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Hello, I have uploaded the questionInternational Diploma in AML – Cohort 17  Assignment One  Submission due date: 8 June 2020  Please read through the following guidance notes before writing your assignment.   Submitting your assignment  1. Please collate your assignment as a single document in a Microsoft Word format.  2. Save the assignment as your candidate ID number, e.g. CON-000123456.  3. All marking is anonymous, which means your name should not appear on your work.  4. You must state the region/jurisdiction in which you are working in the header of each  page.   5. You must ensure that all your work is properly referenced.   6. Penalties will be applied to those candidates who submit their assignment after the  due date.  Word count  7. The total word count for this assignment should be between 3,000 and 3,500 words.  This includes all in-text references and appendices but excludes any footnotes,  reference page or contents page. N.B. Appendices should only be used in exceptional  circumstances and should consist of only brief extracts or tables.   8. The number of words per part of the question should be in proportion to the number of  marks allocated.   9. Penalties will be applied for excessive overall word count.   Academic malpractice  ICA regards plagiarism and other forms of academic malpractice, such as collusion and  fabrication, as serious academic offences.   10. When submitting your assignment to ICA you have responsibility for ensuring that:  a. it is entirely your own work, except where you have given fully documented  references to the work of others   b. the material contained in your assignment has not previously been submitted  for assessment in any formal course of study.   11. All assignments are screened using Turnitin detection software that checks for passages  found elsewhere on the Internet, in books and journals or in work previously submitted.   12. ICA has issued guidelines on academic malpractice to help clarify for you what will be  considered as constituting such offences and to indicate the nature of the penalties  that may be imposed where they occur.  Further advice on all aspects of assignment writing and submission is available in the  ICA Assessment Handbook.  Your assignment question is on the next page   International Diploma in AML - Cohort 17 – Assignment 1 – 8 June 2020   2 ICAA562  All parts of the questions can be answered in relation to a jurisdiction with which you  are familiar.     The name of the jurisdiction you have selected should be clearly stated in your  answer.    Answer all parts of the question.    Question    a) Given the heavy penalties that can flow from a breach of sanctions, suggest measures  that a financial institution might take to minimise the risk of a significant sanctions  breach.     (15 marks)    b) With reference to a jurisdiction with which you are familiar, illustrate the main offences  of money laundering. Within your explanation, you must establish how those money  laundering offences can be committed, the legislation that is applicable to establishing  the offence(s) of money laundering and the potential penalties for commission of the  crime(s). Give examples where appropriate.     (30 marks)    c) Trade-based money laundering is defined as the process of disguising the proceeds  of crime and moving value by using trade transactions in an attempt to legitimise their  illicit origins. Evaluate the attractiveness of international trade and trade finance to  money launderers.     (20 marks)    d) From an AML/CDD perspective outline the importance of identifying the Ultimate  Beneficial Ownership of a corporate structure.    (10 Marks)     International Diploma in AML - Cohort 17 – Assignment 1 – 8 June 2020   3 ICAA562    e) You have recently been appointed as the MLRO for an international financial services  firm based in a jurisdiction of your choice.     You have been recruited to review the effectiveness of the existing money  laundering/terrorist financing risk control framework following a recently completed  regulatory report that identified that the current framework is deficient.     You have been asked by the board of the firm to design and implement a new  framework.     You conduct a full review of the current policies, procedures, risk framework and  controls and draft an initial paper for the board that highlights the best international  practice for the remedial measures that are needed to bring the firm up to a high  standard.     As part of the report you decide to highlight for the board an executive summary that  focuses upon:     i) the key AML risk management principles and concepts that will be at the heart  of the new framework;   ii) the nature of a risk-based approach to AML/CFT and how to apply it.     Draft the executive summary for the report    (25 marks)    Total 100 marks

