AML Interview Questions and Answers Lecture

Importance of AML Professionals

• Safeguard the financial system from illegal activities (fraud, terrorism financing).
• Maintain integrity and stability in financial systems.
• Employers: banks, credit unions, investment firms, regulatory bodies, consulting firms, fintech companies, cryptocurrency exchanges, etc.
• Common positions: AML Analyst, AML Compliance Officer, Financial Crime Investigator, KYC Analyst, Risk Manager, etc.

Interview Focus

• Discussion on 11 basic AML interview questions.
• Relevant for both fresh graduates and experienced professionals.
• Importance of displaying foundational knowledge during interviews.

Key Interview Questions

1. What is Money Laundering?

• Money laundering involves making illegally obtained money appear legitimate.
• Illegal activities include drug trafficking, terrorism, arms smuggling, human trafficking, etc.
• Anti-money laundering policies are critical for detection and prevention.

2. Steps in Money Laundering

• Placement: Injecting dirty money into the financial system.
• Layering: Conducting transactions to hide the money's source.
• Integration: Dispersing laundered money from legitimate accounts.
• Steps may be repeated or combined.

3. Common Methods of Money Laundering

• Gambling: Using casino transactions.
• Precious Metals/Stones: Investing in easily movable valuables.
• Smurfing: Splitting large sums into smaller amounts across accounts.
• Shell Companies: Inactive companies used to launder money.
• Real Estate: Buying real estate and assets.
• Cash Smuggling: Mules smuggle money across borders.
• Bank Complicity: Involvement of corrupt banks/financial institutions.

4. Trade-Based Money Laundering (TBML)

• Manipulating trade transactions to appear legitimate.
• Over/under-invoicing, misclassifying goods, false shipping documents.

5. Financial Action Task Force (FATF)

• Established by G7 in 1989.
• Examines and develops measures against money laundering.
• Monitors criminal and terrorist funding movements.

6. Unique Customer Identification Code (UCIC)

• Assigned to each customer to track accounts/transactions.
• Streamlines KYC and AML/CFT efforts.

7. Indian Law Against Money Laundering

• PMLA 2002: Prevention of Money Laundering Act.
• Provides for confiscation/seizure of laundered assets.

8. Financial Intelligence Unit India (FIU-IND)

• Established in 2004, under Ministry of Finance.
• Handles suspected financial transactions and shares intelligence with enforcement agencies.

9. Suspicious Activity Report (SAR)

• Filed when illicit money flow is suspected.
• Includes transaction details, parties involved, reasons for suspicion.
• Failure to file: Legal penalties, reputational damage, loss of license.

10. Handling Suspicious Transactions as an AML Executive

• Conduct enhanced due diligence and monitor account activities.
• Refer to guidelines for raising SAR.
• Cooperate with law enforcement agencies if necessary.

11. Advice for New AML Employees

• Time management: Know when to stop research and raise issues.
• Be suspicious and thorough.
• Attach relevant documents for faster action.
• Pay attention to feedback and adhere to policies.

Conclusion

• Preparation and foundational knowledge are key to succeeding in AML interviews.
• Importance of anticipating questions and preparing thoughtful responses.
• Related resources: KYC and compliance interview videos available.