KYC & AML Interview Reviewer

Simple explanations + ready-to-say answers. Built for applicants with no prior KYC/AML experience.

How to use this reviewer

Read the simple meaning, then practice the “Say this” answer out loud in your own words.

The one idea behind everything:
KYC and AML are about one question — “Does this customer, their money, and their activity make sense together?”
If something doesn't make sense → verify → investigate → document → escalate.

Know the customer→Check the risk→Watch the activity→Spot what's unusual→Document→Escalate

1. The basics in plain English

Know these terms well. Most questions build on them.

Term	Simple meaning
KYC Know Your Customer	The process of finding out who the customer really is, what they do, and why they want the account.
AML Anti-Money Laundering	The laws and procedures that banks follow to prevent criminals from hiding illegal money. KYC is one part of AML.
CDD Customer Due Diligence	The standard background checks performed for every customer.
EDD Enhanced Due Diligence	Deeper, more thorough checks conducted for higher-risk customers (e.g. PEPs, high-risk countries).
SDD Simplified Due Diligence	Lighter checks permitted for clearly low-risk customers, where regulations allow.
UBO Ultimate Beneficial Owner	The actual person who ultimately owns or controls a company.
PEP Politically Exposed Person	An individual holding a prominent public position (including their family and close associates).
Sanctions	Official government or UN lists of people, companies, or countries that banks must not deal with.
Adverse Media	Negative news reports linking a person to fraud, corruption, or other crimes.
Red Flag	A warning sign that requires a closer look. It is not definitive proof of a crime.
Escalation	The act of passing a concern to a senior officer or compliance team, following established procedures.
STR / SAR	A Suspicious Transaction or Activity Report filed with the authorities. (In the Philippines, this goes to the AMLC.)

KYC = “Who are you?” • AML = “Where is the money coming from, and where is it going?”

2. Coaching questions & model answers

These are the likely interview questions. Tap each one to open it.

Q1What is KYC, and why is it important for banks?

Simple meaning: KYC is how a bank confirms a customer is real, understands what they do, and checks whether they are a risk.

Why banks do it:

Stop crime — prevents money laundering, fraud, terrorist financing.
Follow the law — it's required by regulators (in the Philippines: AMLA, BSP, AMLC).
Avoid penalties — banks get heavy fines if they fail.
Protect reputation — no bank wants to be in the news for helping criminals.

KYC, or Know Your Customer, is the process of verifying a customer's identity and understanding who they are, what they do, and the purpose of their account. It's important for banks because it helps prevent money laundering, fraud, and terrorist financing. It's also a legal requirement, so doing it properly protects the bank from fines and reputational damage, and helps keep the financial system safe.

Q2Can you tell me about your exposure to KYC? / What's your experience in KYC or AML?

Strategy: Be honest → show you prepared → connect to your strengths (numbers, analysis, detail) → show eagerness to learn.

Although I don't have direct professional experience in KYC or AML yet, this is work I've been actively preparing for. I've been studying the KYC process — customer due diligence, enhanced due diligence, PEP and sanctions screening, identifying UBOs, and the stages of money laundering. I'm naturally drawn to this field because I enjoy working with numbers, analyzing information, and spotting details that don't add up. I'm a quick learner, and I'm confident that with proper training I can apply what I've learned and contribute to the team right away.

Shorter version:

I don't have hands-on KYC experience yet, but I've been preparing seriously for this role. I like working with numbers and analyzing information, and I see KYC as a field where those skills really matter. I'm ready to learn your process and do it accurately.

If you have any related experience — data entry, checking documents, customer service, verifying records, accounting, research — mention it: “In my previous role, I [verified documents / checked data for errors]. That's similar to KYC because…”

Q3What kind of KYC / clients do you handle or screen? (Individuals and/or corporate)

Individual (Retail)A single person. Check: name, birthday, nationality, valid ID, address, job/income, purpose of account, PEP/sanctions/news screening.

Corporate (Entity)A company. Check: registration documents (e.g. SEC), business activity, address, directors, authorized signatories, ownership structure and UBOs, and screen all of them.

Key difference: Corporate KYC is harder because you must look behind the company to find the real people who own and control it.

From my preparation, I understand there are two main types: individual and corporate KYC. For individuals, you verify identity, address, occupation, and source of funds, and screen them for PEP, sanctions, and adverse media. Corporate KYC is more complex because, on top of verifying the company's documents, you need to understand the ownership structure and identify the Ultimate Beneficial Owners. I'm open to handling either, and I'm especially interested in learning corporate KYC because of the analysis involved.

Q4What risk assessments do you do? List some risks in the KYC process.

Simple meaning: Risk assessment = deciding if a customer is Low, Medium, or High risk, so the bank knows how closely to check them.

The main risk factors

Risk	What you ask	Higher-risk example
Customer risk	Who is this person?	PEP, unclear job, wealth that doesn't fit
Country risk	Where are they from / sending money?	FATF-listed or sanctioned country
Industry risk	What business are they in?	Casinos, money remittance, crypto, cash-heavy businesses
Product risk	What service are they using?	International wires, private banking
Transaction risk	Does activity fit the profile?	Sudden large amounts, money in and out quickly
Ownership risk	Who really owns it?	Many layers of companies, offshore entities
Reputation risk	Any bad news?	Adverse media about fraud or corruption

Risks in the KYC process itself

Fake, altered, or expired documents
Identity theft / using someone else's identity
Hidden owners behind shell companies
Missing or incomplete information
False matches or missed matches in screening
Outdated KYC that hasn't been reviewed

Risk assessment is about rating the customer as low, medium, or high risk based on several factors: the customer's profile, the country they're connected to, their industry, the products they use, their transaction behavior, their ownership structure, and any adverse media. Some common risks in KYC are fake or expired documents, hidden beneficial owners, PEP connections, links to high-risk countries, and activity that doesn't match the customer's profile. The higher the risk, the deeper the checks — which is where EDD comes in.

