Anti Money Laundery (AML) interview finance questions
Q1 What is meant by pooled accounts
A pooled account is a fiduciary account having investments from multiple individuals which is pooled together.
Q2 List some parameters for enhanced due diligence
The parameters for enhanced due diligence is: Customer location, financial status, Nature of business or Purpose of transaction
Q3 What is meant by KYC Policy
All banks need to have a KYC policy as mandated by RBI, in India. The KYC policy lists Customer Acceptance Policy, Customer Identification Procedures, Monitoring of Transactions and Risk Management.
Q4 Describe the Customer Acceptance Policy in AML/KYC
The customer acceptance policy is guidelines to be followed for account opening by the customer. The policy enlists documents needed for identity and other mandated customer characteristic.
Q5 Explain the customer identification procedure in AML/KYC
The customer identification procedure is the process of identifying the customer by documents and available information so as to be compliant to AML/KYC laws as mandated by Government.
Q6 How will you identify suspicious transactions
Suspicious transactions can be identified by observation, analysis of Exception Reports and by using AML Software.
Q7 What can be a ground for a transaction to be suspicious transaction
There are various grounds for a transaction to be suspicious transaction, some common ones are: False Identity, Wrong Address or Doubt over the real beneficiary of the account.
Q8 What is meant by Name screening?
Name screening refers to ascertain if any customer of the institution is part of any blacklists or regulatory lists.
Q9 Who can be regarded as a customer for the purpose of KYC?
A customer is: individual or a company which maintains an account, establishes relationship, or on whose behalf account is maintained or beneficiary of accounts maintained by intermediaries.
Q10 When is induction training provided to employees?
Induction training is provided to employees at the start of their employment. Induction training is a form of introduction for new starters in order to enable them to do their work in a new profession or job role within a business (or establishment).
Q11 What BR Act, 1949 contains?
It contains AML/KYC Guidelines.
Q12 CTR stands for?
Cash transaction report as per PMLA.
Also referred as currency transaction report
Q13 What do you mean by Money Laundering?
Money laundering is the process of concealing the source of money obtained by illicit means such as gambling, corruption, extortion, drug trafficking, human trafficking, etc., Money is moved around the financial system again and again in such manner that its origin gets hidden. It is the process of making dirty money clean.
Q14 Please read the KYC practice given below. Identify the KYC element which best relates to the stated practice. Effective information-gathering strategies enable building of a solid information base about each customer.
Customer identification, It involves effective information-gathering strategies enable building of a solid information base about each customer. Banks are required to clearly spell out the Customer Identification Procedure to be carried out at different stages i.e. while establishing a banking relationship; carrying out a financial transaction or when the bank has a doubt about the authenticity/veracity or the adequacy of the previously obtained customer identification data.
Q15 What are the objectives of KYC?
The objectives of KYC is to ensure appropriate customer identification, Monitor transactions of suspicious nature.
Q16 What are the stages of money laundering?
The three stages of money laundering are Integration, Layering, Placement.
Q17 Why is there a need to perform Anti-Money Laundering Checks?
Since the AML regulations are governed by Acts namely - The Proceeds of Crime Act, The Serious Organised Crime and Police Act, The Terrorist Act and the Money Laundering Regulations. Any failure to report suspicious activity can carry a criminal sentence and lead to substantial fines from the relevant regulatory body.
Q18 If you have dealt with my clients for many years, so will you still need to carry out customer due diligence?
We need to keep customer due diligence up-to-date for all the clients. We would require to have sufficient documentary ID details on the files but if there has been any subsequent change to their circumstances or risk profile, we should update the customer due diligence.
Q19 What do you understand by money laundering and financial terrorism?
Money laundering is the conversion of money illegally obtained to make it appear as if it originated from a legitimate source. Money laundering is employed by launderers worldwide to conceal criminal activity associated with it such as drugs trafficking, terrorism and extortion.
Q20 What is a KYC Policy?
