IIBF AML-KYC Interview Questions

While some interviewers have their own method of questioning, the majority of job interviews follow a set of questions and responses (including some of the most often-asked behavioural interview questions). Here are some of the most common interview questions, as well as some of the best answers. Consider the following expert interview preparation ideas for IIBF AML-KYC:

What is AML and KYC, and what is their importance in the financial industry?

AML stands for Anti-Money Laundering, while KYC stands for Know Your Customer. These two concepts are important in the financial industry because they help prevent money laundering and the financing of terrorism. AML refers to the set of laws, regulations, and procedures that financial institutions must follow in order to detect and report suspicious financial activity that might indicate money laundering or other criminal activity. KYC refers to the process of verifying the identity of customers and assessing the potential money laundering or terrorism financing risks associated with them. By implementing AML and KYC procedures, financial institutions are better able to monitor and control the flow of funds, reduce the risk of financial crime, and maintain the integrity of the financial system.

What is the role of customer due diligence in the AML process?

Customer Due Diligence (CDD) is an integral part of the Anti-Money Laundering (AML) process. Its main objective is to identify the customer and understand their business activities to assess the level of risk they pose to the financial institution. This helps financial institutions to determine whether the customer is involved in any illegal activities or if their funds are derived from illicit sources.

The CDD process includes verifying the customer’s identity and conducting background checks to identify any potential red flags or warning signs. This information is then used to determine if additional measures, such as Enhanced Due Diligence (EDD), are necessary to manage the risk posed by the customer. By performing CDD, financial institutions can ensure they comply with AML regulations and reduce their exposure to money laundering and terrorist financing risks.

Can you describe the process of identifying and verifying a customer’s identity for KYC purposes?

The process of identifying and verifying a customer’s identity for KYC (know your customer) purposes involves collecting and verifying information about the customer to ensure that they are who they claim to be and to assess any potential risks associated with the customer. This process typically involves the following steps:

1. Customer identification: The first step is to collect and verify the customer’s identity information, such as their full name, date of birth, address, and government-issued identification documents (e.g., passport, driver’s license).
2. Customer due diligence (CDD): During CDD, additional information about the customer is collected and verified, such as their occupation, source of funds, and the nature of their business relationship with the financial institution.
3. Risk assessment: Based on the information collected during CDD, the financial institution assesses the risk associated with the customer and the transactions they will be conducting.
4. Enhanced due diligence (EDD): In some cases, additional due diligence may be required if the customer is considered high-risk. EDD may involve more in-depth research into the customer’s background and financial history.
5. Document verification: Finally, the financial institution verifies the authenticity of the documents submitted by the customer, such as their identification documents and proof of address.

These steps help financial institutions comply with AML (anti-money laundering) regulations and minimize the risk of facilitating illegal or illicit transactions.

What is a suspicious activity report (SAR) and how do you handle one?

A suspicious activity report (SAR) is a document that financial institutions and certain other regulated entities must file with the Financial Crimes Enforcement Network (FinCEN) in the United States when they detect transactions that they suspect may involve illegal activity or funds derived from illegal activity. The purpose of the SAR is to alert law enforcement and regulatory agencies of potential criminal activity, so that they can take appropriate action to prevent or investigate criminal activities.

In handling a SAR, the following steps are typically followed:

1. Review the SAR: Review the SAR to ensure that it meets the criteria set out by the regulatory bodies.
2. Investigate the SAR: Conduct a thorough investigation of the SAR to gather all the relevant information, such as transaction history, customer information, and relevant documentation.
3. Assess the SAR: Assess the information gathered during the investigation to determine if the SAR meets the criteria for filing.
4. File the SAR: If the SAR meets the criteria for filing, file the SAR with the appropriate regulatory body, such as FinCEN.
5. Maintain records: Maintain records of all SARs filed and the information used to support the SAR.
6. Continuously monitor: Continuously monitor the SAR to ensure that any follow-up actions are taken and the SAR is updated as required.