Q5How do you identify if a customer is from a high-risk country?

Step 1 — Look at all country links, not just nationality: nationality, residence, place of birth, where the business operates, and where money is sent/received.

Step 2 — Compare against trusted lists:

FATF “Black List” (call for action) — e.g. North Korea, Iran, Myanmar.
FATF “Grey List” (increased monitoring) — countries with weak AML controls. Updated a few times a year.
Sanctions lists — UN, OFAC (US), EU, UK.
Other indexes — Basel AML Index, Transparency International Corruption Index.
The bank's own internal country risk list — this is what you actually follow at work.

Step 3 — If there's a match: rate the customer higher risk, apply EDD, document, and escalate if needed.

I'd check every country connection — not just nationality, but also residence, place of business, and where funds are coming from or going to. Then I'd compare those against the bank's internal country risk list, which is usually based on the FATF black and grey lists, sanctions lists like the UN and OFAC, and corruption indexes. If there's a high-risk link, I'd apply enhanced due diligence and escalate according to procedure.

Lists change often, so say “I'd check the latest FATF list and the bank's internal list” instead of trying to memorize every country.

Q6What is PEP screening, and who is considered a PEP?

Simple meaning: A PEP is someone who holds (or held) an important public position. PEP screening checks customers against PEP databases (e.g. World-Check, Dow Jones).

Who counts as a PEP

Heads of state, presidents, prime ministers
Cabinet secretaries, senators, congressmen, governors, mayors
Senior judges, prosecutors
High-ranking military and police officials
Ambassadors and senior diplomats
Executives of government-owned companies
Senior political party officials
Heads of international organizations (UN, World Bank, etc.)

Also covered: their family members (spouse, children, parents, siblings) and close associates (business partners, or close personal connections).

Domestic PEPHolds a position in your own country.

Foreign PEPHolds a position in another country. Usually treated as higher risk.

Why PEPs are high-risk

Their power and access to public funds make them more exposed to bribery, corruption, and misuse of government money. Being a PEP is not a crime — it just means more checks (EDD, senior management approval, source of wealth checks, ongoing monitoring).

A PEP, or Politically Exposed Person, is someone who holds or has held a prominent public position — like a politician, senior government official, judge, high-ranking military officer, or an executive of a government-owned company. Their family members and close associates are also covered. PEP screening means checking customers against PEP databases. PEPs are considered higher risk because their position could expose them to bribery or corruption. That doesn't mean they're doing anything wrong — it just means we apply enhanced due diligence, verify their source of wealth, and get senior approval.

Q7What is a UBO (Ultimate Beneficial Owner)?

Simple meaning: The UBO is the actual human being who ultimately owns or controls a company — even if their name is not directly on the registration documents.

How someone becomes a UBO

Ownership — owns 25% or more of the shares (a common standard; some banks use a lower threshold like 10–20% for high-risk clients).
Control — controls decisions even with fewer shares (e.g. they can appoint directors or hold majority voting rights).
Fallback — if nobody qualifies, the senior managing official (e.g. the CEO) is recorded as the UBO.

Example: ABC Corp is owned 100% by XYZ Holdings. XYZ Holdings is owned 60% by Maria and 40% by Juan.
→ UBOs of ABC Corp are Maria (60%) and Juan (40%). Both are above 25%.

Why it matters: Criminals hide behind companies. Identifying the UBO ensures the bank knows who is really behind the money and that decisions and transactions are legitimate.

The UBO, or Ultimate Beneficial Owner, is the actual person who ultimately owns or controls a company. Usually it's anyone owning 25% or more, or anyone who controls the business in other ways, like appointing directors. Identifying the UBO is important because criminals can hide behind layers of companies, so the bank needs to know the real person behind the account and make sure the business and its transactions are legitimate.

Q8What is money laundering, and what are its stages?

Simple meaning: Money laundering is making “dirty” money (from crimes like drugs, fraud, corruption, scams) look “clean” or legitimate.

1. PlacementPutting dirty money into the system.
e.g. depositing lots of cash in small amounts, buying chips at a casino.

2. LayeringMoving it around to hide where it came from.
e.g. many transfers between accounts, countries, shell companies, crypto.

3. IntegrationBringing it back as “clean” money.
e.g. buying property, luxury cars, or investing in a business.

Easy memory trick: Put it in → Mix it up → Take it out clean.

Money laundering is the process of making money from illegal activities look legitimate. It has three stages. Placement is when the illegal money first enters the financial system, like depositing cash. Layering is moving the money through many transactions or accounts to hide its origin. Integration is when the money comes back into the economy looking clean, like buying property or investing in a business. AML controls are designed to detect and stop this at any stage.

Q9Demonstrate Due Diligence vs Enhanced Due Diligence.

	CDD (Standard)	EDD (Enhanced)
Who	All customers	High-risk customers (PEPs, high-risk countries, complex ownership, adverse media, unusual activity)
ID check	Valid ID, address, basic info	Same + extra verification
Money	Basic source of funds, purpose of account	Proof of source of funds AND source of wealth
Ownership	Identify UBOs	Deeper look into full structure
Approval	Normal process	Senior management approval
Monitoring	Normal / periodic	More frequent reviews

Walk-through example

CDD: Ana, a teacher, opens a savings account. → Check ID + address → confirm job and salary as source of funds → screen (no hits) → low risk → approve.

