Certified AML/KYC

Compliance Officer

VS-1092

Certified AML/KYC Compliance Officer

www.vskills.in

Certified Certified Certified Certified AML/KYCAML/KYCAML/KYCAML/KYC Compliance Compliance Compliance Compliance OfficerOfficerOfficerOfficer

Certificate Code VSCertificate Code VSCertificate Code VSCertificate Code VS----1092109210921092

Vskills certification in KYC (Know Your Customer) and Anti Money Laundering

Operation, is one of the first certifications in this area of banking sector. A Vskills Certified

AML/KYC Officer finds employment in banking and banking ancillary firms, security and

audit firms, and other small and medium enterprises.

Why should one take this certification?Why should one take this certification?Why should one take this certification?Why should one take this certification?

The certification is aimed at enhancing the quality of compliance with the directions of RBI

in combating illegal operations and movement of funds through the use of banking

channels. KYC and Anti Money Laundering operations have assumed added importance

owing to the security risk that it poses to the country, and also to maintain the financial

health of the institutions.

Who will benefit from taking this certification?Who will benefit from taking this certification?Who will benefit from taking this certification?Who will benefit from taking this certification?

KYC and Anti Money Laundering certification is being increasingly taken by a large

number of working professionals in banking and finance field. Also, students desirous of

entering banking and finance sector, find this certification as a useful addition to their CV.

Test Details:Test Details:Test Details:Test Details:

� Duration:Duration:Duration:Duration: 60 minutes

� No. of questions:No. of questions:No. of questions:No. of questions: 50

� Maximum marks:Maximum marks:Maximum marks:Maximum marks: 50, Passing marks: 25 (50%);

There is no negative marking in this module.

Fee Structure:Fee Structure:Fee Structure:Fee Structure:

Rs. 4,000/- (Includes all taxes)

Certified AML/KYC Compliance Officer

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Table of ContentTable of ContentTable of ContentTable of Content

1. 1. 1. 1. Money LaunderingMoney LaunderingMoney LaunderingMoney Laundering

1.1 What is Money Laundering?

1.2 Prevention of Money Laundering Act (PML Act)

1.3 Tainted Money or Dirty Money

1.4 Transfer of funds and washing of “Dirty” Money

1.5 Global phenomenon

2222. . . . Money Laundering: Some Methods usedMoney Laundering: Some Methods usedMoney Laundering: Some Methods usedMoney Laundering: Some Methods used

2.1 Process of Money Laundering: Placement, Layering, Integration

2.2 Methods used in Money Laundering

2.3 Sources of tainted money

2.4 Common techniques employed

3333. . . . Legislation and international Legislation and international Legislation and international Legislation and international cooperationcooperationcooperationcooperation

3.1 Legislations in various countries against money laundering

3.2 Financial Action Task Force (FATF)

3.3 Anti Money Laundering measures in India

3.4 Tools required for prevention of Money Laundering

4444. . . . Role of cRole of cRole of cRole of correspondent bankingorrespondent bankingorrespondent bankingorrespondent banking

4.1 Information on Correspondent Bank

4.2 Anti money laundering policies of the correspondent bank

5. 5. 5. 5. Know Your Customer Know Your Customer Know Your Customer Know Your Customer –––– Historical Perspective Historical Perspective Historical Perspective Historical Perspective

5.1 Customer Profile

5.2 KYC Policies and RBI initiative

5.3 Some basic definitions and KYC origination

5.4 Transaction Profile screening

5.5 Organizational Structure in the bank

6. 6. 6. 6. KYC KYC KYC KYC –––– Operating Guidelines Operating Guidelines Operating Guidelines Operating Guidelines

6.1 Customer Identification

6.2 Account opening process

6.3 Accounts of Companies – Limited Companies, Proprietorship, Partnerships

6.4 Trusts, fiduciary relations, professional intermediaries

6.5 Joint Accounts

6.6 Suggested safegaurds

6.7 Existing Accounts

6.8 Inoperative Accounts

6.9 Monitoring of Accounts

Certified AML/KYC Compliance Officer

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7777. . . . Internal Control and structure in banksInternal Control and structure in banksInternal Control and structure in banksInternal Control and structure in banks

7.1 Roles and responsibilities of the Principal Officer

7.2 Roles and responsibilities of the staff

7.3 Roles and responsibilities of Internal Audit and Controls

8888. . . . Customer Risk Categorization (CRC)Customer Risk Categorization (CRC)Customer Risk Categorization (CRC)Customer Risk Categorization (CRC)

8.1 Customer Risk

8.2 Need for Customer Risk Categorization

8.3 Customer Acceptance Policy (CAP)

8.4 Customer Identification Procedures

8.5 Customer due diligence

9999. . . . Reporting ObligationsReporting ObligationsReporting ObligationsReporting Obligations