How do you stay up-to-date with changes in AML regulations and best practices?

To stay up-to-date with changes in AML regulations and best practices, one can follow various methods:

1. Regularly reading and monitoring regulatory updates from relevant government agencies and industry organizations.
2. Attending training programs and workshops on anti-money laundering.
3. Staying informed by reading industry publications and attending webinars on current topics.
4. Keeping in touch with professional networks in the field and participating in industry associations.
5. Participating in internal audit and compliance reviews to ensure that the organization’s AML program is in line with current regulations and best practices.
6. Regularly reviewing and updating AML policies and procedures to ensure that they remain relevant and effective.
7. Staying informed about changes in technology and how they might impact AML processes, such as the use of artificial intelligence in sanctions screening.

Can you describe a scenario where you had to escalate a potential AML violation to senior management or law enforcement?

In general, escalation of a potential Anti-Money Laundering (AML) violation to senior management or law enforcement would only occur after proper investigation and risk assessment have been carried out. The compliance officer would gather all relevant information, including transaction records, customer information, and any other relevant data to determine the nature and level of risk posed by the potential violation. Based on this analysis, the compliance officer would then determine whether to escalate the matter to senior management or law enforcement.

The decision to escalate would depend on several factors, including the size and complexity of the transaction, the reputation of the customer involved, and the potential impact on the financial institution and the financial system as a whole. The compliance officer would also consider the level of certainty regarding the potential violation and the potential consequences of inaction. In all cases, the primary goal would be to ensure that the financial institution is in compliance with AML regulations and to prevent the institution from being used for illicit purposes.

How do you ensure that AML policies and procedures are being followed within your organization?

Ensuring that AML policies and procedures are being followed within an organization typically involves implementing a system of controls and checks to monitor adherence. Some common methods to ensure AML compliance include:

1. Regular training and awareness sessions for employees to keep them updated on the latest AML regulations and best practices.
2. Periodic internal audits to ensure that all employees are following the established policies and procedures.
3. Monitoring transaction patterns and behaviors to identify any unusual or suspicious activity.
4. Regularly reviewing and updating the AML policies and procedures based on the changing regulations and risks.
5. Designating a compliance team or an AML officer to oversee the implementation and enforcement of AML policies and procedures.
6. Incorporating AML checks and controls into the onboarding process for new customers to ensure that all due diligence is performed in a consistent manner.

By implementing these and other measures, organizations can ensure that their AML policies and procedures are being followed and that they are in compliance with relevant regulations.

What is your understanding of sanctions screening and how it is performed?

Sanctions screening is a process of checking individuals, entities, and transactions against government-sanctioned lists (e.g. OFAC list in the US) to ensure that no prohibited activities or transactions are carried out with designated individuals or entities. The process involves comparing information from a customer or transaction against the lists to identify any potential matches. The objective of sanctions screening is to prevent financial institutions from facilitating transactions with sanctioned individuals, organizations or countries and to comply with legal and regulatory requirements. Sanctions screening is typically performed by AML software and tools that can automate the process of checking against lists in real-time, reducing the risk of human error.

Can you describe your experience with AML software and tools?

I have been trained on information related to Anti-Money Laundering (AML) software and tools. AML software and tools are used by financial institutions to comply with AML regulations and detect and prevent money laundering activities. They typically include features such as customer risk assessment, transaction monitoring, sanctions screening, and suspicious activity reporting. These tools help financial institutions automate and streamline the AML compliance process, reducing manual effort and increasing efficiency.

How do you identify and assess the risks associated with different types of customers and transactions?

The identification and assessment of risks associated with different types of customers and transactions is an important aspect of Anti-Money Laundering (AML) and Know Your Customer (KYC) compliance. This process involves evaluating the customer’s profile, business activities, geographical location, and other relevant factors to determine the level of risk they pose to the financial institution. This information can then be used to design and implement appropriate AML/KYC measures, such as enhanced due diligence, transaction monitoring, and reporting requirements.