EDD: Mr. Cruz, a city mayor, opens an account and deposits ₱20M. → He's a PEP → get proof of source of wealth (business records, inheritance, property sales) → verify source of the ₱20M → check adverse media → get senior management approval → monitor more often.

Customer Due Diligence is the standard check for all customers — verifying identity, understanding the purpose of the account, and screening them. Enhanced Due Diligence is a deeper level applied to high-risk customers, like PEPs or people linked to high-risk countries. For EDD, we'd ask for proof of source of funds and source of wealth, look deeper into ownership, check adverse media more thoroughly, get senior management approval, and monitor the account more frequently.

3. Money laundering techniques (with samples)

The tricks launderers use to avoid getting caught. Learn the name, the simple meaning, and one example for each.

Placement=putting physical dirty cash into the bank

Layering=moving it around to hide the trail

Integration=spending it as “clean” legal money

Do they always happen in this exact 1-2-3 order?
Not always! They can overlap, or a step might be skipped completely.

If a drug dealer has bags of physical cash, they must do Placement first (smurfing it into a bank).
But if a hacker steals funds digitally, the money is already inside the banking system! They skip Placement and jump straight to Layering (wiring it to 10 different countries).
Once the money is hidden, the final goal is Integration. This is how they bring the money back into the normal economy so they can enjoy it without getting arrested.
How it works: The criminal uses the hidden money to buy a luxury condo. A year later, they sell the condo. If the bank or government asks, "Where did you get ₱20 Million?", the criminal just shows them a perfectly legal real estate contract. The dirty money has been successfully transformed into "clean" wealth.

These three words are just labels to help you understand what the criminal is trying to achieve at any given moment.

Money launderers use different techniques to avoid detection — like smurfing, where cash is split into small deposits to avoid reporting thresholds; money mules, where other people's accounts are used to move funds; shell companies to hide ownership; and trade-based laundering using fake or inflated invoices. As a KYC analyst, my job is to spot these patterns by checking whether the activity matches the customer's profile.

★ The Full Story: How all 3 stages work together (And how they don't get caught)

The Problem: Imagine a criminal makes ₱20 Million in cash selling illegal drugs. If they walk into a bank with a duffel bag of ₱20M in physical cash, the teller will immediately ask for their Source of Income and report them. The cash is "dirty" and stuck outside the banking system.

1. Placement (Getting it inside): To get the physical cash into the bank without getting caught, they buy a small restaurant. Every day, they secretly take ₱50,000 of their dirty drug cash and mix it into the restaurant's cash register. When they deposit the money at the bank, they say "These are our daily restaurant sales." The bank believes it, because restaurants handle a lot of cash. The physical dirty cash has now been successfully placed into the banking system undetected.

2. Layering (Hiding the trail): Now the money is in the bank, but if the police audit the restaurant, they might notice it makes suspiciously high profits. So, the criminal wires the money to 5 different bank accounts in other countries, then to a shell company in the Cayman Islands. They create a confusing maze of transfers so investigators lose the trail.

3. Integration (Spending it clean): Finally, the criminal wants to buy a mansion, but they need a legal excuse for having so much money. They use their offshore shell company to "invest" in a real estate business they secretly own. That real estate business buys the mansion. Later, they sell the mansion. Now, they have perfectly legal paperwork (a property deed and a sales contract). If the tax office asks where they got their wealth, they show the contract. The money has been completely integrated into the normal economy as clean, legal wealth.

1. Smurfing / Structuring Placement

Simple meaning: Breaking a big amount of cash into many small deposits so each one stays below the reporting limit and doesn't get noticed.

Structuring = splitting the amount into smaller pieces.
Smurfing = using many people (“smurfs”) to make those small deposits.

Carlos has ₱2,000,000 in drug money. In the Philippines, cash transactions over ₱500,000 in a day are reported to the AMLC. So he gives 5 friends ₱400,000 each and they deposit it at different branches on different days. No single deposit hits the limit.

Red flags: many deposits just under ₱500,000 • same account receiving deposits from different branches • different people depositing into one account • customer asks about the reporting limit.

Smurfing, or structuring, is when someone splits a large amount of cash into smaller deposits to stay below the reporting threshold. For example, instead of depositing ₱2 million at once, they use several people to deposit ₱400,000 each at different branches. Structuring is a red flag even if each amount looks small.

2. Money Mules PlacementLayering

Simple meaning: A person who lets criminals use their bank account (or e-wallet) to receive and pass on money — often for a small fee. Some know; some are tricked.

Jessa, a college student, sees a Facebook post: “Earn ₱5,000/week, just receive and send money!” She receives ₱300,000 from scam victims and forwards it to another account within an hour, keeping ₱5,000.

Red flags: young/low-income customer with large transfers • money in and out within hours • many unrelated senders • new account suddenly very active • account sold or “rented” to others.

A money mule is someone whose account is used to receive and transfer illegal funds, often for a small payment. For example, a student receiving money from many strangers and forwarding it right away. The red flag is activity that doesn't match the person's profile.

3. Shell Companies Layering

Simple meaning: A company that exists only on paper — no real office, no employees, no real business. Used to hide who owns the money.

“Golden Star Ventures Ltd” is registered in an offshore country. Its address is just a mailbox. It has no staff, yet it receives and sends millions in wire transfers. The real owner, a corrupt official, isn't named anywhere.

Red flags: no website or real address • recently formed but moving large amounts • no normal business expenses (rent, salaries) • offshore owners • UBO unclear.

