Screening customers at onboarding and quarterly thereafter is not sufficient to ensure compliance with economic sanctions, as sanctions lists may change frequently and the financial institution may not be aware of the latest updates. Screening should occur promptly after list updates to ensure that the financial institution is not dealing with a sanctioned individual or entity, or facilitating a prohibited transaction. This is recommended by the international guidance from the Financial Action Task Force (FATF) and the Wolfsberg Group12.
Screening and performing enhanced due diligence on new relationships is also important, but not the only step to ensure compliance.
References:
* CAMS Certification Package - 6th Edition | ACAMS, Chapter 3: Sanctions, page 86
* The Wolfsberg Group Correspondent Banking Due Diligence Questionnaire 2014, Section 5: Sanctions Policy, page 12
* ACAMS CAMS Certification Video Training Course - Exam-Labs, Video 3.1: Sanctions
* Exam CAMS: Certified Anti-Money Laundering Specialist (the 6th edition), Question 109 The European Union Fourth Anti-Money Laundering Directive (4th AMLD) is a legal framework that aims to prevent the use of the Union's financial system for the purposes of money laundering and terrorist financing.
One of the provisions of the 4th AMLD is to lower the currency threshold for cash payments from €15,000 to
€10,000. This means that any person who makes or receives cash payments of €10,000 or more, whether in a single transaction or in several linked transactions, is subject to customer due diligence and record-keeping obligations. The 4th AMLD also extends its applicability to providers of gambling services, which are now listed as 'obliged entities'.
References:
* Directive - 2015/849 - EN - Fourth Anti-Money Laundering Directive - EUR-Lex, Article 11 and Recital 23.
* EUR-Lex - 02015L0849-20210630 - EN - EUR-Lex, Article 11 and Recital 23.
* Key elements of the 4th EU Anti-Money Laundering Directive, Section: Cash payments.
* Anti-money laundering and countering the financing of terrorism legislative package, Section: New EU AML/CFT Regulation.

Money laundering has severe social and economic impacts, including increased crime rates, corruption and erosion of public trust. Money laundering fuels criminal activities by providing the necessary financial resources for criminals to continue their operations. As illicit funds circulate within the financial system, they enable the growth of criminal organizations and contribute to an increase in crime rates, including organized crime1. Money laundering also facilitates corruption and undermines public trust in financial institutions and the wider economy. This erosion of public trust is exacerbated by trade-based money laundering, which involves the manipulation of international trade transactions to disguise the origins of illicit funds2. Money laundering also weakens financial institutions by exposing them to reputational, operational, legal and regulatory risks. Money launderers exploit the vulnerabilities of financial systems and compromise their integrity and stability. Money laundering can also distort the allocation of resources, create inflationary pressures, and undermine the effectiveness of monetary policy3.
References:
* 1: Consequences Of Money Laundering Are: Understanding The Social, Economic, and Penalties Impacts1
* 2: Consequences of Money Laundering and Financial Crime2
* 3: Money laundering, its impact and consequences3
Reference:
https://www.fatf-gafi.org/faq/moneylaundering/#:~:text=As%20for%20the%20potential%20negative,and%20ex

According to the ACAMS study guide, one of the red flags for money laundering in loan transactions is "the use of shell companies or other legal entities whose ownership is not transparent or whose beneficial owners are unknown" (p. 223). Money launderers may use such entities to hide their identity and the source of their funds, or to create complex layers of transactions to obscure the trail of money. The other options are not necessarily indicative of money laundering risk, as they could be explained by legitimate factors such as the location of the property, the repayment schedule, or the choice of attorney.
References:
* ACAMS. (2020). Study Guide for the Certification Examination for Anti-Money Laundering Specialists (6th ed.). Miami, FL: ACAMS.
* MLO Mentor: Anti-Money Laundering 1
* Compliance Obligations of Certain Loan or Finance Company Affiliates of Federally Regulated Banks and Other Financial Institutions 2

According to the Basel Committee on Banking Supervision's Customer Due Diligence for Banks, the compliance function should provide an evaluation of a bank's policies and procedures independent from its management. The compliance function is responsible for ensuring that the bank adheres to the relevant laws, regulations, and standards on customer due diligence, anti-money laundering, and combating the financing of terrorism. The compliance function should also monitor the implementation and effectiveness of the bank's customer due diligence policies and procedures, identify and report any breaches or deficiencies, and recommend corrective actions or improvements. The compliance function should have sufficient authority, independence, resources, and access to information to perform its duties effectively.
References:
* Customer due diligence for banks, Basel Committee on Banking Supervision, October 2001, paragraphs
55-56
* CAMS Study Guide - 6th Edition, Chapter 6, page 172
* CAMS Certification Exam Outline, Domain 3, Task 3.1, Skill 3.1.2
* Anti-Money-Laundering Guidance: Basel Committee Consultative Paper ..., Office of the Comptroller of the Currency, February 2001, page 2

According to the Third European Union Money Laundering Directive (3rd AMLD), a politically exposed person (PEP) is an individual who is or has been entrusted with prominent public functions, such as heads of state, government ministers, judges, senior military officers, or members of parliament1. The 3rd AMLD requires institutions and persons covered by the Directive to apply enhanced customer due diligence measures when dealing with PEPs residing in another Member State or in a third country, in order to prevent money laundering and terrorist financing risks1. The 3rd AMLD also specifies that a person who is no longer entrusted with a prominent public function shall not be considered a PEP after a period of at least one year has elapsed since that person left office, unless the institution or person covered by the Directive has knowledge or reason to believe that the person is still exposed to specific risks2. However, the Commission Directive
2006/70/EC, which lays down implementing measures for the 3rd AMLD, extends this period to at least two years, and allows Member States to extend it further, depending on the level of risk and the type of prominent public function involved3.
References:
1: Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing
2: Article 3(8) of Directive 2005/60/EC
3: Article 2 of Commission Directive 2006/70/EC of 1 August 2006 laying down implementing measures for Directive 2005/60/EC of the European Parliament and of the Council as regards the definition of 'politically exposed person' and the technical criteria for simplified customer due diligence procedures and for exemption on grounds of a financial activity conducted on an occasional or very limited basis