Origin of the term “Shell Bank”
What is the meaning of shell bank?
Shell bank means a bank that has no physical presence in the country in which it is incorporated and licensed, and which is unaffiliated with a regulated financial group that is subject to effective consolidated supervision.
What is CDD finance?
In early May, the U.S. Department of the Treasury announced the final publication of a rule which requires the financial industry to identify client companies’ “beneficial owners.” The rule, known as the Customer Due Diligence (CDD) rule, specifically requires that banks, brokers, and other financial institutions
What are the 3 stages of money laundering?
Although money laundering is a diverse and often complex process, it generally involves three stages: placement, layering, and/or integration. Money laundering is defined as the criminal practice of making funds from illegal activity appear legitimate.
What is a foreign shell bank?
Section 103.175 defines a foreign shell bank as “a foreign bank without a physical presence anywhere in any country.” Foreign bank as defined under 31 CFR 103.11(o) is “a bank organized under foreign law,” but not including its agents, branches, or offices located in the United States.
What is the FinCEN rule?
Specifically, the act requires financial institutions to keep records of cash purchases of negotiable instruments, file reports of cash transactions exceeding $10,000 (daily aggregate amount), and to report suspicious activity that might signify money laundering, tax evasion, or other criminal activities.
What is smurfing in AML?
A smurf is a money launderer who steals or launders money to avoid regulatory inspection by splitting large transaction into small transactions. This money is deposited by the launderer in the various bank accounts.
What is the last stage of money laundering?
the integration stage
The final stage of the money laundering process is termed the integration stage. It is at the integration stage where the money is returned to the criminal from what seem to be legitimate sources.
What are the 5 pillars of the USA PATRIOT Act?
Currently, institutional AML programs are based on the “five pillars”: internal policies, procedures and controls; designation of an AML officer; employee training; independent testing; and customer due diligence (CDD).
What is shadow banking?
Shadow banking is a term used to describe bank-like activities (mainly lending) that take place outside the traditional banking sector. It is now commonly referred to internationally as non-bank financial intermediation or market-based finance. Shadow bank lending has a similar function to traditional bank lending.
Can we as a bank deal with shell banks?
Financial institutions are prohibited from entering into a correspondent banking relationship with a shell bank, or a financial institution that deals with shell banks in the ways set out in section 95 of the AML/CTF Act.
Which agency is in charge of money laundering in USA?
The United States Department of the Treasury is fully dedicated to combating all aspects of money laundering at home and abroad, through the mission of the Office of Terrorism and Financial Intelligence (TFI).
What is the CDD final rule?
The CDD Final Rule requires firms to verify beneficial ownership with a “reasonable belief” that the information they have received reflects the true identity of the owners of the legal entity customer.
What are the 4 customer due diligence requirements?
To ensure that your business is following best practices, we have put together the following five-step checklist to help improve your CDD processes.
- Step 1: Verify customer identities. …
- Step 2: Assess third-party information sources. …
- Step 3: Secure your information. …
- Step 4: Take any necessary additional measures.
What is the difference between CDD and CIP?
A KYC process includes having a Customer Identification Program (CIP) in place and practicing Customer Due Diligence (CDD).
What is CDD and EDD?
Customer due diligence (CDD) and enhanced due diligence (EDD) are different tiers of know your customer (KYC) processes completed by businesses on their customers. They’re mandated by regulatory organizations for many different industries, but are most prevalent across financial services.
What is the difference between KYC and CDD?
KYC checks are therefore made at the early stage of establishing business relationships, when we screen potential customers, while Customer Due Diligence (CDD) is an ongoing monitoring of suspicious activities aimed at money laundering and both are a crucial part of an anti-money laundering (AML) program.
What is the difference between AML and KYC?
KYC refers specifically to identity verification and risk assessment, whereas AML could refer to a much wider range of techniques (such as transaction monitoring, enhanced due diligence, sanctions & PEP screening, and more) to monitor risk during and after KYC checks. Ultimately, KYC is a part of AML.
What is PEP declaration?
POLITICALLY EXPOSED PERSON (PEP) DECLARATION
Like all estate agents (and many other industries), we are required to ascertain from all buyers and sellers whether they or any member of their immediate family is classed as a Politically Exposed Person (PEP).
What is the difference between CIP and KYC?
Know Your Customer (KYC) and Customer Identification Procedures (CIP) are vital for business operations. KYC involves knowing a customer’s identity and the business activities they engage in. CIP, in contrast, involves verifying the information provided by a customer.
What does BSA stand for in banking?
the Bank Secrecy Act
Under the Bank Secrecy Act (BSA), financial institutions are required to assist U.S. government agencies in detecting and preventing money laundering, such as: Keep records of cash purchases of negotiable instruments, File reports of cash transactions exceeding $10,000 (daily aggregate amount), and.
When did CIP go into effect?
More commonly known as know your customer, the CIP requirement was implemented by regulations in 2003 which require US financial institutions to develop a CIP proportionate to the size and type of its business.