A shell company exists only on paper with no real business operations. Criminals use it to hide the real owner and move money. That's why identifying the UBO is so important.

4. Front Companies / Cash-Intensive Businesses PlacementIntegration

Simple meaning: A real business that mixes dirty cash with its normal sales so it all looks like legitimate income. Common with restaurants, car washes, laundromats, salons, bars.

A small carinderia really earns ₱20,000 a day. The owner adds ₱80,000 of illegal cash and records it as sales. The bank sees ₱100,000/day in “restaurant income.”

Red flags: sales much higher than similar businesses • mostly cash • income stays high even when the business looks empty • sudden jump in deposits.

A front company is a real business used to mix illegal cash with legitimate earnings, usually a cash-heavy business like a restaurant. The red flag is when reported income is much higher than what the business could realistically make.

5. Layering Through Many Transfers Layering

Simple meaning: Moving money quickly through many accounts, banks, or countries so it's hard to trace back to the source.

₱10M moves: Account A (Manila) → Account B (Hong Kong) → Account C (Singapore) → Account D (Dubai) → back to a company in Manila — all within 5 days.

Red flags: rapid transfers with no business reason • money going in circles • many countries involved • funds never “rest” in the account.

This is the layering stage — moving money through many accounts or countries quickly to make it hard to trace. The red flag is many transfers without a clear business purpose.

6. Trade-Based Money Laundering (TBML) Layering

Simple meaning: Using import/export deals with fake prices or fake shipments to move money across borders.

Over-invoicing: billing more than the goods are worth.
Under-invoicing: billing less than the goods are worth.
Phantom shipment: invoice for goods that were never shipped.
Multiple invoicing: billing the same shipment more than once.

How it works (The $2 vs $8 trick):
It is all about lying on the receipt to secretly move money. Imagine a criminal in the US needs to secretly send $8 Million of dirty money to his partner in the Philippines. Carrying $8M in cash on a plane will get them arrested.

Instead, the Philippine partner ships a cargo container of cheap plastic chairs (actually worth only $2 Million). But, they print a fake invoice claiming the chairs cost $8 Million. The US criminal "pays" the $8M invoice through the bank. To the bank and customs, it just looks like a normal business buying furniture. The criminals just successfully moved $6 Million of dirty money across the world completely undetected!

Red flags: prices way above/below market • goods don't match the company's business • shipping route makes no sense • payment from an unrelated third party.

Trade-based money laundering uses trade transactions to move illegal money, for example by over-invoicing goods — selling something worth ₱200,000 for ₱5 million so the extra money moves across borders as a 'payment.'

7. Real Estate Integration

Simple meaning: Buying property with dirty money, then selling or renting it — the proceeds now look like legitimate income.

Rico buys a ₱15M condo using a company and cash from illegal activity. A year later, he sells it for ₱17M. The ₱17M now looks like a legal property sale.

Red flags: paying in large cash • buying through companies or relatives • quick resale • price far from market value • buyer's income doesn't match.

Criminals buy property with illegal funds and later sell or rent it, so the money looks like legitimate income from a real estate deal. That's the integration stage.

8. Casinos & Gambling PlacementLayering

Simple meaning: Buying casino chips with dirty cash, gambling a little (or not at all), then cashing out and claiming it's “winnings.”

Leo buys ₱3M in chips with cash, plays a few small games, then cashes out ₱2.9M and asks for a casino check. He now has a document showing “gambling winnings.”

Real case: In the 2016 Bangladesh Bank heist, about US$81M was stolen and sent to accounts at a Philippine bank, then partly moved through Manila casinos.

Red flags: little actual gambling • large cash-in, quick cash-out • asking for checks or wire transfers • using others to buy chips.

In casino laundering, someone buys chips with dirty money, gambles very little, and cashes out so the money looks like winnings. A known example is the Bangladesh Bank heist, where stolen funds passed through casinos in the Philippines.

9. Nominees / Dummies (Straw Men) Layering

Simple meaning: Using another person's name (relative, driver, employee, friend) to own accounts, companies, or property so the real owner stays hidden.

A politician registers 3 companies and a house under the names of his driver and his housekeeper. They earn ₱25,000/month, but “own” assets worth ₱80M.

Red flags: owner's profile doesn't fit the wealth • someone else always gives instructions • owner doesn't know basic details about “their” business.

A nominee is someone who holds an account or company on paper for someone else, so the real owner stays hidden. For example, a driver listed as the owner of a multi-million company. That's why we verify the UBO and check if the wealth fits the person.

10. Loan-Back / Fake Loans Integration

Simple meaning: A criminal “lends” their own dirty money to themselves through another company, so it looks like a legitimate loan.

Ben moves ₱20M of illegal money to an offshore company he secretly controls. That company then gives Ben's local business a “₱20M loan.” Ben now uses the money openly and even “repays” it.

Red flags: loan from an unknown offshore lender • no interest or unusual terms • lender and borrower linked to the same person • no loan documents.

In a loan-back scheme, the criminal sends illegal money to a company they control, then that company 'lends' it back, so the money looks like a legitimate loan.

11. Round-Tripping LayeringIntegration

Simple meaning: Sending money out of the country and bringing it back disguised as “foreign investment.”

A businessman sends ₱50M to his offshore company in another country. That offshore company then “invests” ₱50M back into his Philippine business as foreign capital.

Red flags: “foreign investor” is linked to the local owner • money leaves and returns in a similar amount • offshore jurisdictions.

Round-tripping is when money is sent abroad and brought back as foreign investment, so its real source is hidden.

12. Hawala / Underground Banking Layering

Simple meaning: An informal money transfer system based on trust. The money doesn't actually travel through banks — brokers in two countries just settle with each other later.

