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Certified Anti-Money Laundering Specialist (the 6th edition) Questions and Answers

Question 1

Whichpractices should financial institutions (FIs) adoptfor the process ofterminating customer relationships? (Select Three.)

Options:

A.

Utilizing a flexible communication style that adapts to different customer situations during the termination process.

B.

Implementing a standardized procedure for customer termination that includes risk assessments and necessary documentation.

C.

Performing a final review of a customer's transaction history and records to address any unresolved issues prior to termination.

D.

Keeping records of the termination process, including the justification for the decision and any correspondence with the customer.

E.

Notifying the customer of the termination decision only after completing the termination process to prevent possible disputes.

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Question 2

A customer's registered business activity is a domestic carpet cleaning company. Besides domestic receipts, there are incoming weekly transactions from an international reputable

auction house starting at 15,000 USD and averaging 30,000 USD. The matching cash outgoings amount to 90% of the incoming deposits to non-related individuals. Which is most

concerning for potential money laundering?

Options:

A.

The customer is paying 90% of the incoming proceeds to non-related individuals in cash.

B.

The customer is a domestic carpet cleaning company.

C.

The customer's international incomings are from an international reputable antique auction house.

D.

The customer's initial international receipt has increased from 15,000 USD to an average of 30,000 USD per transaction per week.

Question 3

A high volume of incoming wire transfers generates an alert about a client. The funds are immediately debited by cash withdrawals and outgoing wire transfers. Which information should be reviewed first to investigate this alert/case?

Options:

A.

Customer profile

B.

Adverse media search

C.

Account activity

D.

Open source information

Question 4

It Is important for financial institutions (FIs) to be aware of anti-financial crime (AFC) and sanctions regulatory regimes in other jurisdictions in order to.

Options:

A.

maintain compliance with the AFC and sanctions requirements of all countries where the F1 operates or has business relationships and to avoid penalties for violations in foreign jurisdictions.

B.

ensure that sanctions regimes are applied selectively based on the regulatory standards of the countries where business activities occur, focusing primarily on aligned jurisdictions

C.

compensate for the limited applicability of AFC and sanctions regulations on cross-border transactions and their reduced relevance for domestic operations in other jurisdictions.

D.

ensure the F1 can manage business relationships in jurisdictions with stricter or more lenient regulations than their home country, allowing for operational flexibility

Question 5

According to the Financial Action Task Force (FATF). potential risk indicators related to money laundering proceeds from environmental crimes include. (Select Two.)

Options:

A.

waste management sector companies based in high-risk jurisdictions with payments or trade invoices tor types of waste aligned with those they are authorized to process.

B.

frequent payments from companies in the logging. milling, or waste trade sectors to individuals or beneficiaries unrelated to the legal parson activity or business.

C.

unexplained wealth and cash transfers involving senior officials or politically exposed persons for their family members) with a position of responsibility related to the management or preservation of natural resources.

D.

small cash transfers from cash-Intensive businesses to beneficiaries in areas known as a source of gold mining, illegal logging, and Illegal land clearing.

Question 6

Money laundering has social and economic impacts, especially within developing countries. A high volume of money laundering in a country may: (Select Two.)

Options:

A.

Reduce confidence in the country's financial sector.

B.

Dissuade government tax incentive programs.

C.

Lower the employment rate.

D.

Dissuade foreign investment.

E.

Reduce volatility in exchange and interest rates.

Question 7

Which of the followingcorporate structurespresent ahigher money laundering riskdue toreduced transparency? (Select Three.)

Options:

A.

A company with nominee shareholders and directors in a local jurisdiction.

B.

A private company that has no activity in a tax haven jurisdiction.

C.

A company with bearer shares incorporated in a tax haven jurisdiction.

D.

A limited liability company incorporated in a foreign jurisdiction.

E.

A private investment company incorporated in a tax haven jurisdiction with strict secrecy laws.

Question 8

Which piece of information identified by customer screening would be the most likely reason to trigger consideration of exiting a business relationship with a customer because of financial crime concerns?

Options:

A.

The customer is a shareholder of a corporation declared bankrupt.

B.