Ashok · Accepted Answer

Jurisdiction Considered - USA
Jurisdiction Considered - USA
a. In today’s world, money laundering is carried out through complex and sophisticated schemes. The risk of being sanctioned by global regulatory bodies and governments, on account of intentional or non-intentional facilitation of money laundering, is increasing. In the wake of above, financial institutions have the option to take following measures to minimize sanctions risk:
· Evaluate risk of exposure to PEPs (Politically Exposed Persons) by verifying the sources of funds that go into their accounts and scrutinizing their transactions.
· Continuously update the list of PEPS and sanctions as these lists change rapidly in a shifting geopolitical climate.
· Invest in systems and processes to ensure that proper controls and reviews are implemented to comply with AML regulations.
· Invest in human capital and training of staff to ensure that they are updated with AML regulations and financial sanctions. Conduct workshops and create video tutorials/tests to get everyone on the same page. Trainings must be regularly updated with policy changes and new technology implementations.
· Regular and proactive risk assessment reviews must be undertaken under the supervision of senior management. A compliance officer must be appointed.
· Reporting to regulators must be centralized to ensure coherence of all information submitted.
· Regular internal audits must be conducted to ensure that records, reports and processes are in place. Ideally, an independent auditor must be appointed to get an unbiased view.
· Identities of customers must be checked before on boarding them and starting any payment or trade related service to them. Strict KYC measures must be implemented.
· Ensure that tools and technology help your organization to escalate and communicate suspicious activities quickly with the compliance team.
· Automated transaction monitoring systems must be implemented to flag suspicious transactions for review. Machine Learning can be utilized to enhance the effectiveness of such systems.
· Legacy systems can be optimized to perform checks. Artificial Intelligence can be utilized to filter and analyse incoming/outgoing transactions and improve the performance of legacy systems.
· Sanction alerts generated must be prioritized on the basis of risk they pose. False alerts can be minimized by a robotized semantical analysis.
· Financial institutions must develop a culture of compliance by regularly inculcating among the employees challenges posed by sanctions violation. Whistle-blower policy can be introduced to get signals for potential violations. 
b. Offences of money laundering under US law are: wire/mail fraud, securities fraud, bank fraud, tax fraud, drug trafficking and terrorism financing.
Any writings, signs/signals, pictures/sounds etc., transmitted by wire, radio or television in interstate or foreign trade is called wire fraud. It is any fraud involving electronic communications or phone lines. It includes theft of personal information to misuse credit card or transfer money from bank accounts. Telemarketing and phishing are examples of wire fraud. Nigerian Prince Scam is an example of a wire fraud (phishing). The sender claimed to be an exiled Nigerian Prince with a lot of money in his account in Nigeria. He would request readers’ bank account details so that he could transfer money and store in a safe account. On receiving the information, the scammer would access the readers account and access amount from his account.
Securities fraud occurs when people are prompted to invest or trade on the basis of false information resulting in significant loss of money. Insider trading and mutual fund frauds are examples of securities fraud.
Tax fraud occurs when individuals or businesses file false information on tax returns to avoid taxes. 
Drug trafficking involves cultivation, processing, distribution and sale of substances which are prohibited under the drug laws.
Terrorism financing is providing funds or means to individual terrorists or entities involved in such activities.
Following laws govern money laundering activities in US:
· Bank Secrecy Act (1970)
Bank Secrecy Act is also known as the Currency and Foreign Transactions Reporting Act. It requires banks to report transactions involving more than $10,000 in cash over 24 hour period. It also requires banks to report suspicious activity that might indicate possible money laundering or fraud. An activity is called suspicious if it involves $5,000 or more.
· Money Laundering Control Act (1986)
Money Laundering Control Act 1986 is an Act passed by US Congress in 1986 that made money laundering a Federal Crime. Under this law, section 1956 prohibits individuals from carrying out a financial transaction with proceeds generated from ‘specific unlawful activities’. Passing money from one person to another, so long as it is done with the intent to disguise the source, ownership, location or control of the money, has been deemed a financial transaction. Under this law, the second section 1957 prohibits spending in excess of $10,000 derived from ‘specific unlawful activities’.
· Anti-drug Abuse Act (1988)
Anti-drug Abuse Act 1988 is a law passed by US congress in November 1988 which created the policy of drug free America and established the Office of National Drug Control Policy. This Act made cocaine the only drug with a mandatory minimum penalty for a first offence of possession. This Act also made possession of more than five grams of a mixture containing cocaine punishable by at least five years in prison. The law enforces organization and coordination of Federal drug control efforts. It intends to reduce drug demand by increasing treatment and prevention measures. It also aims to reduce illicit drug trafficking and production abroad.
· Annunzio-Wylie Anti-money Laundering Act (1992)
Annunzio-Wylie Anti-money Laundering Act 1992 increased penalties for financial entities found guilty of money laundering and encouraged oversight agencies to consider revoking the charters of any financial institution involved in money laundering. This Act withdrew Criminal Referral Forms and introduced Suspicious Activity Reports (SARS). SARS enables banks to report any suspicious activity.

International Diploma in AML – Cohort 17 Assignment One Submission due date: 8 June 2020 Please read through the following guidance notes before writing your assignment. Submitting your assignment 1....

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