Ali gives ₱500,000 to a broker in Manila. The broker calls his partner in Dubai, who hands the equivalent amount to Ali's contact. No bank transfer happens, so there's no record.

Red flags: unlicensed remittance activity • many small transfers to one person who then sends large amounts abroad • business account acting like a remittance center.

Hawala is an informal value transfer system where money moves between brokers through trust, without going through banks, so there's little or no paper trail.

13. Cryptocurrency & Mixers PlacementLayering

Simple meaning: Criminals turn dirty money into crypto (like Bitcoin) because it can be sent anywhere in seconds. To hide the trail, they use a tool called a Mixer (or Tumbler).

How a Mixer works (Real-life analogy):
Imagine 100 people put a ₱1,000 bill into a giant washing machine. The machine spins, and everyone pulls a different ₱1,000 bill back out. You still have ₱1,000, but it is impossible to prove which specific bill was originally yours.

In crypto, a Mixer is a software program that does exactly this. A criminal sends 100 dirty Bitcoins into the Mixer pool along with thousands of other users. The Mixer shuffles them all up, and sends 100 "mixed" Bitcoins to the criminal's new wallet. The police can no longer trace the original crime to the new wallet.

Red flags: receiving funds from a known mixer service • rapid moving of crypto across many wallets • large crypto cash-outs to a bank account that don't fit the customer's normal income.

Launderers use crypto because it moves fast across borders. To hide where the money came from, they use 'Mixers'. A mixer pools crypto from thousands of users, shuffles it, and pays it back out. It's like putting marked bills into a bucket with clean bills, mixing them up, and taking out different bills so they can't be traced back to you.

14. Luxury Goods, Jewelry & Art Integration

Simple meaning: Buying expensive items (cars, watches, jewelry, art, gold) with dirty money. They hold value, are easy to move, and can be resold for “clean” money.

Mia buys a ₱8M Rolex collection and a luxury car in cash. Months later, she sells them and deposits the money as “proceeds from sale of personal items.”

Red flags: large cash purchases • buying and quickly reselling • purchase doesn't fit income • paid by a third party.

Criminals buy high-value items like luxury cars, jewelry, or art with illegal money, then resell them so the money looks like legitimate sale proceeds.

15. Third-Party Payments Layering

Simple meaning: Having someone unrelated pay on your behalf, so the money can't be linked directly to you.

A customer's ₱3M credit card bill and loan are paid by 6 different people and companies who have no clear connection to him.

Red flags: payments from people with no clear relationship • customer can't explain who the payers are • frequent changes in who pays.

Third-party payments are when unrelated people or companies pay for someone else, which hides the real source of the money. We should always understand who is paying and why.

16. Cuckoo Smurfing Placement

Simple meaning: Criminals deposit dirty cash into an innocent person's account who is expecting a legitimate payment from abroad. The innocent person doesn't know.

Rosa's son in Canada sends her ₱200,000 through an informal remitter. The remitter doesn't send real money — instead, a criminal group deposits ₱200,000 of dirty cash into Rosa's account in small amounts. Rosa thinks it's from her son. The criminals keep the son's clean money abroad.

Red flags: many cash deposits from unknown depositors into an account expecting a foreign remittance • customer is surprised by the depositor names.

Cuckoo smurfing is when criminals use an innocent person's account — someone expecting money from abroad — and deposit dirty cash into it, while keeping the clean money overseas.

Quick summary table

Technique	In one line	Stage
Smurfing / Structuring	Splitting cash below the reporting limit	Placement
Money Mules	Using other people's accounts	P L
Shell Companies	Paper-only companies hiding owners	Layering
Front Companies	Real business mixing dirty cash with sales	P I
Rapid Transfers	Moving money through many accounts/countries	Layering
Trade-Based (TBML)	Fake or inflated invoices	Layering
Real Estate	Buy property, sell as “clean” money	Integration
Casinos	Chips in, “winnings” out	P L
Nominees	Using someone else's name	Layering
Loan-Back	Lending your own dirty money to yourself	Integration
Round-Tripping	Out of the country, back as “investment”	L I
Hawala	Informal transfers with no bank record	Layering
Crypto / Mixers	Hiding the trail through wallets and coins	P L
Luxury Goods	Buy expensive items, resell	Integration
Third-Party Payments	Unrelated people pay for you	Layering
Cuckoo Smurfing	Using an innocent person's account	Placement

You don't need to memorize all 16. Know smurfing, money mules, shell companies, trade-based laundering, and real estate very well — those are asked the most.

4. Source of Wealth vs Source of Funds vs Source of Income

A very common question. Know the difference clearly.

Term	Question it answers	Example	Proof
Source of Income (SoI)	How do you regularly earn money?	Monthly salary, business profit, rental income	Payslips, ITR, COE
Source of Funds (SoF)	Where did this specific money come from?	The ₱2M deposit came from selling a car	Deed of sale, bank statement
Source of Wealth (SoW)	How did you build your total wealth over time?	20 years of business ownership + inheritance	Business records, will, property titles

One-person example — Ms. Reyes:

Source of Income: She earns ₱150,000/month as a doctor.
Source of Funds: Today she deposited ₱3M — it came from selling her condo.
Source of Wealth: Her total ₱30M net worth comes from 15 years as a doctor, investments, and an inheritance.

Memory trick: Income = regular flow • Funds = this transaction • Wealth = the whole picture.