The customer is linked to an organized crime group.

C.

The customer is a politically exposed person (PEP).

D.

The customer allegedly violated a construction permit limit.

Question 9

Whichchanges at a financial institution (FI) should trigger an enterprise-wide reassessment of its inherent AML risk exposure? (Select Three.)

Options:

A.

Introduction of new products or services.

B.

Restructuring of the FI’s risk and compliance functions.

C.

Changes in the individuals overseeing the FI’s product lines and sales strategies.

D.

Use of new technologies for delivering existing products.

E.

Mergers or acquisitions.

Question 10

According to the Basel Committee principles, which actions would make a customer identification program at a bank more robust? (Select Two.)

Options:

A.

Limiting the online activities of a new customer during the first two months.

B.

Understanding the nature and purpose behind a new business opening an account at the bank.

C.

Verifying the identity of a customer with reputable online source documentation.

D.

Understanding why a customer has selected a particular financial institution for banking.

Question 11

What are theroles of a government Financial Intelligence Unit (FIU)? (Select Three.)

Options:

A.

Investigate and, where appropriate, prosecute all suspicious transaction and suspicious activity reports received from reporting institutions or obliged institutions.

B.

Analyze all suspicious transaction and suspicious activity reports received from reporting institutions or obliged institutions.

C.

Disseminate analysis of suspicious transaction and suspicious activity reports to foreign judicial systems to enhance their anti-money laundering and terrorist financing investigations and prosecutions.

D.

Disseminate the analysis of suspicious transaction and suspicious activity reports to local law enforcement agencies and foreign FIUs to combat money laundering.

E.

Receive reports of suspicious transactions and suspicious activities from reporting institutions or obliged institutions.

Question 12

Abank in the Netherlandshas been requested toshare informationabout aseries of transactions and related customerswith abank in Italy. Both banks are subject toEuropean Union jurisdiction.

Which factor ismost importantto consider before theDutch bank shares the requested informationwith the Italian bank?

Options:

A.

TheDutch bank’s legal obligationsto protectcustomer privacy and bank secrecyprohibit it from sharing any such information.

B.

TheDutch bank should require a production orderfrom the Italian bank and receiveapproval from its legal departmentbefore sharing the requested information.

C.

Theneed to fight financial crime outweighsthe EU’sdata protection and privacy regulations.

D.

TheDutch bank should limit any information sharing to what is necessary, reasonable, and proportionate, in line with applicable laws and regulations.

Question 13

Arecruitment manager in the human resources departmentof a bank hasshortlisted a candidate for the position of relationship manager in its private banking division.

Thebank’s compliance policyrequiresproper background checksto protect againstfraud and money laundering risks.

Whichresourceswould bemost usefulfor identifying potential negative information regarding the shortlisted candidate? (Select Three.)

Options:

A.

Past employment records.

B.

Personal references from close associates.

C.

Personal resume.

D.

Internet and public media searches.

E.

Criminal history searches.

Question 14

Which activities would be considered money laundering red flags when reviewing the business operations of a money services business (MSB)? (Select Two.)

Options:

A.

A customer being hesitant to provide beneficiary name or address information when sending international wire transfers

B.

Cash-intensive businesses, such as convenience stores or restaurants, making large cash deposits

C.

A customer exchanging foreign currency from a higher-risk jurisdiction for domestic currency under the reporting threshold

D.

A customer using multiple accounts under different names to conduct transactions

E.

A customer completing frequent small-dollar international money transfers to their native country

Question 15

According to the Financial Action Task Force (FATF) Recommendation 22. when involved in customer transactions that include the buying and selling of real estate, real estate professionals are required to apply which customer due diligence (CDD) measures? (Select Two.)

Options:

A.

Obtaining prior senior manager approval for all related transactions

B.

Understanding the purpose of the business relationship

C.

Performing adverse media searches on the customer

D.

Identifying and verifying the customer's identity

Question 16

Whichpractices should financial institutions (FIs) adoptwhen determining thetimeline for completing an internal AML investigationandfiling a Suspicious Activity Report (SAR) to the Financial Intelligence Unit (FIU)?

