AML Certification CAMS Dumps PDF

A financial institution should examine the country or location where the customer is from or does business, the type and size of the business the customer runs, and the legal structure of the customer’s business, because these factors can indicate the level ofmoney laundering risk associated with the customer. For example, some countries or locations may have weak anti-money laundering laws or high levels of corruption, some types or sizes of businesses may be more prone to generating or concealing illicit funds, and some legal structures may be more complex or opaque than others, making it harder to identify the beneficial owners or controllers of the customer.

According to the FATF 40 recommendations, the focus of AML efforts has been expanded beyond financial institutions to include other businesses and professions that are vulnerable to money laundering and terrorist financing risks. These include:

Casinos, when customers engage in financial transactions equal to or above a designated threshold. Casinos are required to identify and verify the identity of their customers, keeprecords of transactions, report suspicious transactions, and implement internal controls and compliance programs to prevent money laundering and terrorist financing. The designated threshold is USD/EUR 3,000 or more1.

Real estate agents, when they are involved in transactions for clients concerning buying and selling properties. Real estate agents are required to identify and verify the identity of their customers and beneficial owners, keep records of transactions, report suspicious transactions, and implement internal controls and compliance programs to prevent money laundering and terrorist financing. Real estate transactions can involve large amounts of money and complex legal arrangements that can be used to conceal the source or destination of illicit funds2.

Trust and company service providers, when they prepare for or carry out transactions for a client concerning the creation, operation or management of legal persons or arrangements. Trust and company service providers are required to identify and verify the identity of their customers and beneficial owners, keep records of transactions, report suspicious transactions, and implement internal controls and compliance programs to prevent money laundering and terrorist financing. Trust and company service providers can facilitate the misuse of legal persons or arrangements, such as shell companies or trusts, to hide the true ownership and control of assets or funds3.

The other option, dealers in art, when they engage in any cash transaction with a customer at or above a designated threshold, is not covered by the FATF 40 recommendations. However, dealers in precious metals and stones are covered when they engage in any cash transaction with a customer at or above a designated threshold of USD/EUR 15,000 or more. Dealers in art may be subject to national or regional regulations that impose AML obligations on them, depending on the jurisdiction.

The Third European Union Money Laundering Directive (3MLD) is a legal framework that aims to prevent the use of the financial system for the purposes of money laundering and terrorist financing. It was adopted in 2005 and repealed by the Fourth European Union Money Laundering Directive (4MLD) in 2015. The 3MLD applies to a range of entities that are considered to be exposed to the risk of money laundering and terrorist financing, such as:

Financial institutions, which include credit institutions, financial intermediaries, insurance companies, investment firms, and payment service providers.

Casinos, which include both online and offline gambling services that involve wagering a stake with monetary value.

Real estate agents, which include both natural and legal persons that act as intermediaries in the buying and selling of real property or rights over it.

The 3MLD requires these entities to implement a number of measures to prevent and detect money laundering and terrorist financing, such as:

Conducting customer due diligence, which involves identifying and verifying the customer and the beneficial owner, understanding the purpose and nature of the business relationship, and applying enhanced or simplified measures depending on the level of risk.

Keeping records of customer and transaction data for at least five years after the end of the business relationship or the execution of the transaction.

Reporting suspicious transactions or activities to the competent authorities without delay and without tipping off the customer.

Establishing internal policies, procedures, and controls to ensure compliance with the 3MLD, and providing adequate training and awareness to staff.

Cooperating with the relevant supervisory and regulatory authorities and financial intelligence units.

The 3MLD does not apply to defense attorneys, as they are not considered to be obliged entities under the directive. However, the 3MLD does apply to other legal professionals, such as notaries, lawyers, and accountants, when they perform certain activities on behalf of their clients, such as:

Buying and selling of real property or business entities

Managing of client money, securities, or other assets

Opening or managing bank, savings, or securities accounts

Organizing contributions for the creation, operation, or management of companies

Creating, operating, or managing trusts, companies, foundations, or similar structures

Organized crime groups often use front companies to disguise the origin and destination of their illicit funds, and to integrate them into the legitimate economy. Front companies are businesses that appear to be engaged in lawful activities, but are actually controlled by criminals for money laundering purposes.

One reason why organized crime groups use front companies is to gain control over an entire sector of the economy, such as construction, transportation, or gambling. By using multiple front companies, they can create a network of interrelated businesses that can manipulate prices, evade taxes, and influence public contracts. This can give them a competitive advantage over legitimate businesses, and allow them to launder large amounts of money through seemingly legitimate transactions.

Another reason why organized crime groups use front companies is to comingle their illicit funds with those of legal businesses. By using the bank accounts of front companies, they can deposit cash from criminal activities along with the revenues from legitimate operations, making it harder to trace the source of the funds. They can also transfer funds between different front companies, or use them to pay for goods and services, creating layers of transactions that obscure the money trail.