Combating Financial Crime

Effective from 11 January 2024

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Objective of the Examination

The objective of the examination is to ensure that candidates have a basic knowledge of
the regulations and practices related to combating financial crime.

The examination will test candidates’ knowledge and understanding of the following
elements:
• The Background and Nature of Financial Crime
• Money Laundering
• Terrorist Financing
• Bribery and Corruption
• Fraud and Market Abuse
• Tax Evasion
• Financial Sanctions
• Financial Crime Risk Management
• The Role of the Financial Services Sector

Syllabus Structure

The unit is divided into elements. These are broken down into a series of learning
objectives.

Each learning objective begins with one of the following prefixes: know or understand.
These words indicate the different levels of skill to be tested. Learning objectives
prefixed:

• know requires the candidate to recall information such as facts, rules and
principles
• understand requires the candidate to demonstrate comprehension of an issue,
fact, rule or principle

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Candidate Update

Candidates are reminded to check the ‘Candidate Update’ area of the Institute’s website
(cisi.org/candidateupdate) on a regular basis for updates that could affect their
examination as a result of sector change.

Examination Specification

Each examination paper is constructed from a specification that determines the

weightings that will be given to each element. The specification is given below.

It is important to note that the numbers quoted may vary slightly from examination to
examination as there is some flexibility to ensure that each examination has a consistent
level of difficulty. However, the number of questions tested in each element and / or
case study should not change by more than two.

50 multiple choice questions

Element 1 The Background and Nature of Financial Crime 5
Element 2 Money Laundering 8
Element 3 Terrorist Financing 4
Element 4 Bribery and Corruption 6
Element 5 Fraud and Market Abuse 4

Element 6 4
Tax Evasion

Element 7 4
Financial Sanctions
Element 8 Financial Crime Risk Management 8
Element 9 The Role of the Financial Services Sector 7
TOTAL 50 Questions

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Assessment Structure

The unit will be assessed by a 1 hour examination of 50 multiple choice questions drawn
from across the syllabus.

Candidates sitting the exam by Computer Based Testing may have, in addition, up to 10%
additional questions as trial questions that are not separately identified and do not
contribute to the result. Candidates who are asked to answer these additional questions
will be given proportionately more time to complete the test.

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Summary Syllabus

Element 1 The Background and Nature of Financial Crime

1.1 Definitions
1.2 Governmental and quasi-governmental approaches to Combating Financial
Crime (CFC)
1.3 Best practice
1.4 Asset recovery

Element 2 Money Laundering

2.1 Background
2.2 International Anti-money laundering (AML) standards
2.3 Financial Action Task Force (FATF)
2.4 The role of other international bodies

Element 3 Terrorist Financing

3.1 Background
3.2 Measures to combat the financing of terrorism
3.3 Standards for combating the financing of terrorism

Element 4 Bribery and Corruption

4.1 Bribery and corruption
4.2 UK Bribery Act (2010)
4.3 Foreign Corrupt Practices Act (FCPA) (1977)
4.4 Corrupt practice
4.5 Combating Corruption

Element 5 Fraud and Market Abuse

5.1 Fraud
5.2 Types of fraud
5.3 Market abuse
5.4 Sarbanes-Oxley Act (2002)

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Element 6 Tax Evasion

6.1 Tax evasion
6.2 Criminal Finances Act (2017)

Element 7 Financial Sanctions

7.1 Financial Sanctions

Element 8 Financial Crime Risk Management

8.1 Considerations for the financial services sector
8.2 Risks
8.3 Practical business safeguards

Element 9 The Role of the Financial Services Sector

9.1 Relations with regulators
9.2 Specific responsibilities
9.3 Compliance
9.4 Fintech
9.5 Customer Due Diligence (CDD)
9.6 Reporting obligations
9.7 Consent regimes
9.8 Record keeping obligations

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Element 1 The Background and Nature of Financial Crime

1.1 Definitions
On completion, the candidate should:

know the following terms:

• financial crime

• money laundering

• predicate offences

• terrorist financing

• proliferation financing

• fraud

• market abuse

• bribery and corruption

• international financial sanctions

• trade and investment sanctions

• tax evasion

• data protection

1.2 Governmental and quasi-governmental approaches to Combating

Financial Crime (CFC)
On completion, the candidate should:

know the role and objectives of FATF, its limitations and the legal
context of its recommendations

know the role of financial regulators, commissions, and institutions

in combating financial crime

• European Commission and Supervisory Authorities

• Office of Foreign Assets Control (OFAC)

• Financial Conduct Authority (FCA)

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• Office for Financial Sanctions Implementation (OFSI)