Options:

A.

Follow local regulatory requirementsfor reporting periods.

B.

Report the SAR within 30 days.

C.

Use a matrix based on the complexityof an investigation.

D.

Act on the professional judgmentof a senior manager.

Question 17

An employee at a financial institution (Fl) suspects that one of their co-workers is involved in a financial investment scam syndicate. Which step should be taken next by the employee who has the suspicion?

Options:

A.

Question their co-worker to determine If their suspicions are correct before reporting to the Fl's Human Resources department

B.

Use the Fl's whistle blowing channel to report the suspected employee

C.

Warn colleagues and customers of the F1 that the employee's suspicious financial investment proposals could be a scam

D.

Conduct an open-source intelligence investigation using artificial intelligence tools to gain more information on the activities of the suspected employee

E.

Report the suspected employee to the line manager of the F1 to take the required action

Question 18

What is theimportance of a risk-based approach (RBA)andbuilding controls commensurate with risks?

Options:

A.

An RBA allows organizations to adopt a more flexible set of measures and to use resources more effectively to control specific risks.

B.

An RBA makes it easier for organizations to implement controls faster to counter all applicable risks.

C.

An RBA is internationally accepted by customers and stakeholders, making it a more appropriate risk control mechanism.

D.

An RBA more clearly dictates which resources are to be used to control an organization’s overall residual risks.

Question 19

Which statement regardingdata privacyis the most accurate in the context ofAML investigations?

Options:

A.

FIUs should document purposes for which personal data included on Suspicious Activity Reports (SARs) may be shared with other agencies.

B.

Any customer that is the subject of asuspicious report filinghas the right to request redaction of their personal data.

C.

Data privacy laws prohibit information sharing between financial institutions for the purposes of AML investigations in all jurisdictions.

D.

Organizations are required to demonstrate that customers have opted into information sharing before submitting SARs to relevant Financial Intelligence Units (FIUs).

Question 20

Which of thebelow statementsare supported by theFinancial Action Task Force (FATF) 40 Recommendationsadopted in 2012? (Select Two.)

Options:

A.

Regulators should direct Financial Institutions to establish appropriate frameworks to avoid banking higher-risk customers.

B.

Nations should work towards implementing targeted financial sanctions in alignment with the UN Security Council.

C.

Nations should establish frameworks that take a risk-based approach to prevent and mitigate money laundering and terrorist financing.

D.

Governments must work toward developing identical administrative and operational frameworks for investigating and prosecuting crime.

E.

Nations should take measures to ensure there is transparency to the beneficial ownership of legal persons.

Question 21

Red flags for potential money laundering in real estate include completing luxury real estate purchases. (Select Two.)

Options:

A.

using shell companies or trusts for privacy, lax planning, or asset protection.

B.

in the names of unrelated thud patties.

C.

using the proceeds from selling a prior property or liquidating investments to make an all-cash purchase

D.

using legal entities and intermediaries to protect the privacy of the purchasers.

E.

using loans backed by cash or certificates of deposit.

Question 22

A financial institution (FI) is fined for failure to implement an effective AML program. Which consequences could the regulator impose on the bank's Chief AML Officer? (Select Three.)

Options:

A.

Loss of professional accounting and legal designations

B.

Civil and criminal prosecution, fines, and imprisonment

C.

Ban from employment in the financial services industry

D.

Recommend termination of employment from the FI

E.

Add to the Office of Foreign Assets Control Specially Designated Nationals and Blocked Persons List

F.

Prohibition from dealing with goods on the Wassenaar List

Question 23

The Office of Foreign Assets Control (OFAC) is responsible for:

Options:

A.

Ensuring an effective export control and treaty compliance system

B.

Administering and enforcing economic and trade sanctions

C.

Designating jurisdictions as primary money laundering concerns

D.

Managing trade agreements between the US and foreign countries

Question 24

What is acore function of a Financial Intelligence Unit (FIU)as described inFATF Recommendation 29?

Options:

A.

Serving as a national centerfor thecollection and analysis of suspicious activity.

B.

Prosecuting significant cases of money launderingor terrorist financing under national jurisdiction.

