ML/FT Risks in Exchange Houses

What is a primary ML/FT risk associated with remittance services offered by exchange houses?

• High transaction volume with traceable sources

• Cross-border transactions with limited verification of fund sources

• Exchange rates set by government regulation

• Only domestic transfers are allowed

At the branch level, which product typically carries the highest ML/FT risk?

• Currency exchange for small amounts

• International remittances to high-risk countries

• Bill payment services

• Money transfers within the same country

Which of the following is a red flag for potential ML/FT activity?

• Consistent small deposits into a savings account

• Frequent large cash deposits with no clear business purpose

• Regular payroll deposits into a business account

• A customer updating their address on file

Cash-intensive businesses are particularly vulnerable to ML/FT risks due to:

• The high volume of cash transactions making it easier to disguise illicit funds

• Limited opportunities for small transactions

• Their lack of international business relationships

• No need to report large cash deposits

Which transaction pattern might indicate potential money laundering?

• Regular monthly bill payments

• Multiple small remittances to a high-risk jurisdiction

• A single international remittance to a family member

• A recurring loan repayment

An exchange house should escalate a suspicious transaction internally when:

• The customer asks for a receipt

• The transaction is higher than usual but justified

• The activity is inconsistent with the customer’s known profile and expected behavior

• The customer changes their personal details

How should an exchange house handle incomplete or inconsistent KYC information?

• Proceed with the transaction but flag it for later review

• Halt the transaction until all required KYC documentation is verified

• Ignore minor discrepancies if the customer is a long-term client

• Process the transaction without investigation

Which key element is part of the KYC process for high-risk customers?

• Simplified due diligence

• Enhanced due diligence (EDD)

• Reliance on customer self-certification

• Skipping transaction monitoring for high-volume customers

What type of transactions should raise immediate concern under transaction monitoring procedures?

• Multiple transactions within the same city

• Large, round-dollar amounts transferred to offshore accounts

• Customers making utility payments

• Business customers receiving regular invoices

What should be done after a suspicious transaction is identified?

• Halt all customer transactions indefinitely

• Immediately report it to the financial intelligence unit (FIU) without escalation

• Document the suspicion and escalate it to the compliance team for further investigation

• Warn the customer of potential investigation