6th Edition CFCS CERTIFICATION EXAMINATION STUDY MANUAL Preparing For The Certified Financial Crime Specialist Examination CFCS CERTIFICATION EXAMINATION STUDY MANUAL Association of Certified Financial Crime Specialists Rivergate Plaza, 444 Brickell Avenue, Suite P60 Miami, FL 33131 USA Tel: 786-530-8231 Email: [email protected] © Copyright 2019. All rights reserved. Association of Certified Financial Crime Specialists. Miami USA Reproduction or transmission of any part of this Manual without the express written authorization of the Association of Certified Financial Crime Specialists is strictly prohibited and is a violation of United States and other laws. Notice: The Certified Financial Crime Specialist Examination Preparation Manual is designed to help candidates prepare for the certification examination. No warranty or representation is made that candidates will pass the CFCS examination by using or studying this Manual. It is designed to provide accurate and authoritative information concerning financial crime and related subjects. In publishing this Manual, neither ACFCS, the editors nor contributors is engaged in rendering legal or other professional service. The services of a competent professional should be sought if such assistance is required. @2019 Association of Certified Financial Crime Specialists CFCS CERTIFICATION EXAMINATION STUDY MANUAL CFCS CERTIFICATION EXAMINATION STUDY MANUAL Executive Editor Brian Svoboda Kindle Contributing Editors Kenneth Barden, Esq. Brian Golden, HSBC Donald Semesky, Financial Operations Consultants Karen Van Ness, Compliance Risk Solutions @2019 Association of Certified Financial Crime Specialists CFCS CERTIFICATION EXAMINATION STUDY MANUAL SPECIAL ACKNOWLEDGMENT AND APPRECIATION The CFCS Examination Preparation Study Manual was written and edited with the outstanding contributions of experts and specialists. ACFCS extends special thanks and acknowledgment to these financial crime profes- sionals who shared their expertise and assistance. Beth Berenbaum John Lash, Esq. AML Consultant BDO Samantha Dillhoff Moyara Rueshen Fraud Specialist Monterey Institute of International Studies Matteson Ellis, Esq. Sarah Satten Miller and Chevalier Wells Fargo & Company JR Helmig Margaret S. Silvers Leveraged Outcomes Wells Fargo & Company Bud Heng Sandra Stibbards US OCDETF Pacific Region Camelot Investigations Ron King Swathi Perpati Retired Ernst & Young Rebecca LaPorte Mohammad Zraiqat AIG Advisor Group Pelican RECOGNITION OF THE FINANCIAL CRIME SPECIALISTS WHO ASSISTED IN CONSTRUCTING THE CFCS CERTIFICATION ACFCS extends special thanks and acknowledgment to these financial crime professionals who shared their expertise in the creation of the CFCS Certification Examination. Heather Adams Joram Borenstein Lynn Correia Accenture NICE Actimize Kroll Advisory Group Albert Allison Daniel P. Boylan Annette Dance Office of the City Auditor Bank of America Wells Fargo and Company Scott Andersen Lorice E. Brown Nyron Davidson KRyS Global Financial Services Commission Ameritrade Carlota Arias Alice Campbell Delina Dhamo Lozano Consultores Research and National Bank of Egypt Litigation Services Kenneth Barden, Esq. Samantha Dillhoff Jeff Chapman Fraud Specialist Dan Barta IBM i2 SAS Sonia Desai Martin Chung Charles Schwab Beth Berenbaum ICDD Pte Ltd AML Consultant @2019 Association of Certified Financial Crime Specialists CFCS CERTIFICATION EXAMINATION STUDY MANUAL Juan Ducali Rebecca LaPorte Patricia Potts United Nations Federal FINRA Sightspan Credit Union John Lash, Esq. Saskia Rietbroek Annette Escobar, Esq. BDO AML Services International, LLC Astigarraga Davis Tom Lasich International Centre for Guillermo Rodriguez Stanley I. Foodman Asset Recovery Bangkok Bank NY Branch Foodman & Associates, P.A. Allen G. Love Louis Sapirman Brian Golden TD Bank Dun and Bradstreet HSBC Alberto Lozano, Esq. Nicole Saqui, Esq. Amanda Gore Lozano Consultores Conrad & Scherer, LLP Botswana Directorate on Corruption and Michael M. Martens Sara L. Satten Economic Crime Wells Fargo & Company Wells Fargo JR Helmig Isabel Medrano Lisa Schor Babin Leveraged Outcomes WestStar Bank Dun and Bradstreet Elizabeth Henry Michael McDonald, Esq. Donald C. Semesky Western Union Michael McDonald & Associates Financial Operations Consultants Katya Hirose Tina Miller, Esq. FTI Consulting Farrell & Reisinger Stephen J. Shine, Esq. Prudential Financial Steven Johnston, Esq. Deborah Morrisey Economic Crime Unit of DHS - ICE – HIS Margaret S. Silvers Alberta Justice Wells Fargo Pamela C. Ogle Marie Kerr Wells Fargo & Company Jeffrey Sklar Shamrock Consulting Group SHC Consulting Group, LLC Natasha Pankova Taft Ron King Bank Hapoalim James Slear Retired Thompson Coburn Holly R. Park Ben Knieff Wells Fargo Steve Smith NICE Actimize SRS Consulting, Inc. Paul E. Pelletier, Esq. Nikki Kowalski, Esq. Mintz, Levin, Cohn, Delena Spann JPMorgan Chase Ferris, Glovsky United States Secret Service Ken Krys Ron Penninger KRyS Global IBM i2 @2019 Association of Certified Financial Crime Specialists CFCS CERTIFICATION EXAMINATION STUDY MANUAL TABLE OF CONTENTS CHAPTER 1 ACFCS AND THE CHALLENGE OF FINANCIAL CRIME ............................................................................11 The Association of Certified Financial Crime Specialists ....................................................................................................................11 ACFCS Certification Examination ...............................................................................................................................................................12 Construction of the CFCS Certification Exam .......................................................................................................................................13 Job and Career Benefits from CFCS Certification ............................................................................................................................... 14 Conclusion.......................................................................................................................................................................................................... 14 CHAPTER 2 FINANCIAL CRIME OVERVIEW, COMMONALITIES AND CONVERGENCE .....................................15 Financial Crime Overview ..............................................................................................................................................................................15 Defining Financial Crime and its Permutations .....................................................................................................................................16 Technology Changes Complexion of Financial Crime ..........................................................................................................................16 Globalization of Financial Crime .................................................................................................................................................................17 Commonalities of All Financial Crimes .....................................................................................................................................................17 Capitalizing on the ‘Commonalities’ and Exploring ‘Convergence’ ............................................................................................... 21 Conclusion......................................................................................................................................................................................................... 22 CHAPTER 3 MONEY LAUNDERING ....................................................................................................................................... 23 Overview ............................................................................................................................................................................................................ 23 The Financial Action Task Force .......................................................................................................................................................................................... 24 Money Laundering Methods ....................................................................................................................................................................... 25 The Three Stages of Money Laundering..................................................................................................................................................26 The Russian Laundromat ..............................................................................................................................................................................27 Money Laundering Indicators .................................................................................................................................................................... 29 Financial Institution Money Laundering Methods and Vehicles .....................................................................................................32 The Egmont Group of Financial Intelligence Units ............................................................................................................................. 33 Non-Financial Institution Money Laundering Vehicles ......................................................................................................................36 The Odebrecht Corruption Scandal ..........................................................................................................................................................37