AML TRANSFORMATIONS
KYC Screening Interview Questions
YouTube Channel Link: https://www.youtube.com/@Aml_Transformations
1.What do you mean by PEP Screening?
Answer)
PEP screening is a regulatory requirement for financial institutions to identify and assess the risks
associated with Politically Exposed Persons (PEPs).
PEPs are individuals who hold prominent public positions or have relationships with such individuals on
senior positions, making them more exposed to bribery, corruption and money laundering.
Financial institutions use a combination of methods to screen for PEPs such as : including:
➢ Name matching: Checking customer names against international PEP lists and sanctions
databases.
➢ Negative screening: Searching for keywords related to PEPs in customer
information, such as job titles, addresses, affiliations.
➢ Enhanced due diligence: Conducting enhanced background checks on PEPs and their
associated accounts and party.
Example:
➢ A bank identifies a new customer who is the head of a state-owned Farm company. This
triggers in PEP screening process since the bank reviews the customer's
background, transaction history and source of funds. This new customer after investigation
found to be close associate of a Senior Politician.
➢ During a transaction monitoring process, an alert is raised for a high-value transfer from a
PEP's account to a shell company in a high-risk jurisdiction (Outside Country). The bank
investigates further to determine if the transaction is legitimate or suspicious (EDD).
2.What do you mean by Sanction Screening?
Answer)
Sanctions screening is the process of checking customer & transaction data against sanctions lists.
These lists contain names, aliases, addresses, and other identifiers of individuals, companies, and
organizations deemed off-limits by various authorities.
Financial institutions use a combination of methods to screen for Sactions such as : including:
• Customer onboarding: New customers' names and other demographic details are
compared against sanctions lists provided by Regulators.
• Transaction monitoring: Every financial transaction is checked against the lists in real-time
as per the client requirement.
• Alerts and investigations: If a potential match is found(Both positive and Negative), an alert
is triggered for further investigation which is investigated by Analyst.
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AML TRANSFORMATIONS
KYC Screening Interview Questions
YouTube Channel Link: https://www.youtube.com/@Aml_Transformations
Example:
A bank receives a large wire transfer from a company with a name similar to one on the
sanctions list. The system flags it, and the bank investigates, uncovering a shell company used
to launder money.
3.What do you mean by Global Sanctions and Sanctions is imposed by Whom?
Answer)
Sanctions are punitive or restrictive actions taken by individual countries, regimes, or coalitions
with the primary purpose of provoking a change in behaviour or policy.
Sanctions can restrict trade, financial transactions, diplomatic relations and movement. They can
be specific or general in their implementation and enforcement.
Global Sanctions goal is primary towards:
➢ Economic sanctions: These restrict trade, investments, and financial transactions with the
target.
o Examples include trade embargoes, asset freezes, and restrictions on financial
services.
➢ Diplomatic sanctions: These limit or sever diplomatic relations with the target. This may
involve withdrawing ambassadors, closing embassies, or suspending participation in
international organizations.
➢ Military sanctions: These involve the use of military force or the threat of force to achieve
compliance.
Some type of Global Sanctions are :
Comprehensive Sanctions
Complete Sanctions Ex. Syria, Cuba, North Korea, Iran
Targeted Sanctions
Sanctions On Certain Individuals Or Entities Ex. Al Qaeda, Jaish-E-Mohamed
Sectorial Sanctions
Trade Is Banned Like Crude Oil From and Energy from Companies in Russia
Major Sanctions Are Imposed By :
➢ OFAC
➢ EU
➢ UN Security Council
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AML TRANSFORMATIONS
KYC Screening Interview Questions
YouTube Channel Link: https://www.youtube.com/@Aml_Transformations
Examples of Global Sanctions:
➢ The United Nations sanctions against Iran in response to its nuclear program.
➢ The European Union sanctions against Russia for its annexation of Crimea and its
involvement in the conflict in Ukraine.
➢ The United States sanctions against North Korea for its nuclear and ballistic missile
programs.
4.Which type of individuals and business are considered as High-risk during KYC screening?
Answer)
Individuals which are considered as High Risk in KYC:
1. Politically Exposed Persons (PEPs):
2. Including high-ranking government officials, politicians, their family members, and close
associates.
3. High Net Worth Individuals (HNW): Individuals with significant wealth seeking opportunity to
exploit their financial resources.
4. Individuals from sanctioned countries or high-risk jurisdictions: These countries have weak
AML/CFT regimes.
5. Individuals with a history of financial crime
6. Individuals with complex financial structures: Complex ownership structures and offshore
accounts can be used to obscure the source of funds and support money laundering.
Businesses:
1. Businesses operating in high-risk industries: These industries include casinos, money
service businesses, arms dealers, and precious metals dealers.
2. Businesses with opaque ownership structures: Shell companies and businesses with
complex ownership structures .
3. Businesses with a history of financial crime.
4. Businesses located in sanctioned countries or high-risk jurisdictions.
5. Businesses with high transaction volumes: Businesses with a large number of transactions
mostly cash.
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AML TRANSFORMATIONS
KYC Screening Interview Questions
YouTube Channel Link: https://www.youtube.com/@Aml_Transformations
Banker’s AML, © Asmita Tech