1.What does “pooled accounts” imply in IIBF AML-KYC?

A pooled account is a fiduciary account in which numerous people’ investments are pooled together.

2.What are some parameters to improve due diligence?

Customer location, financial state, nature of business or transaction purpose are the parameters for better due diligence.

3. What does KYC Policy imply in IIBF AML-KYC?

In India, all banks are required to have a KYC policy, as mandated by the RBI. Customer Acceptance Policy, Customer Identification Procedures, Transaction Monitoring, and Risk Management are all listed in the KYC policy.

4. In AML/KYC, describe the Customer Acceptance Policy.

The customer acceptance policy outlines the procedures to be followed when a consumer opens an account. The policy outlines the documents required for identification as well as other required client characteristics.

5. Explain the AML/KYC client identification procedure.

The customer identification method is the process of identifying a client using documents and other available information in order to comply with government-mandated AML/KYC rules.

6. How will you spot suspicious activity in IIBF AML-KYC?

Observation, study of Exception Reports, and the use of AML Software can all be used to spot suspicious transactions.

7. What can cause a transaction to be considered suspicious?

There are several reasons for a transaction to be suspicious, including false identity, incorrect address, or doubt about the account’s true recipient.

8.What does name screening imply?

Name screening is used to see if any of the institution’s customers are on any blacklists or regulatory lists.

9. How can I open an account if my name has changed and I have no ovd in my new name?

In the case of persons who change their names due to marriage or otherwise, a certified copy of the ‘Officially Valid Documents’ in the person’s former name must be provided for account opening.

10. Is it mandatory for banks to categorise their customers based on risk assessments?

Yes, based on their AML risk assessment, banks must classify their customers into ‘low, medium, and high’ risk categories.

11. Who can be considered a customer for KYC purposes?

A client is an individual or a business that maintains an account, forms a relationship, or has an account maintained on their behalf or is the beneficiary of accounts kept by intermediaries.

12. Do I have to provide KYC documents for each bank account I open, even if I have already provided proof of identity and address?

No, if you have a KYC compliant account with a bank other than a’small account,’ you do not need to provide documentation to open another account with the same bank.

13. Is KYC compatible with Credit/Debit Cards?

Yes. For credit/ smart cards, as well as add-on/supplementary cards, a KYC exercise is require. There is no need for a separate KYC for issuing debit cards because debit cards are only issued to account holders and accounts are only open after the KYC procedure is finished.

14. What exactly do you mean when you say “money laundering”?

Money laundering is the process of disguising the source of funds received through illegal activities such as gambling, corruption, extortion, drug trafficking, and human trafficking. It’s the process of cleaning up dirty money.

15. Why do Anti-Money Laundering Checks need to be done?

Since the Proceeds of Crime Act, the Serious Organized Crime and Police Act, the Terrorist Act, and the Money Laundering Requirements control the AML regulations. Failure to report suspicious activities might result in a criminal charge as well as hefty fines from the regulating agency.

16.Will you still need to conduct customer due diligence if you’ve been dealing with my clients for a long time?

We need to maintain all of our clients’ due diligence up to date. We would need appropriate documentary ID details on the files, but if their circumstances or risk profile have changed since then, we should update the customer due diligence.

17. What do you think of when you hear the terms “money laundering” and “financial terrorism”?

Money laundering is the process of converting illegally obtained funds into funds that appear to have come from a legitimate source. Money launderers all over the world use money laundering to hide illicit behaviour such as drug trafficking, terrorism, and extortion.

18. What is a Know Your Customer Policy?

All banks are expect to create a KYC Policy with the consent of their respective boards, according to RBI instructions given vide. The major parts of the KYC Policy are as follows: 1. Acceptance Policy for Customers 2. Procedures for Customer Identification 3. Transaction Monitoring 4. Risk mitigation.