With reference to RBI guidelines issued vide all banks are required to formulate a KYC Policy with the approval of their respective boards. The KYC Policy consists of following key elements - 1. Customer Acceptance Policy 2. Customer Identification Procedures 3. Monitoring of Transactions 4. Risk Management.
Q.21 What do you understand by Customer Identification Procedure?
Customer Identification refers to identifying the customer and verifying identity through reliable and independent documents, data and information. In which case the banks would need to satisfy to the competent authorities that due diligence was observed in accordance with the requirements of existing laws and regulations.
Q.22 Who Is A Customer?
If our main Purpose here is the KYC Policy then 'a Customer' can be defined as: Someone who maintains his/her account and/or has a business relationship with the bank; Or say the one on whose behalf the account is maintained (i.e. the beneficial owner); Beneficiaries of transactions conducted by professional intermediaries, such as: Chartered Accountants, Stock Brokers, Solicitors etc as permitted under the law, and Any person who has a connection with some financial transaction which can pose consequential reputational or other risks to the bank, like- a wire transfer or issue of high value demand draft as a single transaction.
Q.23 Under which conditions KYC should be applied?
Under which conditions KYC should be applied? There are condiotions to which KYC applies but *Please-Note: its not limited to: At the opening of a new acount the acount type is deposit/borrowal. At the opening of a subsequent account where documents as per current KYC standards not submitted, at the time ofopening the initial account. At the opening of a locker facility where these documents are not available with the bank for all locker facility holders. Based on the conduct of the account when the bank feels it is necessary to obtain additional information from existing customers. After periodic intervals as instructed by the RBI. Also, if there are changes to signatories, mandate holders, beneficial owners, etc.
Q.24 What Is A Customer Acceptance Policy?
The general guidelines followed by banks to allow customers to open accounts with them refers to Customer Acceptance Policy. Generally the guidelines stipulate that no accounts shall be opened in anonymous or hypothecial names or when the identity of the customer matches with any person with known criminal background or banned entities. In the same way the accounts should not be opened when the bank is not in the state to verify the identity and/or obtain documents required as per the bank’s policy.
Q.25 What unit are the Aml/cft Supervisors wanting For?
The AML/CFT supervisors area unit that specialize in whether or not the coverage entity has an acceptable and cheap risk assessment, and an AML/CFT programme that reflects and controls those risks. The AML/CFT supervisors take a risk-based approach to supervising - choosing from the supervising and social control tools out there to United States. supervising can take under consideration the character of the business and also the risks that every coverage entity is managing. browse our Bulletin article or speech for additional data on the Reserve Bank’s approach to AML/CFT supervising
Q.26 What Ongoing Customer Due Diligence means?
Regularly reviewing customer information and having systems to conduct account monitoring is what the Ongoing Customer Due Dilligence is. While this is required for all the customers including the existing and not just the new customers.
Q.27 What do you know about the Politically Exposed Persons, Specially Designated Nationals And Financial Sanctions and, Why do you need to check on them?
In place to check PEPs, SDNs and the HMT Financial Sanctions, it is recommended by the 3rd European Money Laundering Directive to have a procedure. A Politically Exposed Person, or someone who holds a prominent public position, or an individual linked to them is known to be as a PEP. An SDN is a Specially Designated National, on a list which specifies that US Citizens dont have the permissio to conduct business with them. The HM Treasury Financial Sanctions list specifies individuals with whom it is prohibited to transfer or make funds available to.
Q.28 Name the software and/or applications are you proficient in.
To find an accounting firm these days where software isn’t at the cornerstone of how they operate you’d be hard pressed. In the affair that you don’t have experience with popular software, familiarize yourself with industry standards ahead of time. To ensure that you are able to name popular applications, and have a solid idea of their purpose you need to take some time out. "The bulk of my experience lies with the x platform, but I'm pretty fascinated with some of what the y system is capable of".
