Learning Objectives:

  • Understand the AML/CFT framework and its key components.

  • Apply Know Your Customer (KYC) and Customer Due Diligence (CDD) requirements.

  • Identify and report suspicious activity.

4.1 The AML/CFT Framework

The EM Normandie module covers “Anti- Money Laundering (AML) and Financial Crime Prevention” and “AML laws and compliance frameworks” . The University of Edinburgh module covers “financial crimes part 1 – money laundering and terrorist financing” .

Key components:

  • Risk-Based Approach: Enterprise-wide risk assessments.

  • Customer Due Diligence (CDD): Identifying and verifying customer identity.

  • Enhanced Due Diligence (EDD): For high-risk clients.

  • Transaction Monitoring: Monitoring transactions for suspicious patterns.

  • Suspicious Activity Reporting (SAR/STR): Filing reports with Financial Intelligence Units.

4.2 Know Your Customer (KYC) and Customer Due Diligence

The EM Normandie module covers “Know Your Customer (KYC) and Customer Due Diligence (CDD) requirements” . Key elements include:

  • Customer Identification Program (CIP): Collecting and verifying basic identifying information.

  • Beneficial Ownership Identification: Identifying the individuals who ultimately own or control legal entities.

  • Risk Profiling: Categorising customers as low, medium, or high risk.

  • Ongoing Monitoring: Continuously reviewing transactions and updating customer information.

4.3 Sanctions and Counter-Terrorist Financing

The EM Normandie module covers “sanctions compliance and counter- terrorist financing (CTF)” . The University of Edinburgh module covers “terrorist financing” as a core topic . Banks must screen customers and transactions against sanctions lists and report any matches to the relevant authorities.

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