ACAMS Test Review

cause a loss of public confidence in the integrity of the organization. Operational Risk is potential for loss resulting from inadequate internal processes, personnel or systems or from external events. Legal Risk is the potential for lawsuits, adverse judgments, unenforceable contracts, fines and penalties generating losses increased expenses for an organization or even the closure of the organization. Concentration Risk is the potential for loss resulting from too much credit or loan exposure to one borrower or group of borrowers. Describe the elements that should be addressed in a global approach to KYC identified in the Basel Committee's October 2004 paper called "Consolidated KYC Risk Management? - Risk Management. Customer acceptance & identification policies. Ongoing monitoring of higher risk accounts. Identify, in general, who should approve policies and procedure? - In writing, & must be approved by appropriate levels of management. In general, institution- level policies should be approved by the board, while business unit procedures can be approved by business unit management. Where does the ultimate responsibility for the AML compliance program rest with? - The board of directors. Members must set the tone from the top by openly voicing their commitment to the program, ensuring that their commitment flows through all service areas and lines of business, and holding responsible parties accountable for compliance. Why is the Risk-Based approach more preferable then a prescriptive approach in the area of Anti-Money Laundering and Counter-Terrorism Financing? - Flexible, as Money Laundering & terrorist financing risk vary across jurisdictions, customers, products & delivery channels, & over time.