19. What exactly do you mean when you say Customer Identification Procedure?

Customer identification is the process of identifying and verifying a customer’s identity using trustworthy and independent papers, data, and information. In such event, banks would have to demonstrate to the appropriate authorities that due diligence was carried out in compliance with existing rules and regulations.

20. Under what circumstances should KYC be use?

There are several conditions that KYC applies to, however they do not include: The account type while starting a new account is deposit/borrowal. When opening a later account after not submitting documents that meet current KYC standards when opening the first account. When a locker facility first opens, these documents may not be available at the bank for all locker facility users. Further, when the bank believes it is important to gather extra information from existing clients based on the account’s performance. Following the RBI’s instructions, at regular intervals. Also, if any signatories, mandate holders, beneficial owners, or other details change.

21.What unit do the Aml/cft Supervisors desire?

The AML/CFT supervisors are in charge of determining whether or not the insurance company has a reasonable risk assessment and an AML/CFT programme that recognises and controls those risks. AML/CFT supervisors employ a risk-based approach to supervision, selecting from a variety of monitoring and social control methods available in the United States. Supervising can take into account the nature of the business as well as the risks that each covering entity is responsible for. For more information on the Reserve Bank’s approach to AML/CFT supervision, see our Bulletin article or speech.

22. What does Continuous Customer Due Diligence imply?

Ongoing Client Due Diligence entails evaluating customer information on a regular basis and having procedures in place to undertake account monitoring. While this is require for all customers, not just new ones, it is also require for existing ones.

23. Do you need to verify anything else when collecting passports and driver’s licences?

The EV can verify a broader range of data, giving you a better understanding of your client (KYC – Know Your Customer). Furthermore, it can be use to examine other data sets such as PEPS and Sanctions lists, as recommend and required by the 3rd European Money Laundering Directive. As the number of counterfeit documents increases, it is necessary to refocus efforts on identifying them. Electronic verification was create to eliminate the risk of obtaining possibly fake documents, allowing you to have greater trust in their authenticity.

24. Is it possible if I don’t have any of the legally required documents to open a bank account that isn’t subject to any restrictions (as in the case of a small account)?

Yes, A standard account can be open by submitting a copy of any of the valid papers as Proof of Identity (PoI). Identity cards with the respective person’s photograph issued by Central/State Government Departments, Public Sector Undertakings, Statutory/Regulatory Authorities, Scheduled Commercial Banks, and Public Financial Institutions; or Stamp-paper/letter issued by a gazetted officer, with a duly attested photograph of the person

25. What crimes are covered by AML-KYC and whose proceeds are verified?

Drug trafficking, kidnapping, extortion, murder, corruption, immoral trafficking of women and children, and waging a war against the state are all covered.

26. Anti-money laundering checks are carried out by?

Professionals representing customers, institutions, bank or financial institution workers involved in account opening or acceptance of funds conduct anti-money laundering checks. Tax experts, solicitors, accountants, real estate agents, and other professionals are include.

27. Why are anti-money laundering checks necessary?

Anti-money laundering must be carried out in accordance with the law, and compliance is require. Noncompliance can result in not simply a fine, but potentially a criminal charge or the institution’s closure. Anti-money laundering legislation has been enact by governments all over the world.

28. Does the financial institution required to conduct customer due diligence on existing customers in IIBF AML-KYC?

Yes, all clients’ customer due diligence should be current. Any changes in a client’s profile should be record in the customer due diligence process, which should be done on a regular basis.

29. Explain electronic verification in AML/KYC terms in IIBF AML-KYC.

Electronic verification is the process of comparing client records to databases held by the government or institutions. It is more reliable than physical or recorded evidence. It also saves time for the customer because no physical verification is require.

30. What more documents are required for a customer’s CDD or KYC besides their passports and driver’s license?

Fraudulent documentation is difficult to recognise due to advances in forging techniques, therefore you should have supporting documents in addition to the customer’s passport and driver’s licence. It is also possible to use more reliable electronic verification.