Question 1

What is a money laundering typology according to FATF?

Accepted Answer

A money laundering typology is a recurring operational pattern used to conceal the illicit origin of funds. FATF identifies and documents typologies through regular sector-specific reports to help obliged entities calibrate their monitoring systems. Each typology is associated with specific behavioural and documentary indicators that enable its detection.

Question 2

Which documents are most commonly falsified in money laundering schemes?

Accepted Answer

The most frequently falsified documents are source-of-funds evidence (payslips, sale agreements, loan contracts), financial statements (management accounts, audited accounts), and beneficial ownership declarations. In TBML operations, commercial invoices, certificates of origin, and bills of lading are systematically targeted for manipulation.

Question 3

When must a UK obliged entity file a Suspicious Activity Report (SAR)?

Accepted Answer

A SAR must be submitted to the NCA where an obliged entity knows, suspects, or has reasonable grounds to suspect that a person is engaged in money laundering or terrorist financing, under POCA 2002, section 330. The obligation applies even on the basis of suspicion alone, without waiting for certainty. Filing a SAR provides a defence against the principal money laundering offences under POCA 2002.

Question 4

What is the difference between standard and enhanced due diligence under MLR 2017?

Accepted Answer

Standard due diligence applies to the majority of ordinary business relationships. Enhanced due diligence (EDD) is mandatory for high-risk customers — including those from high-risk third countries, politically exposed persons (PEPs), and complex or opaque structures — as well as non-face-to-face transactions and atypical transactions without apparent economic rationale. EDD requires additional documentation, senior management approval, and more frequent ongoing monitoring.

Question 5

How is real estate used to launder money in the UK?

Accepted Answer

Common UK real estate schemes include purchasing property below market value with a cash element, acquiring through chains of offshore entities with nominee directors, and rapid resale to generate an apparently legitimate capital gain. Conveyancers and estate agents must identify the beneficial owner of any corporate purchaser and file a SAR with the NCA before completing a transaction where suspicion arises. The register of overseas entities introduced by the Economic Crime (Transparency and Enforcement) Act 2022 now mandates disclosure of foreign entity ownership of UK land.

Question 6

What is the difference between a red flag and reasonable grounds to suspect?

Accepted Answer

A red flag is a preliminary indicator that requires further investigation. Reasonable grounds to suspect — the legal standard under POCA 2002 s.330 — is the conclusion reached after that investigation. Not every red flag produces reasonable grounds to suspect, but every SAR must have been preceded by the identification of at least one red flag that was assessed against available evidence and left unresolved.

Question 7

Who is legally responsible for filing a SAR?

Accepted Answer

The nominated officer — typically the MLRO — is the person legally responsible for making the external SAR disclosure to the NCA UKFIU. However, all staff in the regulated sector have an individual obligation to report their suspicions internally to the nominated officer as soon as practicable. Failure to make an internal report is itself a potential offence under POCA 2002 s.330 for staff who knew or suspected money laundering.

Question 8

How does CheckFile support the detection of AML red flags?

Accepted Answer

CheckFile's document verification platform analyses the authenticity of identity documents, proof of address and financial records submitted during onboarding and ongoing due diligence. It identifies inconsistencies, alterations and documents originating from high-risk sources in real time. Our KYC solution for banking and financial services integrates this verification into the onboarding workflow without adding friction for legitimate customers.

Question 9

What are the penalties for failing to comply with AML obligations in the UK?

Accepted Answer

Firms face unlimited financial penalties from the FCA and potential withdrawal of authorisation. At the individual level, MLRO and senior management failures can result in personal fines and prohibition orders. Under POCA 2002, criminal prosecution for failure to disclose carries a maximum sentence of five years' imprisonment. Published FCA enforcement decisions provide useful benchmarks for the level of sanctions imposed in practice.

Question 10

Where can I find the FATF list of high-risk jurisdictions?

Accepted Answer

The FATF publishes two lists: the "black list" (Call for Action jurisdictions) and the "grey list" (increased monitoring). These are updated at each FATF Plenary, typically three times per year. Access current lists at fatf-gafi.org. UK firms must also have regard to the list of high-risk third countries designated by the UK government under MLR 2017, Regulation 33. Explore our pricing plans to see how CheckFile fits your compliance budget.

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