9.1 Cash transaction reporting (CTR)

9.2 Counterfeit Currency Reporting (CCR)

9.3 Suspicious Transaction Report (STR)

11110000. . . . Transaction MonitoringTransaction MonitoringTransaction MonitoringTransaction Monitoring

10.1 Methods of monitoring

10.2 Suspicious transactions

10.3 Name Screening process

10.4 Wire Transfers

10.5 Preservation of records

11111111. . . . Staff and Customer AwarenessStaff and Customer AwarenessStaff and Customer AwarenessStaff and Customer Awareness

11.1 Training methods

11.2 Assessments

11.3 Records of training

11.4 Importance of creating customer awareness

Certified AML/KYC Compliance Officer

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Course OutlineCourse OutlineCourse OutlineCourse Outline

Money LaunderingMoney LaunderingMoney LaunderingMoney Laundering: Some Methods Used: Some Methods Used: Some Methods Used: Some Methods Used

� Briefly explains the complex web of money laundering operations

� Various steps involved in money laundering like Placement – physically placing

bulk cash proceeds, Layering – separating the proceeds of criminal activity from

their origins, through layers of complex transactions, Integration – providing a

seemingly legitimate explanation to the illegal proceeds

� Various methods of money laundering like creating shell companies, front

companies, offshore banking accounts, structuring the amounts, and hawala

transactions

� Common sources of money laundering like drug trafficking, tax evasion, organized

crime etc

� Studying the various markets in detail that absorb money laundering money like

precious metals etc

Legislation and InLegislation and InLegislation and InLegislation and International Cooperationternational Cooperationternational Cooperationternational Cooperation

� Several countries have come up with strict legislations to counter money laundering

� UK has come up with various legislations like Drug Trafficking Offences (1998),

Criminal Justice Act (1988), Criminal Justice (Consolidation) (Scotland) Act (1995),

Proceeds of Crime (Scotland) Act (1995), Criminal Justice (International

Cooperation) Act (1990)

� USA has consistently come out with various acts , and since 9/11 has taken

significant steps like USA Patriot Act 2001 giving substantial powers to law

enforcing agencies to prevent cross border flow of funds that look suspicious

� Basel Principles have also addressed four areas that tackle money laundering i.e.

customer identification, compliance with laws, cooperation with law enforcing

agencies, adherence to the statement

� Financial Action Task Force (FATF) was established by G-7 and has come up with

recommendations to help uncover money laundering techniques, to introduce

counter manners, and to harmonize anti money laundering policies at an

international level

� In India, The Prevention of Money Laundering Act (2002) addresses the problem

of money laundering in conjunctions with other laws in existence

� RBI has also come out with certain guidelines for banks and financial institutions to

prevent money laundering

� Tools are required to study the complex transactions and good software packages

are needed along with high quality human resource

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Role of Correspondent BankingRole of Correspondent BankingRole of Correspondent BankingRole of Correspondent Banking

� Importance of properly examining the correspondent bank with which transactions

are happening

� Gathering all important information about the correspondent bank like other

bank’s management, major business activities, level of KYC and AML norms, etc

before extending correspondent facilities to the bank

Know Your Customer: Historical PeKnow Your Customer: Historical PeKnow Your Customer: Historical PeKnow Your Customer: Historical Perspectiverspectiverspectiverspective

� Importance of KYC activities and appreciating the value of KYC processes in

ensuring that the banking operations are safe and clean to help clients and bank

personnel to conduct business, with comfort and confidence

� Customer Profile and what is the set of important information that needs to be

collected

� Understanding the global case and countries that are deficient in KYC norms

� Initiatives taken by the RBI and their impact in the banking business. The RBI’s

approach has been chiefly to prevent banks from being used by criminal elements

to launder money and to help banks know their customers and their financial

transactions better

� Some of the KYC Policies laid down by RBI include Customer Acceptance Policy

(CAP), Customer Identification Process, Monitoring of Customer Transactions and

Risk Management

� RBI also suggests close monitoring of transactions like archival of profiles, scrutiny

of unusual transactions, audit and compliance functions, reporting and training.

KYC: Operating GuidelinesKYC: Operating GuidelinesKYC: Operating GuidelinesKYC: Operating Guidelines

� Various guidelines related to customer identification in opening of accounts,

monitoring customer transactions, risk management and other matters related to

KYC standards.

� General operating guidelines for customer identification in opening of accounts as

in the case of individuals, companies, partnerships, proprietorships, trusts and

foundations

� Concept of an introducer and who can be an introducer and client accounts

opened by professional intermediaries

Internal Control and Structure in bankInternal Control and Structure in bankInternal Control and Structure in bankInternal Control and Structure in bank

� Internal control in terms of customer research, monitoring of cash transactions,

monitoring remittances, and the parameters used for customer identification

� Customer research may involve desk research, discussions with customers, periodic

calls to customers etc

� Research on customer may further be extended using softwares of the bank.

