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© ACAMS. All rights reserved. This information is subject to change. KYC CDD course syllabus updated 1 KYC CDD AML Course Syllabus Audience ACAMS KYC CDD focuses on research skills—how to better assess, explore, organize, and present—in the context of customer due diligence. The primary target is the frontline analyst, teaching skills that benefit new and experienced employees, especially as regulator expec- tations increase regarding beneficial owners. This course assumes the employer has already introduced that organization’s unique roles, processes, systems, and common cases. It will use only generic forms or processes that won’t conflict with each organization’s own. To bring all learners to a shared baseline of terminology, concepts, and processes, the course starts with the “KYC CDD: Essentials” video and then builds from there. The course is written and presented by due diligence experts working around the world. It pulls examples from many countries, and is globally appropriate. The lessons and examples are relevant to any industry. A primary focus is “financial institutions,” including banks, credit unions, insurance, MSB, securities broker-dealers, credit card issuers, alternate payment sys- tems, etc. Course Structure This course is offered in two delivery formats: Virtual Classroom or Self-Paced Video. The content and learner outcomes are identical, as you watch a pair of expert, industry practitioners teach you about the topic. You are allowed 4 calendar weeks to complete roughly 4 hours of coursework, including a final assessment. In the Virtual Classroom format, portions of the course are scheduled on specific dates and times. The live events include Q&A sessions, polling, and the ability to interact with other learners. The dates are pre-scheduled before you purchase the course and recordings of the session are available after each event. The Self-Paced video format is available 24/7/365. You have the ability to complete coursework on your own time, pausing at any time. To successfully complete this course and earn the certificate, you must pass a short assessment. The assessment contains 20 questions. The minimum passing score is 80% and multiple attempts are allowed. When you pass, your certificate will be available in the learning path itself and ACAMS will automatically add 4 CAMS credits to your profile.

Transcript of KYC CDD AML - ACAMSfiles.acams.org/pdfs/2019/ACAMS_KYC-CDD_Course_Syllabus_2019… · KYC CDD...

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KYC CDD course syllabus updated 1

KYC CDD AML

Course Syllabus

Audience

ACAMS KYC CDD focuses on research skills—how to better assess, explore, organize, and present—in the context of customer due diligence. The primary target is the frontline analyst, teaching skills that benefit new and experienced employees, especially as regulator expec-tations increase regarding beneficial owners. This course assumes the employer has already introduced that organization’s unique roles, processes, systems, and common cases. It will use only generic forms or processes that won’t conflict with each organization’s own. To bring all learners to a shared baseline of terminology, concepts, and processes, the course starts with the “KYC CDD: Essentials” video and then builds from there.

The course is written and presented by due diligence experts working around the world. It pulls examples from many countries, and is globally appropriate. The lessons and examples are relevant to any industry. A primary focus is “financial institutions,” including banks, credit unions, insurance, MSB, securities broker-dealers, credit card issuers, alternate payment sys-tems, etc.

Course Structure

This course is offered in two delivery formats: Virtual Classroom or Self-Paced Video. The content and learner outcomes are identical, as you watch a pair of expert, industry practitioners teach you about the topic. You are allowed 4 calendar weeks to complete roughly 4 hours of coursework, including a final assessment.

• In the Virtual Classroom format, portions of the course are scheduled on specific datesand times. The live events include Q&A sessions, polling, and the ability to interactwith other learners. The dates are pre-scheduled before you purchase the course andrecordings of the session are available after each event.

• The Self-Paced video format is available 24/7/365. You have the ability to completecoursework on your own time, pausing at any time.

To successfully complete this course and earn the certificate, you must pass a short assessment. The assessment contains 20 questions. The minimum passing score is 80% andmultiple attempts are allowed. When you pass, your certificate will be available in the learning path itself and ACAMS will automatically add 4 CAMS credits to your profile.

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Module 1: “KYC CDD: Essentials Video” (30 minutes)

Purpose: To bring all learners to a shared baseline of terminology, concepts, and processes.

