Branch Compliance Officers Course (BCO) Practice Questions And Answers

A relevant institutions must inform OFSI without delay whenever it credits a frozen account with:

• payments due under prior contracts
• payments made under judicial decisions rendered in an EU member state
• funds transferred to an account by a third party

There has been considerable debate on who, and what agencies, should undertake assessments of the humanitarian implications of sanctions, especially when the sanctions are imposed by the United Nations.

The following attributes represent desirable skills and qualifications of investigators for humanitarian assessments. The investigators should:

• Have experience and knowledge of sanctions assessment techniques and the recent developments in the sanctions debate, especially within the United Nations;
• Have experience in undertaking or contributing to humanitarian assessments;
• Be versant in the concepts and methods of epidemiology and public health, statistics, risk analysis and economics;
• Possess country-specific or regional expertise;
• Be aware of the potential for political manipulation in their interactions with important institutions or people involved;
• Maintain an effective and ongoing liaison with the commissioning entity (e.g. United Nations Secretariat/Office for the Coordination of Humanitarian Affairs);
• Be capable of clearly communicating the methodology and objectives of the assessment to those contributing to the study;
• Be sensitive to cultural differences, institutional hierarchies and the existence of formal/informal networks and special relationships when conducting the assessment.

Financial sanctions are restrictions put in place by the UN, EU or UK to achieve a specific foreign policy or national security objective. They can:
• limit the provision of certain financial services
• restrict access to financial markets, funds and economic resources.

Financial sanctions are generally imposed to:
• coerce a regime, or individuals within a regime, into changing their behaviour (or aspects of it) by increasing the cost on them to such an extent that they decide to cease the offending behaviour

• constrain a target by denying them access to key resources needed to continue their offending behaviour, including the financing of terrorism or nuclear proliferation;

• signal disapproval, stigmatising and potentially isolating a regime or individual, or as a way of sending broader political messages nationally or internationally; and/or

• protect the value of assets that have been misappropriated from a country until these assets can be repatriated

The consolidated list contains a range of information to aid the identification of designated persons. For an individual this can include their:
• aliases
• date of birth
• passport details
• nationality
• last known address
• employment or government role

If you know or have ‘reasonable cause to suspect’ that you are in possession or control of, or are otherwise dealing with, the funds or economic resources of a designated person you must:
• freeze them
• not deal with them or make them available to, or for the benefit of, the designated
person, unless:
• there is an exemption in the legislation that you can rely on
• you have a licence from OFSI

• report them to OFSI

UNICEF defines the three levels of causes as follows:
Immediate causes: such as disease and inadequate nutrition, which directly relate to life, survival and development rights;

Underlying causes: such as the status of household food and nutrition, as well as social services like water and sanitation, health and education, which promote or prevent wellbeing and development;

Basic causes: which relate to issues such as control and distribution of national resources, institutional arrangements and social organization (including the status of women).

Building a causal model
1. Be clear about the problem statement before starting.
2. Associate variables that MAY belong in causal chains.
3. Identify potential causes.
4. Identify likely causes.
5. Construct the causal pathway s” linking cause and effect.

There has been considerable debate on who, and what agencies, should undertake assessments of the humanitarian implications of sanctions, especially when the sanctions are imposed by the United Nations.

The following attributes represent desirable skills and qualifications of investigators for humanitarian assessments. The investigators should:

• Have experience and knowledge of sanctions assessment techniques and the recent developments in the sanctions debate, especially within the United Nations;
• Have experience in undertaking or contributing to humanitarian assessments;
• Be versant in the concepts and methods of epidemiology and public health, statistics, risk analysis and economics;
• Possess country-specific or regional expertise;
• Be aware of the potential for political manipulation in their interactions with important institutions or people involved;
• Maintain an effective and ongoing liaison with the commissioning entity (e.g. United Nations Secretariat/Office for the Coordination of Humanitarian Affairs);
• Be capable of clearly communicating the methodology and objectives of the assessment to those contributing to the study;
• Be sensitive to cultural differences, institutional hierarchies and the existence of formal/informal networks and special relationships when conducting the assessment.