• Other domestic regulators

know how regulators implement international standards and

facilitate cross border cooperation

understand the role and scope of:

• intelligence gathering and analysis

• investigating financial crime

• asset recovery and repatriation

1.3 Best practice

On completion, the candidate should:

know the role, evolution, and practical application of best practice in

CFC and establishing international standards

know the role of the FCA’s financial crime guide

understand the importance of the Joint Money Laundering Steering

Group Guidance to UK financial services firms

1.4 Asset recovery

On completion, the candidate should:

know the importance of recovery for prevention, deterrence, and

justice

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know civil and criminal remedies to recovering assets and the

implications of freezing orders

• criminal confiscation

• civil recovery

• freezing orders

• search orders

• disclosure of information orders

• tracing

• monitoring

• unexplained wealth orders

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Element 2 Money Laundering

2.1 Background
On completion, the candidate should:

understand the models of the money laundering process:

• Placement, Layering, Integration model (PLI)

• the ‘enable, distance, and disguise’ model (EDD)

know these associated activities as defined by the Proceeds of

Crime Act (POCA) (2002):

• concealment

• arrangements

• acquisition, use and possession

• failure to disclose

• tipping off

• consent regime

• criminal conduct

• criminal property

know the role, purpose and scope of The Money Laundering,

Terrorist Financing and Transfer of Funds (information on the payer)
Regulations (MLR 2017) as amended

understand how the stages of the money laundering process are

detected by financial services firms in the regulated sectors

2.2 International Anti-money laundering (AML) standards

On completion, the candidate should:

know the role, purpose and scope of international instruments and

conventions

• UN conventions

• Directives/Regulations of the European Union - 2015/849/EC

(4th Money Laundering Directive) 2018/843/EC (5th Money

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Laundering Directive) 2018/1673/EC (6th Money Laundering

Directive) 2015/847/EC (Fund Transfer Regulations)

2.3 Financial Action Task Force (FATF)

On completion, the candidate should:

know FATF’s risk-based approach to AML and combating the

financing of terrorism (CFT)

know the broad categories of what the recommendations cover

know the categorisation of jurisdictions which FATF considers to

have strategic deficiencies

understand the role, activities, and coverage of FATF Style

Regional Bodies (FSRBs)

2.4 The role of other international bodies

On completion, the candidate should:

know the role other bodies play in combating money laundering and
establishing best practice

• Basel Committee on Banking Supervision

• International Organization of Securities Commissions (IOSCO)

• International Association of Insurance Supervisors (IAIS)

• Egmont Group of Financial Intelligence Units

• Wolfsberg Group

• Regulatory and supervisory bodies

• Professional bodies

understand the importance of the guidance issued by the European

Supervisory Authorities and the role played by the European Central
Bank (ECB)

understand that each jurisdiction has a list of high-risk countries

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Element 3 Terrorist Financing

3.1 Background
On completion, the candidate should:

understand the similarities and differences between:

• money laundering and financing terrorism

• proliferation finance and terrorist financing

3.2 Measures to combat the financing of terrorism

On completion, the candidate should:

know the main provisions of the United Nations International

Convention for the Suppression of the Financing of Terrorism

know the work of the United Nations Security Council in relation to

the financing of Terrorism

3.3 Standards for combating the financing of terrorism

On completion, the candidate should:

know EU CFT initiatives

• money laundering directives

• regulations of fund transfers

• Payment Services Regulation

know UK CFT / PF initiatives

• money laundering directives

• regulations of fund transfers

• Payment Services Regulation

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Element 4 Bribery and Corruption

4.1 Bribery and corruption

On completion, the candidate should:

know the difference between bribery and corruption

4.2 UK Bribery Act (2010)

On completion, the candidate should:

know the global reach of the UK Bribery Act (2010) and the
offences:

• bribing another person

• receiving bribes

• bribery of a Foreign Public Official (FPO)

• failure of commercial organisations to prevent bribery

know the definition of an FPO

understand the liabilities corporate entities face from “Associated

Persons”

understand strict liability and the meaning of "adequate procedures"

understand the six principles for bribery prevention and their legal
context

know the maximum penalties applicable to individuals found guilty

under the Act

understand the circumstances under which Directors and senior

officers of a corporation may be found liable under the Act

• consent or connivance

• passive acquiescence

• failure to implement adequate procedures and potential civil

liability

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4.3 Foreign Corrupt Practices Act (FCPA) (1977)

On completion, the candidate should:

understand the objectives and scope of the FCPA (1977)

know the key differences between the UK Bribery Act (2010) and
the FCPA (1977)