C.

Sponsoring the research and developmentof advanced technological surveillance tools for AML investigations.

D.

Sharing real-time criminal intelligencegathered from national law enforcement agencies with the private sector.

Question 25

Whichline of defenseissolely tasked with providing assurance to the Board of Directorsof an organization?

Options:

A.

The fourth line of defense

B.

The second line of defense

C.

The third line of defense

D.

The first line of defense

Question 26

A financial institution is conducting an enterprise-wide risk assessment (EWRA) and has identified a high inherent risk of money laundering associated with its private banking division due to the clientele's high net worth and complex financial structures. However, the institution has implemented robust customer due diligence (CDD) and enhanced due diligence (EDD) procedures, along with sophisticated transaction monitoring systems.

How would these controls impact the assessment of residual risk?

Options:

A.

The residual risk would be significantly reduced due to the effectiveness of the controls in place

B.

The residual risk would be moderately reduced, but further controls may be necessary to achieve an acceptable level

C.

The residual risk would remain high due to the inherent nature of the private banking business

D.

The residual risk would be eliminated entirely because the controls are sufficient to mitigate all potential risks

Question 27

Which of the followingindicates potential money laundering activity by a lawyer?

Options:

A.

A lawyer’strust account regularly receives wire transfers from unknown remittersfrom a higher-risk country andimmediately transfers the same amountof funds to a known beneficiary's account in a low-risk country.

B.

A lawyerlocated in a higher-risk country deposits their firm’s bank draftissued from their trust account to another lawyer’s trust account located in a low-risk country for legal services rendered.

C.

A lawyer’strust account receives a large-value wire transferfrom aregulated insurance companyand immediately transfers the same amount of funds received to the beneficiary’s bank account in a low-risk country.

D.

A lawyer’strust account receives a large wire transfer depositfrom a client that wanted to purchase a piece of property and then transfers the same amount to the property seller’s lawyer’s trust account.

Question 28

A credit institution has been served with a preliminary findings report highlighting major deviations from AML obligations in its country and stating that it faces the possibility of withdrawal of its banking license.

Which authorities could have issued the report?

Options:

A.

A banking sector self-regulatory body

B.

Law enforcement authority

C.

Financial Action Task Force (FATF)

D.

AML supervisory authority

Question 29

Which product type is subject to US extra-jurisdictional reach over non-US banks and non-US persons under the USA PATRIOT Act?

Options:

A.

Commercial lending

B.

Correspondent banking

C.

Trade finance

D.

Private banking

Question 30

The role of FATF-style regional bodies (FSRBs) is to; (Select Three.)

Options:

A.

identify and address the current financial crime trends through the issuance of typologies originating in members outside of their FSRB's Jurisdiction.

B.

provide AM L/C FT technical assistance needed by members in their FSRB junsdiction.

C.

coordinate technical assistance for members in their FSRB jurisdiction

D.

set and amend the FATF 40 Recommendations for members in their FSRB jurisdiction.

E.

identify and address any gaps in the AML/CFT policies for members outside of their FSRB jurisdiction.

F.

offer mutual evaluation and follow-up processes for members in their FSRB Jurisdiction.

Question 31

Which of the following statementsbest describes the role of the Board of Directorsin overseeing an institution’sAML governance and compliance framework, according to theBasel Committee on Banking Supervision?

Options:

A.

The compliance function shouldreport directly to the CEOconcerning the bank’s compliance with applicable laws, rules, and standards and only update theBoard of Directorson the bank's efforts in managing compliance riskwhen required.

B.

The compliance function must havesufficient authority, stature, independence, and resourcesto be effective on its own and shouldnot have access to the Board of Directors.

C.

The Board of Directors should be responsible foroverseeing the management of the bank’s compliance riskbutnot be involved in establishing a compliance policythat explains the processes by which compliance risks are to be identified and managed throughout the organization.

D.

The Board of Directors shouldestablish a compliance functionand approve the bank’s policies foridentifying, assessing, monitoring, reporting, and advising on compliance risk.

Question 32

Which of the following businesses require enhanced or additional scenarios for identifying anomalous transactions? (Select Two.)