Investigations may be initiated from proactive monitoring for potentially suspicious activity as well as reactive measures taken to address regulatory findings, referrals or other recommendations.
Common investigation initiators include:
• Regulatory recommendations or official findings.
• Transaction monitoring rules designed to detect potentially suspicious activity.
• Referrals from customer-facing employees regarding potentially suspicious activity.
• Information obtained from internal hotlines.
• Negative media information.
• Receipt of a governmental subpoena or search warrant.

Financial institutions may initiate investigative efforts based on regulatory findings or recommendations. Such efforts may result in the creation of new ongoing monitoring or maybe one-time reviews to address specific questions or observations.

Law enforcement agencies may initiate investigations against a financial institution, or contact financial institutions in the context of an investigation involving a customer of the institution. Steps that law enforcement agencies can or should take in conducting a money-laundering investigation include:

• Follow the money. If the agency is aware of where the laundered money originated or where nit ended up, it is appropriate for the agency to attempt to bring the two ends together and to compile a complete understanding of the flow of the funds.
• Leverage the financial knowledge and due diligence information contained in financial institutions.
• Identify the unlawful activity.
• Review databases.
• Review public records.
• Review licensing and registration files.
• Analyze the financial transactions and account activity of the target.
• Review STRs that might involve any potential individual linked to the target or the transactions or activity.

When considering whether — or to what extent — to bring a case against an institution involving money laundering-related charges, prosecutors will look at many factors, including:
• The institution has a criminal history.
• The institution has cooperated with the investigation.
• The institution discovered and self-reported the money laundering-related issues.
• The institution has had a comprehensive and effective AML/CFT program.
• The institution has taken timely and effective remedial action.
• There are civil remedies available that can serve as punishment.
• Deterring wrongdoing by others is needed and will be served by a prosecution.
• Advice and recommendations from regulatory agencies and/or the FIU for the jurisdiction is available.

The Wolfsberg Group is an association of 13 global banks that aims to develop financial services industry standards and guidance related to Know Your Customer, Anti-Money Laundering and Counter-Terrorist Financing policies. The Wolfsberg Group, which has no enforcement powers, issued the guidelines to manage its members’ risks, to help make sound decisions about clients and to protect their operations from criminal abuse.

The Wolfsberg Anti-Money Laundering Principles for Private Banking recommends the following;

• Controls for private banking
• Controls for customer satisfaction
• Enhancing due diligence
• Heighten scrutiny of individuals who “have or have had positions of public trust”

All US persons must comply with OFAC regulations including the following statements;

• Permanent resident aliens
• All persons and entities within the United States
• All US incorporated entities and their foreign branches

There were three main points of contention about the Third Directive:

1. The definition of politically exposed persons (PEPs). The Third defined PEPs as, “natural persons who are or have been entrusted with prominent public functions and the immediate family members, or individuals known to be close associates, of such persons.” Close associates must be identified only when their relationship with a PEP is publicly known or when the institution suspects there is a relationship. Finally, the commission said persons should not be considered PEPs after one year of not being in a prominent position.

2. The inclusion of lawyers among those who are required to report suspicious activity.

3. The precise role of a “comitology committee.” The European Commission coined the term “comitology,” which means the EU system that oversees the implementation of acts proposed by the European Commission.

Credit unions do not have clients or customers; instead, they have members who are also owners. Credit unions serve only the financial needs of their members and are governed by a “one member, one vote” philosophy. Credit union membership is based on a common bond, a linkage shared by savers and borrowers who belong to a specific community, organization, religion or place of employment. Most credit unions focus primarily on servicing personal banking relationships from within their community. Credit unions do not participate in trade-based financing, will not facilitate correspondent banking relationships, and will not maintain large corporate relationships, particularly those with international banking needs.