4.4 Corrupt practice

On completion, the candidate should:

understand the main components and differences between types of

corrupt practice

• active and passive bribery

• embezzlement

• trading in influence

• abuse of office

• illicit enrichment

• concealment

4.5 Combating Corruption

On completion, the candidate should:

know the role that international bodies play in combating corruption

understand the practical application and limitations of quantitative

indicators in combating corruption

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Element 5 Fraud and Market Abuse

5.1 Fraud
On completion, the candidate should:

know the three classes of fraud defined in the UK Fraud Act (2006)

• false representation

• failing to disclose information

• abuse of position

5.2 Types of fraud

On completion, the candidate should:

know common examples of types of fraudulent activity:

• Identity fraud, identity theft and account takeover

• Cyber attacks and computer hacks

• Phishing

• Ransomware and other forms of Malware

• Application fraud

• Advanced fee / 419 fraud

• Money mules / Smurfing

• Authorised push-payment fraud

• Smurfing

know the difference between internal and external fraud

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5.3 Market abuse

On completion, the candidate should:

know international and UK legislation for combating market abuse

• The EU Market Abuse Regulation (2014) (MAR)

• The Dodd Frank Wall Street Reform and Consumer Protection

Act (Dodd Frank) and the Volcker Rule

• FATF Risk-based Approach Guidance for the Securities Sector

(2018)

• ESMA guidance

• Market Abuse (Amendment) (EU Exit) Regulations 2019

know behaviours that constitute market abuse

know the insider dealing provisions of the UK’s Criminal Justice Act
1993 (part 5, s.52)

know the offences relating to financial services provisions of the

UK’s Financial Services Act 2012 (part 7, sections 89, 90 & 91)

know how market abuse is detected

5.4 Sarbanes-Oxley Act (2002)

On completion, the candidate should:

know the main provisions of the Sarbanes-Oxley Act (2002)

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Element 6 Tax Evasion

6.1 Tax evasion

On completion, the candidate should:

know the difference between tax evasion and tax avoidance

know international EU and US approaches to improving tax

compliance

• Foreign Account Tax Compliance Act (FATCA)

• Crown Dependencies and Overseas Territories (CDOT)

regulation

• OECD’s Common Reporting Standard for Automatic Exchange

of Financial Information (CRS)

• EU’s list of non-cooperative tax jurisdictions

understand the difference between individual and corporate liability

know how tax evasion is detected

6.2 Criminal Finances Act (2017)

On completion, the candidate should:

know the extra-territorial reach of the Act

know the offences introduced by the Criminal Finances Act (2017)

understand the liabilities corporate entities face from “Associated

Persons”

know the meaning of strict liability and 'reasonable procedures'

know the six principles for tax evasion prevention and their legal
context

know the maximum penalties under the Act

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Element 7 Financial Sanctions

7.1 Financial Sanctions

On completion, the candidate should:

know the purpose and application of financial sanctions screening in

relation to

• terrorist financing

• proliferation finance

• other foreign policy objectives

understand the financial sanctions listing process of the:

• United Nations

• European Union

• United Kingdom, including the role of OFSI

• OFAC

• other states

know the range of legal financial sanctions related to "designation"

• asset freezes

• prohibitions

• targeted sanctions

know the potential penalties of dealing with designated persons and

entities

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Element 8 Financial Crime Risk Management

8.1 Considerations for the financial services sector

On completion, the candidate should:

understand how financial crime can directly impact on firms

• embezzlement

• asset misappropriation

• fraudulent customer activity

• defrauded by organised criminals

• limiting access to data

• data compromise

understand how firms can be exploited as a vehicle for financial

crime

• criminals using the firm’s services to launder the proceeds of

crime

• customer payments to terrorists

• theft of customer data to facilitate identity fraud

• trade-based money laundering

understand how a firm or its representatives may collude in the

propagation of financial crime

• misstatement of financial circumstances

• corporate malfeasance

understand the relevant implications of business strategies

• corporate structure

• outsourcing and oversight

• use of middlemen

• Fintech

• Green Finance

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8.2 Risks
On completion, the candidate should:

know the role, significance, and utilisation of national risk

assessments

understand how to identify, assess, and manage the risks posed on

a firm’s business activities by the following:

• products and services

• customers

• sector

• countries

• delivery channels

understand the risks associated with non-compliance for regulated

firms

• financial

• reputational

• legal including civil liability

• operational

• systemic

• regulatory

• criminal

• prudential

8.3 Practical business safeguards

On completion, the candidate should:

know the relevant risk factors firms may consider before

commencing business relationships

• nature and purpose of the relationship

• source of introduction

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• company structure

• political connections

• country risk

• establishing beneficial ownership

• the customer’s or beneficial owner’s reputation

• source of funds/ source of wealth

• expected account activity

• sector risk

• involvement in public contracts

• charities, voluntary and not-for-profit bodies

understand the risks from counterparties with opaque corporate and

ownership structures

understand what measures can be adopted to minimise financial

crime opportunities within a firm

• conflicts of interest policies

• compliance monitoring

• information barriers

• restricting physical access

• limiting access to data

• effective sign off protocols

• gifts and entertainment policies

• remuneration policies

• objective audit processes

• I.T. security

• whistleblowing

• employee vetting

• penetration testing and vulnerability assessment

• secure disposal
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• staff training

• segregation of duties

understand how internal policies and procedures on CFC are

formulated:

• laws and regulations

• regulators’ handbooks

• relevant codes of conduct

• sector and regulatory guidance

know effective techniques for conducting due diligence on:

• directors

• employees

• contractors

• service providers

know the additional measures financial services firms can take to

manage the risk of financial crime originated or enabled by an
employee

• raising awareness

• improving the management of I.T. privileges for joiners, movers

and leavers

• classifying and segmenting data

• embedding ethical practice in relation to data security

• implementing whistleblowing procedures

know the role industry groups and guidance bodies play in

facilitating practical solutions for business

understand how auditing contributes to corporate governance,

accounting and reporting requirements

• audit committees

• internal audit

• external auditors

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Element 9 The Role of the Financial Services Sector

9.1 Relations with regulators

On completion, the candidate should:

know financial services firms’ responsibilities for dealing with

regulatory and other relevant authorities

• protection of customer confidentiality

• responses to information requests

• responses to investigation orders

• civil recovery, forfeiture and confiscation

• global investigation, prosecution and confiscation

• presentation of evidence in court

• transparency and communication with regulator

9.2 Specific responsibilities

On completion, the candidate should:

know the role of the Money Laundering Reporting Officer (MLRO)

and the Nominated Officer (NO) or equivalents

understand the responsibilities of Directors and senior management

in relation to CFC under the Senior Managers and Certification
Regime (SM&CR) or equivalent individual accountability regimes

know regulators’ expectations of firms with respect to adequate

management systems and controls to combat financial crime

9.3 Compliance
On completion, the candidate should:

know the Basel Committee on Banking Supervision’s (BCBS)

definition of “Compliance risk”

understand how a compliance culture may be created and

maintained, including:

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• tone from within

• performance management processes

• appointment of Compliance / Money Laundering Reporting

Officers

• information gathering and analysis

• application in routine operations

• raising awareness

• training

• monitoring and updates

9.4 Fintech
On completion, the candidate should:

know the benefits of utilising technology to support a compliance

culture and the limitations of over-reliance on systems

know how distributed ledger technology and advanced/objective

blockchain ID can be utilised for CDD

know how the following technological solutions can be utilised for

CDD:

• digital recognition

• face recognition

know how artificial intelligence (AI) can be utilised for detecting

financial crime

know how data sources can be utilised by firms to detect financial

crime

• customer complaints

• trade and transactions monitoring

• suspicious transaction reports

• Internet and website usage patterns

• customer device profiles

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• employee turnover statistics

know the role of fast-paced electronic markets (FPM)

know the role of the Global Financial Innovation Network (GFIN)

9.5 Customer Due Diligence (CDD)

On completion, the candidate should:

know how regulated financial institutions implement CDD

procedures

• Know Your Customer (KYC)

• ongoing monitoring

• non-face-to-face

• correspondent banking

• Politically Exposed Persons (PEPs)

• reliance on others

understand how firms implement a risk-based approach

know Enhanced Due Diligence (EDD) requirements for higher risk

situations

know how financial institutions implement sanctions screening

procedures

know examples of Politically Exposed Persons (PEPs)

know standards for dealing with PEPs

• The Money Laundering, Terrorist Financing and Transfer of

Funds (Information on the Payer) Regulations (MLR 2017) as
amended, and the FCA’s Financial Crime Guide: the treatment

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of PEPs for anti-money laundering purposes, the Joint Money

Laundering Steering Group Guidance as amended.

9.6 Reporting obligations

On completion, the candidate should:

know how and why regulated financial institutions report suspicious

transactions, trading activity and order reports

know the circumstances in which financial services firms are obliged

to report currency transactions and those circumstances that are
exempt

9.7 Consent regimes

On completion, the candidate should:

know what is meant by a “consent regime”

know the legal basis on which the consent of a Financial

Intelligence Unit (FIU) must be obtained

9.8 Record keeping obligations

On completion, the candidate should:

understand the reasons why financial institutions have record-

keeping requirements and the circumstances in which they are
required to comply

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