Source of income is how a person regularly earns money, like a salary or business profit. Source of funds is where the specific money in a transaction came from — for example, a deposit coming from the sale of a property. Source of wealth is the bigger picture — how the person accumulated their total net worth over time, such as from years of running a business or an inheritance. Source of funds is checked for transactions; source of wealth is especially important for high-risk customers like PEPs.

5. The key risk checks

These are the main things you look at for every customer.

A. Customer identity risk

Are they a PEP? If yes → EDD, source of wealth, senior approval.
Are they connected to high-risk countries? Nationality, residence, business, transactions.
Does their profile make sense? Job, income, and activity should match.

B. Screening

Name ScreeningChecking the person's name against global databases and lists — sanctions (UN, OFAC, EU), PEP lists, watchlists.

Adverse Media / Negative NewsSearching news and online sources (including social media) for links to fraud, corruption, crime, or scandals.

A name match is NOT automatically a hit. Compare other details — date of birth, nationality, address, photo, job. Many people share the same name (e.g. “Juan Dela Cruz”). Decide: true match or false positive, then document why.

Checking adverse media properly:

Is it really the same person? (Match identifiers.)
Is the source credible? (Major news vs. random blog.)
Is it recent and relevant to financial crime?
What's the status? Allegation, charge, conviction, or cleared?
Document the source and your reasoning.

C. Ownership structure (corporate accounts)

Identify and confirm who the UBO is.
UBOs are the people who control or influence the business and its decisions.
Commonly anyone with 25% or more ownership (some banks use a lower threshold such as 20% or 10%), or control by other means.
Checking them ensures that transactions and decisions made are legitimate.

6. Coaching tips — be ready to explain these

① The 25% UBO threshold

Anyone owning 25% or more of a company is treated as a UBO (common international standard). Directly or indirectly — you multiply through layers.

Indirect ownership example: Pedro owns 50% of Company B. Company B owns 60% of Company A.
Pedro's share in Company A = 50% × 60% = 30% → Pedro is a UBO of Company A.

The common threshold for a UBO is 25% ownership, either direct or indirect. For indirect ownership, you multiply the percentages through each layer. Some banks apply a lower threshold for high-risk clients. And even below the threshold, anyone who controls the company in other ways is also considered a UBO.

② WHY PEPs are high-risk

They have power and influence over government decisions and contracts.
They may have access to public funds.
This creates exposure to bribery, kickbacks, and corruption.
Corrupt money is often laundered through family members or close associates — that's why they're covered too.

PEPs are high-risk not because they're assumed to be guilty, but because their position gives them power and access to public money, which exposes them to bribery and corruption. That's why banks apply EDD, verify their source of wealth, and get senior management approval.

③ How complex UBO structures can signal layering

Criminals use many companies stacked on top of each other — often in different countries or offshore — to hide who really owns the money. This is the layering stage of money laundering.

Person X→Offshore Co. (BVI)→Holding Co. (Cyprus)→Trust→Local Co. (PH)→Bank account

Warning signs:

Many layers with no clear business reason
Companies in secrecy jurisdictions / tax havens
Nominee directors or shareholders (people named only on paper)
Ownership just below 25% each (e.g. 4 people at 24.9%) — may be designed to avoid UBO checks
Customer is reluctant to explain the structure

A complex ownership structure isn't automatically suspicious, but if there are many layers of companies across different countries with no clear business reason, it can be a sign of layering — an attempt to hide the real owner and the origin of the money. In that case, I would trace the chain to identify the UBO, ask for the business rationale, document my findings, and escalate if it still doesn't make sense.

7. Case studies — how to answer them

Interviews may give you a short case. Use this structure every time.

What case studies usually include

1. Customer profile analysisWho are they? Job, income, country, business, PEP?

2. Transaction reviewDo the amounts, frequency, and destinations fit the profile?

3. Identification of triggersWhat red flags do you see?

4. Final risk ratingLow / Medium / High — and what action to take.

What to look for when reading a case

Risky patterns — money in and out fast, sudden large amounts, many unrelated senders
Gaps in documentation — missing, expired, or inconsistent documents
Sanctions exposure — name matches, sanctioned countries or counterparties
Needed escalations — what should go to compliance / senior management

Answer formula: “First I'd look at the profile… Then I'd review the transactions… The red flags I see are… There are gaps in… My risk rating is… and I would escalate / request documents.”

Practice Case 1 — The student with large transfers

Profile: Mark, 21, college student, no stated income. Opened a savings account 2 months ago.

Activity: Received ₱1.2M from 18 different people in 3 weeks. Within hours of each deposit, the money is sent to one overseas account.

Risky patterns: Pass-through (in → out fast), many unrelated senders, activity far beyond his profile.
Documentation gap: No source of funds or explanation for the deposits.
Sanctions exposure: Need to screen the overseas beneficiary and country.
Escalation: Yes — possible money mule. Escalate for STR consideration.

Risk rating: HIGH

The activity doesn't match the profile — a student with no income receiving ₱1.2M from many people and sending it overseas immediately. This looks like a pass-through or money mule account. I'd check the senders and the overseas recipient, see if there's any documented source of funds, and since there isn't a reasonable explanation, I'd rate it high risk, document everything, and escalate for possible suspicious transaction reporting.

Practice Case 2 — The company with hidden owners

Profile: Sunrise Trading Inc., registered 6 months ago as a small local retail business.

Ownership: 100% owned by Global Holdings Ltd (British Virgin Islands). Owners of Global Holdings not provided.

Activity: Receives large international wires and quickly sends them to other countries. Almost no normal expenses (rent, salaries, suppliers).

Risky patterns: New company, large cross-border flows, no real business activity → possible shell company.
Documentation gap: UBO not identified; no ownership documents for Global Holdings.
Sanctions exposure: Unknown owners cannot be screened; check countries of counterparties.
Escalation: Yes — cannot complete KYC without UBO.