Format: This module is offered as either ‘Virtual Classroom’ or ‘Self-Paced Video’ depending on the format you choose at time of purchase.

Structure: Packed with examples, red flags, what-ifs, poll questions, and other activities to

engage and motivate the learner.

1. Who is your customer?

a. Examples (FI is focus but use broad list across industries)

i. Account holders

ii. Signatories

iii. Other bank products (e.g., safety deposit boxes)

iv. Policy holders

v. Etc

2. Why do you need KYC/CDD?

a. Primary driver is regulatory risk

i. Primary audience is regulator

ii. What does regulator want to know?

a. Do you understand the nature of the customer and theiraccount activity

1. Why does the regulator want to know that?

2. To what level of detail?

b. Secondary driver is business risk

i. Secondary audience is internal

ii. What do internal partners want to know?

1. Why does internal want to know that?

2. To what level of detail?

3. What is “risk”?

a. What is risk in KYC/CDD context?

b. How is risk measured?

i. Risk Factors

1. Corruption perception index

2. Cash intensive

3. Trade finance

4. Correspondent banks

5. Geographics

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6. Etc.

ii. Automatic High Risk Factors

1. Negative news, PEPs, Sanctions, existing SAR

c. How does a KYC analyst influence risk?

4. KYC/CDD roles (very generic)

5. KYC/CDD terminology (very generic)

a. Establishing the terminology for the course (while acknowledging that you can usewhat you want)

i. Customer information

ii. SDD (standard)

iii. EDD (enhanced)

iv. Beneficial ownership

6. How do you know your customer?

a. Research skills

i. Assess (ask, plan, prepare, assess)

ii. Explore (investigate, search, interview)

iii. Organize (gather, align, collect, clarify, iterate with Explore step)

iv. Present (write, document, persuade, defend—internal and external audiences)

b. Systems and tools commonly used in KYC

7. Benefit statement: Personal, to employer, to society

8. Call to action: Improve your personal commitment to KYC

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Module 2: “Finding Answers” (90 minutes)

Purpose: Teach and motivate the first two research skills (“Assess” and “Explore”).

Format: This module is offered as either ‘Virtual Classroom’ or ‘Self-Paced Video’ depending on the format you choose at time of purchase.

Structure: Packed with examples, red flags, what-ifs, poll questions, and other activities to engage and motivate the learner. Learners should be able to recall the overall skills of Assess,

Explore, Organize, Present.

1. Review of “Essentials” video

2. Research skills - Overview

a. Assess – What do you need to know?

b. Explore – Where can I find the answers?

c. Organize – How do I make my customer information meaningful

d. Present – How do I present my customer information in a manner to fulfill its purpose,i.e., aid in the detection of suspicious activity?

3. Assess

a. Who is my target audience?

i. The simple answer is regulators, but that misses the point. Your work will berelied on by others within your firm throughout the lifecycle of the customerrelationship.

ii. During transaction monitoring, others will rely on your work-product whendetermining whether observed activity/red flags are suspicious

b. What do they need to know?

c. Identify the customer

i. Understand the nature of the customer’s account

d. Identifying the customer

i. Goal: Form a reasonable belief that the customer is who it claims to be

ii. What do I need to know and what do I already have?

1. Customer Identification – Natural Person

a. Basic Identifying Information

i. Name

ii. Address

iii. Date of Birth

iv. Identification Number

b. Documentary Verification

i. The best documents are those issued by a government

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and are difficult to forge

ii. Examples

1. Driver’s License

2. Government Identification Card

3. Passport

c. Non-Documentary Identification

i. Contacting the customer

ii. Use of proprietary databases

iii. Third party reports, like credit reports,

iv. Obtaining a financial statement

d. Resolving Discrepancies

e. Failure to Verify

2. Customer Identification – Non-Natural Person

a. Basic Identifying Information

i. Name

ii. Address

iii. Identification Number

b. Documentary Verification

c. Non-Documentary Verification

d. Resolving Discrepancies

e. Failure to Verify

3. Nature and purpose of business for legal entities

4. Source of wealth/funds

5. Beneficial Ownership

a. What is the appropriate threshold?

b. Who is a beneficial owner?

c. What sources can I use?

i. Europe will have a registry that contains

1. Name

2. Month and year of birth

3. Nationality

4. Country of residence, and

5. Nature and extent of beneficial ownership held

ii. United States

1. Beneficial Ownership Prong

2. Control Prong

3. Verification Prong

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e. What else do I need to know?

i. Do I know enough already? What is reasonable?

