risk jurisdictions or unclear final destinations.

What role do embassies play in host countries?

Handle political and economic matters between countries and facilitate communication and negotiation.

What is the primary function of a consulate?

To act as a branch of an embassy, providing administrative and governmental functions such as issuing visas and handling immigration matters.

Who are considered politically exposed persons (PEPs)?

Individuals in prominent political functions, along with their immediate family or close associates, who may be at higher risk for involvement in bribery and corruption.

What are some risks associated with foreign embassy and consulate accounts?

Accounts held in higher money laundering jurisdictions, substantial cash transactions, and account activity inconsistent with the account’s purpose.

What challenges do drug-related businesses pose for financial institutions?

Money laundering risks, complexity in transactions, and regulation discrepancies at state and federal levels.

What is the significance of the FATF Recommendations?

They set key global standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) efforts.

What is the role of FATF in assessing jurisdictions?

FATF conducts evaluations to determine the effectiveness of jurisdictions in implementing AML/CFT measures.

What can result from noncompliance with FATF standards?

Regulatory fines, reputational damage, and potentially loss of access to the global banking system.

What are the two main components of FATF mutual evaluations?

Effectiveness and technical compliance.

What are Immediate Outcomes (IO) in the context of FATF assessments?

Ratings that measure the effectiveness of a jurisdiction's AML/CFT programs.

What is the purpose of financial intelligence units (FIUs)?

To analyze suspicious transaction reports and assist in law enforcement investigations.