CGSS Flash Cards Latest Version With Verified Answers

What is sanctions evasion? A counterparty is the other side of a transaction—the seller where the customer is the buyer, or vice versa. An institution establishes counterparty relationships with other third-party participants in a transaction for an established customer. Another way to establish a counterparty relationship is to provide a service to an individual or entity that has not established a full customer relationship. Such a relationship usually exists only for the life of the transaction itself. What are shell companies, and how are they used by sanctions evaders? Shell companies are companies without active business or significant assets. These companies are legal, but sanctions evaders often use them illegitimately, e.g., to disguise business ownership. Evaders also can use shell companies to hide the identity of end users or the final destination of goods. For example, evaders can incorporate a front or shell company in a third country and arrange for citizens of that third country to manage it. This can make it seem as though the company buying the goods (the end user) is operating in a third country. FATF has stated that shell companies are one of the most frequently used methods to hide identities. Describe the four steps of the Know Your Customer (KYC) research model. The Know Your Customer (KYC) research model involves: 1. Assess: "What do we need to know?" Determine what information the firm already knows, what information is missing, and how to most effectively collect that information. 2. Explore: "Where can we find the answers?" Execute the plan created to collect the necessary information. This step includes expanding the firm's research toolkit and effectively using time and effort.