Options:

A.

Companies operating in cash intense businesses not subject to licensing requirement

B.

Companies operating hospitals and health-care services

C.

Companies operating in cash intense businesses subject to licensing requirement

D.

Companies producing pharmaceutical products and medical devices, companies active in the mining industry

E.

Companies operating retail shops countrywide

Question 33

Which of the followingscenarios warrants enhanced due diligence (EDD)?(Select Three.)

Options:

A.

The former personal secretary to the minister of transport in a low-risk country 25 years ago opening a bank account at a bank in a neighboring low-risk country.

B.

An existing local league footballer trying to open a bank account with a bank in their local jurisdiction.

C.

A bank located in a higher-risk country trying to establish a correspondent-respondent banking relationship with a bank in a lower-risk country.

D.

An individual with a current bank account who resides in one country becoming the ambassador of another country.

E.

The current prime minister of a country trying to open a bank account in another country.

Question 34

Whichred flagscould indicateincreased terror financing and money laundering risksrelated tocultural objects? (Select Three.)

Options:

A.

Use ofart storage facilitieslocated intax-free zones.

B.

Payingfair market valueorpremium pricesfor valuable art, gems, or precious metals at auction.

C.

Engagement ofthird-party art advisorsas representatives at art auctions.

D.

High-quality single pieces of significant valuesold on social media platforms.

E.

Use ofart and antiquity expertsto verify an item’s authenticity.

Question 35

What is the first step that an investigator should take when beginning a financial investigation into a potential suspicious activity?

Options:

A.

Contacting the country's financial intelligence unit (FIU) officers to seek advice on whether the potential suspicious activity is indeed suspicious.

B.

Determining whether the potential suspicious activity is consistent with the customer's transactional behavior, nature of business, and occupation.

C.

Gathering and assessing internal sources of information, including information obtained from the customer, transactions, and value and volume.

D.

Identifying and reviewing external information, including online presence, customer-related entities, and relevant media.

Question 36

The Wolfsberg Group's 2012 "Principles (or Private Banking" established that.

Options:

A.

private banks agree that transparency of client beneficial ownership Is necessary and appropriate.

B.

due diligence requirements tor private banking customers are necessary to prevent predicate offenses.

C.

risk based approaches are insufficient to address the heightened risk presented through private banking

D.

private banks need to better coordinate and align their global AML control environment strategies.

Question 37

At a minimum, who should receive role-specific AML training? (Select Three.)

Options:

A.

Consultants

B.

Information technology staff

C.

Customer facing staff

D.

Board of Directors

E.

Human resources staff

F.

AML/Compliance staff

Question 38

Which section of theUSA PATRIOT Actpermits theU.S. government to seize funds deposited in a U.S. correspondent account of a foreign bank, creating extraterritorial impact?

Options:

A.

Section 319(b)

B.

Section 314(b)

C.

Section 314(a)

D.

Section 319(a)

Question 39

A student contacts a real estate broker to view a home but cancels last minute due to illness. The student wants to quickly buy the 800,000 USD home, which is overvalued, despite the broker'sobjections to the asking price. Which real estate red flags should the broker identify? (Select Three.)

Options:

A.

Anonymity

B.

Structuring

C.

Value

D.

Flow through

E.

Inconsistency

F.

Transaction speed

Question 40

A financial institution is designing anEnterprise-Wide Risk Assessment (EWRA).

According to theWolfsberg Group’s risk-based approach to AML, an effective EWRA should:

Options:

A.

Use a framework provided by a third-party vendor and used by other FIs in the jurisdiction.

B.

Include appropriate measures and controls to mitigate money laundering risks stemming from higher-risk customers, products, and geographies.

C.

Focus on understanding the risks presented by new clients within the assessment period and the controls to mitigate associated money laundering risks.

D.

Focus on the inherent risk in the FI’s product and service offerings and the controls to mitigate potential money laundering risks.

Question 41

Which of the followingscenarios best justifies why a customer’s account might be closedby a financial institution?

Options:

A.

The account has transactions that triggered multiplesuspicious activity reports (SARs).