1. While collecting the above information may meet the letter of thelaw, it may fail to meet the intent of the law, i.e., forming a reasonablebelief as to the identity of the customer. Final intent is to be able touse the data in determining whether a SAR/STR needs to be filed

ii. Are my efforts redundant to what others have done?

1. Check your jurisdiction and your firm’s policy about reliance provisions

2. Although reliance provisions make KYC easier, it does not necessarilyabsolve your firm from being accountable if reliance was unreasonable

iii. Did I meet the needs of each audience (as discussed earlier)?

f. What else do I need to know: Customer Due Diligence

i. The purpose of customer due diligence is to understand the nature andpurpose of the account.

ii. Information collected will be organized in a meaningful way, i.e., creating acustomer profile

iii. What is Customer Due Diligence?

1. CDD is not only about identifying your customer, but also assessingthe risks.

2. It is in conducting customer due diligence that the term “risk basedapproach” is often used

a. A risk based approach means assessing and understanding thevaried applicable risks and then taking appropriate steps tomitigate those risk to an acceptable level

iv. General categories of risk and risk factors

1. Customer

a. Line of business/occupation

b. Entity type

c. Length of incorporation, etc

2. Geography

a. Place of residence

b. Place of incorporation

c. Major place of business

d. Nationality

e. Destination of transactions/location of related account parties

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3. Products

a. Are the products high risk that are to be used

b. Will there be cross-border transactions

4. Delivery Channels

a. How was the account opened?

b. How will the account be used?

5. Expected Transaction Value & Volume

v. The information collected through the customer identification most likely willnot be sufficient for purposes of understanding the nature and purpose of theaccount

4. Explore

a. Which answers to the above questions are likely from what sources?

i. Evaluating quality of sources : Primary Sources v. Secondary Sources

ii. Primary Sources - These are customer interviews, original (or verifiedduplicates) documents, and other documents/evidence provided bythe customer or otherwise certified by an authoritative third party (e.g.,government entity)

iii. Secondary Sources - These are sources other than first-hand sources/primarysources. Its reliability and veracity is not as solid. Google, Wikipedia, Facebookpage,

b. Adverse Media (Negative News)

i. Bad vs. Relevant

1. The purpose of our career is more than just preventing “bad” peoplefrom accessing the financial system

2. Adverse Media has to be relevant to either a predicate moneylaundering offense or controls related to anti-money laundering(including sanctions). This makes it relevant (material).

3. Negative News Search String

4. In the next session, we will discuss how adverse media factors into theorganization and creation of a customer profile.

ii. Bad, but not relevant

1. In the course of researching, you will come across individuals/corporations connected with domestic violence, unpopular groups,businesses that are traditionally considered immoral, and the wholegambit of possibilities

2. Knowledge Check: John Doe wants to open an account. Whenconducting a negative news search you find many different news events

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that give you pause. Of the following news events found on John, which would be relevant to deciding whether to open an account:

a. (multiple examples of “bad” but not “relevant”)

3. PEPs/Embassies

a. Definition of a PEP

b. Case Study – ABN AMRO

4. Sanctions lists (brief, promote other course)

5. Proprietary Sources

a. There are numerous third party vendors

6. Open Sources

a. Google

b. Yahoo

c. Secretary of State

d. EU Registry

e. Central Bank Registries (e.g., MSBs)

f. Additional useful internet sites

g. Social media

h. Deep web searches

c. Corporate information from trade registry/corporate information databases

i. Ownership details

ii. Management

iii. Nature and purpose of business

d. How to do more effective searches

i. Internet searches

1. Word Strings

a. In English including terms of (corruption, money laundering taxevasion, litigation, bribery etc.)