Certified AML/KYC Compliance Officer

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� Internal guidelines for new accounts, cash transactions, large value transfer of funds,

monitoring remittances

� NRI Accounts become important in the light of FEMA, and KYC should be

proper

� Identification parameters need to be established like transactions not consistent

with customer’s usual business, incomplete/non disclosure of data by customer,

unusual activity, suspicious fund transfer activity

� Check on bank employees and their lifestyle, employee discipline and

confidentiality of internal control documents

� Roles and responsibilities of Board of Directors and senior management

� Appointment of Principal officer along with defining the roles and responsibilities,

and formulation of appropriate procedures to prevent Money Laundering

� Roles and responsibilities of the staff and internal audit/ internal control

Customer Risk Categorization (CRC)Customer Risk Categorization (CRC)Customer Risk Categorization (CRC)Customer Risk Categorization (CRC)

� Meaning of Customer risk, and classification of customers in various buckets of

risk. Various selection of parameters for risk categorization, determining the risk

rating methodology, deciding on type of classification, use of various soft wares for

risk categorization, and periodic review of CRC

Reporting ObligationsReporting ObligationsReporting ObligationsReporting Obligations

� Under PMLA Act, 2002, certain obligations were cast on banking companies with

regards to reporting of certain transactions.

� Banks are required to make reports of the following types : Cash Transaction

Reporting (CTR), Counterfeit Currency Reporting (CCR), Suspicious Transaction

Reporting (STR)

TranTranTranTransaction Monitoringsaction Monitoringsaction Monitoringsaction Monitoring

� Transaction Monitoring is critical to AML/KYC efforts. Various methods of

monitoring are studied like observation, analysis of exception reports, AML

software, looking at suspicious transactions

� Rules for transaction monitoring and challenges for transaction monitoring

� Importance of software for transaction monitoring and features available for the

software

� Scope and purpose of name screening and negative lists

Certified AML/KYC Compliance Officer

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Staff and Customer AwarenessStaff and Customer AwarenessStaff and Customer AwarenessStaff and Customer Awareness

� Creating staff awareness of AML/KYC and allocating responsibility to top

management, defining roles and responsibilities and obligations of staff

� Need for development appropriate training methods and using regular assessments

to gauge performance

� Maintenance of regular records of training and assessment and why is it important

to create customer awareness on AML

Certified AML/KYC Compliance Officer

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Sample QuestionsSample QuestionsSample QuestionsSample Questions

1. 1. 1. 1. Money Laundering refers to Money Laundering refers to Money Laundering refers to Money Laundering refers to ____________.____________.____________.____________.

A. Tansfer of assets/cash from one account to another

B. Conversion of illegal money through banking channels

C. Conversion of cash into gold for hoarding

D. Conversion of assets into cash to avoid income tax

2. 2. 2. 2. In case of societies, the important document to be verified is In case of societies, the important document to be verified is In case of societies, the important document to be verified is In case of societies, the important document to be verified is ____________.

A. Copy of bye laws

B. Certificate given by ROC

C. Certificate given by the Local Authorities

D. No document is to be verified in case of societies, as societies are exempted by Registrar

3. 3. 3. 3. PAN (Permanent Account Number) is compulsory for Fixed Deposits, PAN (Permanent Account Number) is compulsory for Fixed Deposits, PAN (Permanent Account Number) is compulsory for Fixed Deposits, PAN (Permanent Account Number) is compulsory for Fixed Deposits,

Remittances like DDs/TTs/RTCs, etcRemittances like DDs/TTs/RTCs, etcRemittances like DDs/TTs/RTCs, etcRemittances like DDs/TTs/RTCs, etc ____________. ____________. ____________. ____________.

A. if the amount exceeds Rs.10,000

B. if the amount exceeds Rs.25,000

C. if the amount exceeds Rs 50,000

D. no such limit is fixed by income tax authorities

4. 4. 4. 4. Dormant/ in operative account meansDormant/ in operative account meansDormant/ in operative account meansDormant/ in operative account means ____________. ____________. ____________. ____________.

A. No debits/credits in account for a certain period

B. Dead Account without any operation for long

C. No debit entries, but certain credit entries for a certain period

D. Fixed asset account of the bank

5. 5. 5. 5. While opening an account of a Public Limited company, While opening an account of a Public Limited company, While opening an account of a Public Limited company, While opening an account of a Public Limited company, which of the following which of the following which of the following which of the following

is a mustis a mustis a mustis a must? ? ? ?

A. Introduction by a customer known to the banker

B. Certificate of incorporation/Certificate of commencement of business

C. Introduction by ROC

D. None of the above

Answer: 1 (B), 2 (Answer: 1 (B), 2 (Answer: 1 (B), 2 (Answer: 1 (B), 2 (AAAA), 3 (), 3 (), 3 (), 3 (CCCC), 4 (), 4 (), 4 (), 4 (AAAA), 5 (), 5 (), 5 (), 5 (BBBB))))