B.

The account shows periodic fixed amount remittances fortuition fees.

C.

The customer uses ashipping company dealing with specially designated nationals(SDNs).

D.

The customer is the object of acivil subpoena.

Question 42

Which activities conducted by a lawyer could be a red flag for money laundering? (Select Two.)

Options:

A.

The lawyer does not have experience in providing the particular services requested.

B.

The lawyer worked unusual hours to perform case duties.

C.

The lawyer was paid substantially higher than usual fees.

D.

The lawyer does not document case notes for the services provided.

E.

The lawyer spent two days working a case.

Question 43

Which accurately describes the social and economic impacts of money laundering?

Options:

A.

Money laundering impacts the financial sector, which is critical for economic growth.

B.

Foreign investors are often attracted to jurisdictions with significant money laundering activity as the same conditions favour legitimate economic activity.

C.

Money launderers generally remit any tax revenue that would be due in the jurisdictions in which they operate via front businesses.

D.

Increased money laundering generally results in greater economic stability as profits are reinvested in the jurisdiction.

Question 44

According to the Financial Action Task Force (FATF) report on terrorism financing, charities and nonprofit organizations are often vulnerable to terrorist financing because they: (Select Two.)

Options:

A.

Have a global presence that provides a framework for national and international operations and financial transactions that are often in or near areas most exposed to terrorist activity.

B.

Are usually legitimate establishments and will not use the funds collected through donations for the profit of individuals or entities.

C.

Collect donations from various sources, and their primary objective is philanthropy and social well-being.

D.

Enjoy the public trust and have access to considerable sources of funds, and their activities are often cash-intensive.

Question 45

An international bank is headquartered in Madrid, Spain, with an office in New York City (NYC), US. The Madrid office is investigating a transaction originating from a customer of the NYC office and inquires whether the NYC office can share any relevant further information on the individual. Upon further research, the NYC office finds that they have filed a Suspicious Activity Report (SAR) on the individual in the previous year.

Which factors need to be considered before sharing the requested information? (Select Two.)

Options:

A.

The bank should consider jurisdictional privacy requirements and its own policies and procedures to determine what information to share.

B.

The information should only be shared on a need-to-know basis.

C.

The bank should report this to the Financial Crimes Enforcement Network (FinCEN) and receive formal guidance before sharing the information.

D.

The foreign bank must always request approval by its national anti-financial crime authority to share any information cross-border.

Question 46

In which of the following situations would it be most crucial for the designated AML compliance officer of a company to perform a complete review of the company's AML program, including identifying the risks and commensurate controls?

Options:

A.

An external audit highlights several deficiencies

B.

The company is merging with or acquiring another entity

C.

Extensive AML legislation is proposed by a legislative body in the company's jurisdiction

D.

A high-profile money laundering case involving another industry is publicized

Question 47

Alegal instrument executed between two nationsthat governscross-border information sharingis known as a:

Options:

A.

Memorandum of Agreement.

B.

Declaration of Understanding.

C.

Memorandum of Understanding.

D.

Mutual Legal Assistance Treaty.

E.

Request for Urgent Information.

Question 48

How do nominees benefit criminals misusing thorn for money laundering purposes? (Select Two.)

Options:

A.

Allow beneficial owners to provide proxies lot voting on corporate decisions

B.

Obscure beneficial ownership

C.

Allow domicile in the nominee's jurisdiction

D.

Derail investigations

Question 49

The compliance officer at a casino in Taiwan discovers that the casino received multiple cash deposits from a customer just below the Large-Amount Transaction Report (LTR) limit on consecutive days. The customer used three different betting accounts.

What is the appropriate next step?

Options:

A.

Make a note in the customer's account that the customer's gambling activities are frequently conducted below the reporting limit

B.

Follow internal reporting procedures to escalate the activity as suspicious and report to appropriate authorities

C.

Inform the customer their activity Is suspicious and request an explanation

D.

Contact law enforcement to launch an Investigation into the customer's financial activities

Question 50

Public-private partnerships (PPPs) that involve the sharing of information between law enforcement authorities, Financial Intelligence Units (FIUs), and the private sector are established to: (Select Two.)