Q.29 If you collect passports and driving licences, Do you need to check anything else?
A wider range of information can be checked by the EV, thus Providing a more thorough knowledge of your client (KYC – Know Your Customer). Besides, it can also enable you to check other data sets such as: PEPS and Sanctions lists, which is advisable and specified by the 3rd European Money Laundering Directive. As the fraudulent documentation are on the rise, therefore, there is a need to refocus efforts on identifying them. In order to remove the risk of receiving potentially fraudulent documents the Electronic verification is designed; therefore you can have a greater level of confidence in their authenticity. Various checks are carried out on the documents to confirm as much as possible, thus reducing the risk of ID fraud.
Q.30 Can you spot any difference between ‘small Accounts’ and Other Accounts?
Yes. There are certain limitations associated with ‘Small Accounts’ such as: At any point of time, the balance should not exceed Rs.50,000, in such accounts in a year the total credits should not exceed Rs.1,00,000. Also, the total withdrawal and transfers in a month should not exceed Rs.10,000 while the biggest disadvantage over this type of account is that the foreign remittances cannot be credited to such accounts. Initially for a period of twelve months and thereafter such accounts remain operational, for a further period of twelve months if within twelve months of the opening of such account the holder of such an account provides evidence to the bank of having applied for any of the officially valid documents.
Q.31 What if i don't possess any of the officially valid documnets to get a bank Account, which isn't subjected to hold any limitations (as in the case of small account) would It Be Possible?
Yes, By submitting a copy of any one of the valid documents as Proof of Identity (PoI) a normal account can be openend. There are several valid ID proofs that can be Provided such as: Identity card with the respective person’s photograph issued by the Central/State Government Departments, Public Sector Undertakings, Statutory/Regulatory Authorities, Scheduled Commercial Banks, and Public Financial Institutions; (or) Stamp-paper/letter issued by a gazetted officer, with a duly attested photograph of the person.
Q.32 What is PMLA Act
The PMLA Act expands to The Prevention of Money Laundering Act (PMLA) and is the anti-money laundering act of Government of India passed in 2002.
Q.33 What crimes are included whose proceeds are verified under AML-KYC
All crimes are included and major ones being Drug trafficking, Kidnapping, Extortion, Murder, Corruption, Immoral traffic of women and children and Waging a war against the state.
Q.34 Checks for anti-money laundering are performed by
Anti-money laundering checks are performed professionals representing clients, institutions, bank or financial institution employees involved in account opening or acceptance of finances. It also includes tax advisors, solicitors, accountants, real estate agents, etc.
Q.35 Why to conduct checks for anti-money laundering
Anti-money laundering is o be conducted as mandated by law and complying with law is mandatory. Any non-compliance will attract not only penalty but can also lead to criminal case or closure of the institution. Governments across the globe have passed laws to mandate anti-money laundering.
Q.36 Does customer due diligence needed for old clients by the financial institution
Yes, customer due diligence should be recent for all the clients. Any change in client’s profile should be present in the customer due diligence and be performed on regular basis.
Q.37 The Anti-money laundering laws and regulations are mandated by
Financial authority mandated by the government, lists and enforces the anti-money laundering laws and regulations. The laws and regulations also comply with international treaties for the same.
Q.38 Describe electronic verification in context of AML/KYC
The electronic verification refers to verification of customer records electronically with databases with the government or institutions. It is more authentic than the physical or documentary verification. It also saves time for the customer as they are not physically needed for verification.
Q.39 What is the need for documents other than the passports and driving licence for a customer’s CDD or KYC
Due to advancement in forging techniques, fraudulent documentation is difficult to distinguish and you should have supporting documents other than just the passport and driving licence for a customer. Electronic verification which is more reliable can also be applied.
Q.40 What do you understand by PEP in AML/KYC
PEP expands to Politically Exposed Persons and refers to individuals who are prominent and hold public or political positions who are susceptible to corruption.