b. In local language of the country where the customer is based

2. Boolean logic

3. Key Words/Phrases

4. Narrowing results

ii. Document searches

e. How to do more effective interviews

i. Interpersonal skills

ii. Quality/reliability of information gained

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iii. Cross-verify with information from public sources

f. Regulations around research methods and documentation

i. Internal processes and procedures in line with data protection laws

ii. How to document my research as I go

iii. Develop document research steps

iv. Keep track of searches done including search strings and key words used

v. Develop research notes

vi. Input information in report as I go along

vii. Positive results

viii. Negative results (absence of information)

5. Knowledge checks throughout and final assessment practice questions

6. Benefit statement: Personal, to employer, to society

7. Call to action: Practice research skills. Congratulations! You are now swimming in data.But what do you do with it? That is the next live virtual classroom.

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Module 3: “Making the Case” (90 minutes)

Purpose: Teach and motivate last two research skills (“Organize” and “Present”).

Format: This module is offered as either ‘Virtual Classroom’ or ‘Self-Paced Video’ depending on the format you choose at time of purchase.

Structure: Packed with examples, red flags, what-ifs, poll questions, and other activities to engage and motivate the learner. Learners should be able to recall the overall skills of Assess, Explore, Organize, Present.

1. Continue the story arc

a. Characters (with learner as frontline KYC analyst)

b. Situation

c. Cliffhangers at KYC analyst decision-points

2. Review of “Finding Answers” session

3. Research skills

4. Organize

a. Data does not become really meaningful until it is organized in a meaningful way (e.g.,Bloomberg relies on publicly available data for the most part, but it becomes valuableas it is organized in a meaningful and accessible way)

b. Develop report template and research topics

c. Structure research notes into report format

d. The Customer Risk Rating Model: Linking Questions to Answers

i. Inputs

1. The CRR Model is used to risk rate your customer into risk categories,generally high, medium, or low (or some variation)

2. For every risk factor, the analyst should be able to link informationgathered during the Explore step

3. Every piece of information inputted into the CRR model should have aclearly identifiable source

ii. Common Risk Factors

1. Suppliers/Dealers

iii. Identifying Gaps in Research

1. Common concern is that analysts don’t want to burden customers withinquiries or otherwise cause a burden for account opening and scarethe customer to somewhere else

2. Make a list of follow-up research steps to fill the gaps and answerunanswered questions

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iv. Minimum regulatory requirements

1. Name

2. Address

3. DOB

4. Blacklist searches (external: SDN, OFAC, EU Sanctions etc. and internal)

5. Purpose and nature of business activities

6. Legal entities – incorporated and date and activity

v. Risk Based Approach

1. Develop risk indicators and research questions – check list

2. Develop system to assess the risks

3. Generating a score and risk category

vi. Beneficial ownership (continuing the topic)

1. Identify legal UBO of any legal entities – 25% threshold

2. Is the legal UBO also the person who controls the legal entity - withhigh risk

vii. Enhanced Due Diligence

1. Determined by risk category

2. If enhanced due diligence is applied prescriptively, is it still enhanceddue diligence (negates the idea of a risk-based approach)

3. EDD is an iteration of the previously mentioned Explore step

a. Basic principles - Onsite visits/call reports

i. Is there an actual physical store or place of operations

ii. Does the business actually do what it clams or appear tobe legitimate

b. Collecting Source of Wealth

i. Definition of Source of Wealth

ii. Difference between Source of Wealth and Source ofFunds

4. Issues of focus

a. Based on Risk Assessment undertake enhanced due diligenceon high risk clients

i. Undertake in-depth research into customer, relatedentities and individuals

ii. Research into any litigation or regulatory risks

iii. Research into any political risks

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iv. Additional in-depth media research

v. Assessment of overall reputation and integrity

vi. In-house function or outsourcing?