Options:

A.

Exchange operational information between public authorities and obliged entities

B.

Exchange strategic information between FIUs and obliged entities

C.

Exchange strategic information between financial institutions

D.

Create a common database of key information and share analysis of suspicious activities with FATF

Question 51

A financial crimes risk appetite statement describes:

Options:

A.

how an organization defines Its risk-based approach.

B.

how an organization determines its key risk and performance indicators.

C.

the level and type of risk the organization is willing to take to meet its objectives

D.

the purpose of an organization's financial crimes compliance program.

Question 52

To ensure the independence of an audit for an AML program those involved in the audit would best be described as being:

Options:

A.

not Involved in the organizations AML compliance program and having a reporting line to the board of directors or committee thereof

B.

not involved in the organizations AML compliance program and having a reporting line to the organization's Chief Executive Officer

C.

not involved in the organization's suspicious activity report filing process and having a reporting line to the board of directors or committee thereof.

D.

not involved in the organization's suspicious activity report filing process and having a reporting line to the organization's Chief Executive Officer

Question 53

Which collective body of Financial Intelligence Units (FlUs) was formed with an objective to improve Information exchange and sharing mechanisms among member FlUs as well as to support its members by enhancing their capabilities'?

Options:

A.

The Organisation for Economic Co-operation and Development (OECD)

B.

The Egmont Group

C.

The Wolfsberg Group

D.

The International Monetary Fund (IMF)

Question 54

AnAML compliance officerreceives anindependent audit reportwith a number offindings.

Anappropriate responseto thereportwould include:

Options:

A.

Reperforming the testing for the controls mentioned in the findings to confirm the results of the audit.

B.

Assigning responsibility for reviewing the action plan to the board of directors.

C.

Drafting detailed action plans for the audit team to execute to close the findings.

D.

Defining remedial actions based on the findings' root cause analysis.

Question 55

AnAML compliance officeris drafting plans toaddress deficiencies identified in an independent audit.

Which approach is thebest option?

Options:

A.

Draft action plans in consultation with the jurisdiction’s FIU to remain aligned with other similar companies.

B.

Only commit to action plans that can be implemented and closed within the three-month management reporting cycle.

C.

Draft action plans that will take many months to fully implement to address the root cause of the deficiencies.

D.

Only commit to action plans that require no new investment to maximize shareholder value.

Question 56

A customer puts high-denomination cash notes into a poker machine at a casino. Without placing any bets, the customer collected winnings in the form of a check from the casino.

Which money laundering threats could result from the customer's activities?

Options:

A.

Micro-structuring cash

B.

Legitimizing illicit funds

C.

Misuse of money service business

D.

Obscured beneficial ownership

Question 57

Which of the following statements istrueregarding the2012 Financial Action Task Force (FATF) 40 Recommendationsand/or11 Immediate Outcomes?

Options:

A.

The cornerstone of the40 Recommendationsis the adoption of arisk-based approachby each jurisdiction.

B.

Each jurisdiction can reach out to the FATF for private access to theinterpretive notesto the40 Recommendations.

C.

The40 Recommendationshave not been updated to reflect the impact of new technology.

D.

The11 Immediate Outcomesare recommendations specific tohigh-risk jurisdictionsrequiringenhanced monitoring.

Question 58

Abank is preparing for a regulatory examafter a previousregulatory exam identified weaknesses in its AML program. Since the last exam, the bank has:

    Improved its written AML program

    Hired an experienced AML compliance officer

    Demonstrated a stronger culture of compliance

    Focused on clearing its transaction monitoring case backlog and enhancing its sanctions screening program

Which of the followingare correct? (Select Two.)

Options:

A.

The bank is likely to face secondary sanctions from global financial institutions despite addressing many of the previous concerns.

B.

The bank is protected from reputational risk arising from any regulatory action because regulatory orders must remain confidential.

C.

The bank may face the risk of regulatory orders to remediate its AML program despite addressing many of the previous concerns.

D.

The bank may face civil or criminal penalties if it is unable to demonstrate sustained improvement in addressing the previous concerns.