Risk rating: HIGH

The main issue is that the UBO isn't identified — it's owned by an offshore company with no ownership details. The activity also doesn't fit a small local retailer. I'd request the full ownership structure down to the individuals, screen them, and ask for the business rationale. Until that's provided, the KYC is incomplete, so I'd rate it high risk and escalate.

Practice Case 3 — The PEP buying property

Profile: Atty. Santos, a sitting provincial governor. Declared income ₱120,000/month.

Activity: Wants to transfer ₱45M to buy a luxury property. Says it's from “family savings.” Adverse media: news article about an ongoing investigation for misuse of public funds.

Risky patterns: Amount far above declared income; PEP; vague explanation.
Documentation gap: No proof of source of funds or source of wealth.
Sanctions exposure: Screen him, family, and associates.
Escalation: Yes — PEP + adverse media + unexplained wealth. Needs EDD and senior approval.

Risk rating: HIGH

He's a PEP, which already requires EDD. The ₱45M is far beyond his declared income, and “family savings” is too vague, especially with adverse media about misuse of public funds. I'd request documented proof of source of funds and source of wealth, verify the news, and escalate to compliance and senior management. I wouldn't approve without strong evidence.

Practice Case 4 — Big amount, but legitimate

Profile: Mrs. Lim, retired teacher, usually small monthly pension deposits.

Activity: Suddenly deposits ₱8M. She explains she sold her family's house and provides a deed of sale and the buyer's bank transfer record.

Risky patterns: Large and unusual — but explained.
Documentation: Deed of sale matches the amount and date.
Escalation: Not needed if everything is consistent.

Risk rating: LOW to MEDIUM (document the rationale)

A large amount alone isn't suspicious. The deposit is unusual for her, but she gave a clear explanation and supporting documents that match. I'd verify the documents, record the source of funds, document my reasoning, and continue normal monitoring.

This case shows interviewers you don't panic over big numbers. Context matters.

Practice Case 5 — The name match

Profile: New customer “Ahmed Hassan,” born 1995, Filipino citizen, nurse in Manila.

Screening: Hits on “Ahmed Hassan” on a sanctions list — born 1962, national of another country.

Compare: Different birth year, nationality, and profile.
Conclusion: Likely false positive.
Action: Document the identifiers compared and why it's not a match. Follow the bank's procedure for clearing alerts.

A name match isn't a confirmed hit. I'd compare the identifiers — date of birth, nationality, address, and other details. Here they don't match, so it's likely a false positive. I'd document exactly what I compared and why I discounted it, following the bank's procedure. If I wasn't sure, I'd escalate rather than guess.

8. Common red flags

Warning signs that need a closer look.

Activity doesn't match the customer's job, income, or business
Money comes in and goes out quickly (pass-through)
Many unrelated people sending money to one account
Sudden, unexplained large transactions
Splitting cash into smaller amounts to avoid reporting (structuring)
Complex ownership with no clear reason
Links to high-risk or sanctioned countries
Customer can't explain source of funds or wealth
Fake, altered, or inconsistent documents
Customer is evasive or rushes the process
Credible negative news about the customer

Remember: A red flag means “look closer,” not “guilty.” Always compare against the customer's profile before concluding.

Common mistakes to avoid

Wrong thinking	Right thinking
Large amount = suspicious	Context matters — check if it's explained
PEP = criminal	PEP = higher risk, needs EDD
Name match = sanctions hit	Compare identifiers first
Customer explained it, so done	Explanation needs supporting proof
Registered company = safe	Still check UBO, business, and activity
My job is to accuse	My job is to verify, document, and escalate

Philippines quick facts (good to know):

AMLA — Anti-Money Laundering Act (RA 9160, as amended).
AMLC — Anti-Money Laundering Council, receives reports.
BSP — regulates banks' AML rules.
CTR — Covered Transaction Report: transactions over ₱500,000 within one banking day.
STR — Suspicious Transaction Report: no minimum amount, filed whenever activity is suspicious.

9. Questions about you

Be honest about no experience — focus on preparation, numbers, analysis, and attention to detail.

Tell me about yourself.

I have a background in [your course / previous work], where I developed experience in working with information, solving problems, and paying attention to details.

I'm now looking to move into KYC and AML because I enjoy analyzing information and figuring out if things make sense. I like work where I need to be careful, follow a process, and make decisions based on facts.

I don't have direct KYC or AML experience yet, but I've been studying the basics and preparing myself for the role. I'm looking for a long-term career in compliance where I can keep learning and improve.

Why do you want to work in KYC / AML?

I like analytical work. I enjoy checking information, finding inconsistencies, and understanding the bigger picture.

KYC and AML fit that because you're reviewing customers, transactions, and information to identify possible risks. I also like that it's a field where I can build a long-term career and continue learning.

You don't have experience. Why should we hire you?

I understand I don't have direct experience yet, but I already have the mindset needed for the role.

I'm detail-oriented, organized, comfortable working with information, and I follow procedures carefully. I also took the initiative to study KYC and AML before applying, because I wanted to understand what I'm getting into.

I'm also very open to feedback. If I don't know something, I'd rather ask and verify than guess.

How have you prepared for this role?

I've been studying the basics of KYC and AML, including CDD, EDD, PEPs, sanctions, UBOs, source of funds, source of wealth, and money laundering red flags.

I've also gone through sample cases to practice identifying red flags and thinking about how I would assess the risk.

I know the actual work will involve your own systems and procedures, but I wanted to have a good foundation before joining.

