Anti-Money Laundering

• Topic 01

  Anti-Money Laundering

  57 questions

A few questions from this unit, with the answer and a full explanation. The complete bank is available when you start practising.

1. What is the maximum prison sentence for the principal money laundering offences under POCA 2002 sections 327, 328, and 329?

   • A
     10 years' imprisonment
   • B
     5 years' imprisonment
   • C
     7 years' imprisonment
   • D
     14 years' imprisonment
     Correct answer
   Explanation

   The three principal money laundering offences under POCA 2002 — concealing (s.327), arranging (s.328), and acquiring (s.329) — each carry a maximum sentence of 14 years' imprisonment. This contrasts with the ancillary offences of failure to disclose (s.330) and tipping off (s.333A), which each carry a maximum of 5 years' imprisonment.

2. To which body does the MLRO submit an external Suspicious Activity Report?

   • A
     Her Majesty's Revenue and Customs (HMRC)
   • B
     The National Crime Agency (NCA)
     Correct answer
   • C
     The Crown Prosecution Service (CPS)
   • D
     The Prudential Regulation Authority (PRA)
   Explanation

   External SARs are submitted to the National Crime Agency (NCA), specifically to its UK Financial Intelligence Unit (UKFIU) via the SARs Online system. The NCA is the central body responsible for receiving, analysing, and disseminating AML/CTF intelligence. It is distinct from the FCA, which is a regulatory body responsible for supervising firms' compliance with AML obligations. The FCA may take enforcement action against firms with inadequate AML systems and controls, but SARs are submitted to the NCA.

3. A firm's annual AML risk assessment identifies that its high-net-worth client segment has a materially elevated risk of money laundering compared to its mass-market retail clients. What specific additional obligations does this risk assessment finding create for the firm under the Money Laundering Regulations 2017, and what might those enhanced measures look like in practice?

   • A
     The finding requires the firm to notify the FCA of the elevated risk and obtain FCA approval before accepting further high-net-worth clients
   • B
     The finding only requires the firm to update its written AML policy — no additional client-level checks are needed
   • C
     The firm must apply Enhanced Due Diligence to the high-net-worth segment; in practice this means additional source-of-wealth checks, senior management approval for relationships, and more frequent ongoing monitoring of transactions
     Correct answer
   • D
     The firm must file a bulk SAR with the NCA covering all existing high-net-worth clients
   Explanation

   When a firm's risk assessment identifies an elevated risk in a segment, the MLR 2017 requires it to apply enhanced measures proportionate to that risk. For a high-net-worth segment (which is at higher risk due to larger transaction volumes, complex structures, and potential PEP exposure), EDD measures in practice include: obtaining source of wealth information (e.g. how did the client accumulate their wealth?); obtaining source of funds information for specific transactions (where did this specific money come from?); requiring senior management (or the MLRO) to approve new high-net-worth client relationships; and conducting more frequent and more detailed ongoing monitoring of transactions to identify anomalies. These measures must be documented and proportionate.