vii. What kind of a due diligence product do we need?

viii. Public records only or also source enquiries (also knownas Business Intelligence or Corporate Intelligence)

5. Enhanced Due Diligence research tools

a. Importance of indirect search

b. Additional useful internet sites

c. Social media

d. Deep web searches

e. Media sources in country

f. Litigation sources

g. In-country sources

h. Build table - All the things already done in left-hand column– new points in right column. Need to have your procedure– revert to procedure regarding the topic of enhanced duediligence and outsourcing

6. Other issues

a. Any indirect links to PEPS or other high risk individuals/entities,sectors, products etc.

e. Periodic refreshes / monitoring requirements

f. This “Organize” step iterates with Explore step until results are adequate

5. Present

a. Document, document. document

b. Creating a customer profile

i. Drafting

1. How to structure a KYC summary?

a. Identify key issues of concern

b. By Risk Category

c. By highest risk factors to lowest risk factors

d. Some other means

2. How to write succinctly

3. What to escalate?

4. Appealing to an internal auditor and/or external audiences

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ii. Content of Customer Profile

1. Official company registry

2. Passports

3. Value and Volume of transaction

4. Geographic profile

5. Product profile

a. Cross-border transactions

b. Cash products

6. Line of business

7. Nature/purpose of account

8. Exceptions or irregularities in the onboarding process

9. Any red flags

10. Source all information using hyperlinks or reference to where theinformation was retrieved (e.g. NYT, 3. April 2016)

c. Structure the information

1. State which information was found and where it was retrieved from

2. State which information could not be retrieved and why not (e.g.litigation records in Germany are not publicly available and couldtherefore not be searched)

3. Summarize key findings

4. Outline recommendations and risk mitigation measures

i. How to structure a compelling case

1. Structure the information

2. State which information was found and where it was retrieved from

3. State which information could not be retrieved and why not (e.g.litigation records in Germany are not publicly available and couldtherefore not be searched)

4. Summarize key findings

5. Outline recommendations and risk mitigation measures

ii. How to write succinctly

1. Short sentences

2. Check out style guides

iii. Use visualization tools for ownership structures if appropriate

iv. What to escalate

v. Appealing to internal and/or external audiences

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1. Summary includes everything relevant for senior management

2. PowerPoint presentations if necessary for workshop/discussion

vi. Remember why we are doing this and come back to the former topics. Touchon who the audiences are - we talked about the regulator what do we have totell them – think of how you might want to talk to the regulator but becausemy audience is this I also need to say the following – they should feel confidentthat their approach will work for all audiences

d. Maintaining the Customer Profile

i. Periodic (1,2,3)

ii. Event Triggered

1. Filing of SAR

2. New signatories

3. New line of business

4. New use of product

e. Terminating the customer relationship/off-boarding

i. When you terminate someone you need to document that you did it for anAML purpose – otherwise the regulator will not credit you – have to presenta strong case - the issue in order to solve discrepancy. De-risking - Work withyour organization legal department on how to do that – only little time on this.

6. Red flags (worked in throughout the entire course)

a. Typical red flags per customer, country, sector, product

b. Can red flags be mitigated or can the risk be managed

c. Develop excel table to build red flag typologies based on results and new red flagsidentified in own research

7. Case examples, practices, and polls throughout – especially beneficial ownership

a. Case studies highlighting research question, research approach, red flags identified,risk assessment

b. Regions/Topics for case studies

i. Western Europe (ongoing litigation identified in deep web and criticalcomments on social media)

ii. Eastern Europe (corruption / issues of PEPS and not transparent UBO)

iii. Middle East (CFT allegations / PEP issues, political situation (e.g. Arab Spring)

iv. Africa (Angola or DRC – correspondent banking, transparency source ofwealth)

8. Knowledge checks throughout and final assessment practice questions

9. Benefit statement: Personal, to employer, to society

10. Call to action: Prepare for final assessment