What would you do if you found a red flag?

First, I wouldn't immediately assume the customer did something wrong.

I'd verify the information, look at it in the context of the customer's profile and activity, and check for supporting evidence.

I'd document what I found, and if the concern remains, I'd escalate it according to the company's procedure.

What if you can't verify something?

I'd document what I already checked and what's still missing.

Then I'd use other approved sources or request additional information if the process allows it.

If I still can't verify it, I'd escalate it instead of simply marking it as complete.

How do you handle a high workload or tight deadlines?

I prioritize based on deadlines and risk.

I usually use a checklist or a structured process so I don't miss important details. I also keep my notes organized so I can work faster without sacrificing accuracy.

If something needs clarification, I'd raise it early instead of waiting until the deadline.

What is your biggest strength?

My biggest strength is attention to detail.

I naturally like checking information and making sure things add up. I think that's important in KYC because even a small inconsistency can sometimes be important.

What is your weakness?

Sometimes I spend too much time double-checking things because I want to make sure they're correct.

I'm improving that by using checklists and focusing on the information that actually matters, so I can stay accurate while also working efficiently.

What if a teammate disagrees with your finding?

I'd look at the evidence and the procedure together with them.

If they show me something I missed, I'd change my assessment. If we still disagree, I'd ask a senior or team lead to review it.

For me, it's about getting the correct result, not about being right.

Why should we choose you over someone with experience?

Someone with experience will obviously have an advantage in knowing the process already.

What I can bring is that I'm prepared, willing to learn, and serious about building a career in this field. I don't pretend to know something when I don't. I verify, I follow procedures, and I take feedback seriously.

I think that mindset is important for compliance work.

Where do you see yourself in a few years?

I'd like to become strong in KYC and AML first, then gradually take on more complex cases and responsibilities.

My goal is to build a long-term career in financial crime and compliance rather than just treat this as another job.

Do you have any questions for us?

Pick 1–2:

"What does the training look like for new analysts?"
"What types of clients would I mainly handle?"
"What does success look like during the first three months?"
"What screening or KYC systems does the team use?"
"What usually makes someone successful in this team?"

10. KYC / AML — Remember These

KYC	Know your customer.
AML	Prevent and detect money laundering and financial crime.
CDD	Normal customer checks.
EDD	Deeper checks for higher-risk customers.
UBO	The real person who owns or controls a company.
PEP	Person with a prominent public position. Higher risk, but not automatically criminal.
Sanctions	Restrictions against specific people, entities, countries, or activities.
Adverse Media	Credible negative information about a customer.
Source of Income (SoI)	How the person normally earns money.
Source of Funds (SoF)	Where the specific money came from.
Source of Wealth (SoW)	How the person built their overall wealth.

Money Laundering

1. Placement → Put illegal money into the financial system.
2. Layering → Move it around to make the trail difficult to follow.
3. Integration → Make the money appear legitimate.

Remember: P → L → I

Common Red Flags

Transactions don't match the customer's profile.
Unusual or unexplained transactions.
Sudden large deposits.
Multiple accounts moving money between each other.
Complex ownership structures.
High-risk countries or industries.
Negative or suspicious media.
Customer can't explain where money came from.
Information doesn't match across documents.

Common Techniques

Smurfing	Breaking a large amount into many smaller transactions.
Money Mules	Using other people's accounts to move money.
Shell Companies	Companies used to hide ownership or move money without a legitimate business purpose.
TBML	Trade-Based Money Laundering. Using trade transactions and false or manipulated invoices to move value.
Real Estate	Using property transactions to make illegal money appear legitimate.

Risk Factors

Remember: Customer → Country → Industry → Product → Transaction → Ownership → Reputation

Case Review

Use this order: Profile → Transactions → Red Flags → Missing Information → Risk → Escalate

When You Don't Know

Say:

"I'm not completely sure of the exact procedure, but my approach would be to verify the information, understand the context, compare it with the customer's profile, document my findings, and escalate if needed."

Strong Phrases

"I'd verify before reaching a conclusion."
"I'd look at it in the context of the customer's profile."
"A red flag is a reason to look closer, not proof of wrongdoing."
"I'd document my findings and reasoning."
"If the concern remains, I'd escalate according to procedure."
"I'd rather ask and confirm than guess."

Before the Interview

Practice your answers out loud.
Don't memorize every word. Remember the keywords.
Know SoF vs SoW vs SoI.
Know Placement → Layering → Integration.
Prepare 1–2 real examples showing attention to detail, analysis, numbers, or problem-solving.
Be honest about not having direct experience.
Speak slowly. Take a second to think before answering.

Protected Reviewer

KYC & AML Interview Reviewer

How to use this reviewer

1. The basics in plain English

2. Coaching questions & model answers

The main risk factors

Risks in the KYC process itself

Who counts as a PEP

Why PEPs are high-risk

How someone becomes a UBO

Walk-through example

3. Money laundering techniques (with samples)

Quick summary table

4. Source of Wealth vs Source of Funds vs Source of Income

5. The key risk checks

A. Customer identity risk

B. Screening

C. Ownership structure (corporate accounts)

6. Coaching tips — be ready to explain these

① The 25% UBO threshold

② WHY PEPs are high-risk

③ How complex UBO structures can signal layering

7. Case studies — how to answer them

What case studies usually include

What to look for when reading a case

8. Common red flags

Common mistakes to avoid

9. Questions about you

10. KYC / AML — Remember These

Money Laundering

Common Red Flags

Common Techniques

Risk Factors

Case Review

When You Don't Know

Strong Phrases

Before the Interview