E.

The regulatory agency may require the bank’s board of directors to publicly share the actions taken to address the previous concerns in order to limit its reputational risk.

Question 59

Alegal instrumentexecuted betweentwo nationsgoverningcross-border information sharingis called a:

Options:

A.

Memorandum of agreement

B.

Declaration of understanding

C.

Memorandum of understanding

D.

Mutual legal assistance treaty

Question 60

Which statements relate to the role of financial intelligence units (FIUs) in combatting financial crime on a national and international level? (Select Three.)

Options:

A.

FIUs can only engage in cross-border collaboration where there exists a reasonable suspicion that is confirmed by a court-issued document.

B.

FIUs are legally empowered to use a wide range of investigative techniques, both in the public and in the private sector.

C.

FIUs use a limited range of investigative techniques.

D.

FIUs have a broad range of financial information to assess suspicious activity alerts.

E.

FIUs can only command data and information requests from public sector entities.

F.

FIUs are able to cooperate both with foreign counterparts and national institutions.

Question 61

Anewly appointed senior money laundering reporting officer (MLRO)at adigital bankhas been instructed toimplement an effective AML transaction monitoring system.

What areimportant considerationsfor selecting and implementing the AML system? (Select Two.)

Options:

A.

Whether the monitoring system is adequate with respect to the bank's size, activities, complexity, and risks.

B.

Whether the vendor has documented appropriate internal controls for designing the system and data integration schema.

C.

Whether the permissions and user access settings for reviewing, investigating, and reporting details of alerts generated by the system are commensurate with those in use at other banks.

D.

Whether the monitoring system can be configured to enable the bank to execute trend analysis of transaction activity and to identify unusual business relationships and transactions.

Question 62

What is a key objective of the Egmont Group?

Options:

A.

To find ways to promote the development of Financial Intelligence Units and the sharing of expertise.

B.

To safeguard the financial system from illicit use and combat money laundering and promote nationalsecurity.

C.

To issue binding standards that establish consistently operated Financial Intelligence Units in memberjurisdictions.

D.

To provide best practices for financial institutions on how to report suspicious activity to best share theinformation with law enforcement.

Question 63

Which three actions should employees be instructed to do during an internal investigation?

Options:

A.

Provide corporate documents directly to law enforcement

B.

Inform counsel of all request for documentation

C.

Make copies of all documents provided to law enforcement

D.

Keep a log of the documents requested

Question 64

A compliance officer provides an overview of the bank’s anti-money laundering program to a group of new

tellers during employee orientation.

Which training element should be delivered to this audience?

Options:

A.

Results of recent risk assessments

B.

Large cash transaction reporting procedures

C.

The financial institution’s surprise cash audit policy

D.

Past check fraud losses incurred by the financial institution

Question 65

A financial institution files a suspicious transaction report on a customer as the result of a high volume of large currency deposits to pay off a loan. A law enforcement officer calls the anti-money laundering officer to discuss the suspicious transaction report. Which of the following is the anti-money laundering officer legally permitted to do?

1. Discuss any aspects of the reported activity.

2. Provide copies of the customer's loan documents.

3. Explain the customer's loan payment history.

4. Send the deposit documents referenced in the suspicious transaction report.

Options:

A.

1 and 2 only

B.

1 and 4 only

C.

2 and 3 only

D.

2 and 4 only

Question 66

A new compliance officer is reviewing the bank’s anti-money laundering program and notices that the risk assessment was completed six months ago. Since that time, the bank acquired another financial institution, renamed

the internal records group, and streamlined cash handling procedures.

Which factor causes the compliance officer to update the bank’s risk assessment?

Options:

A.

The bank acquired another institution

B.

The internal records group has been re-named

C.

The cash handling procedures were streamlined

D.

The risk assessment was completed six months ago

Question 67

Historically, which vehicle is most often used to hide beneficial ownership?

Options:

A.

Professional association

B.

An offshore company

C.

A limited liability partnership

D.

A charitable organization

Question 68

Which insurance product is particularly vulnerable to money laundering?

Options:

A.

Annuity

B.

Casualty

C.

Collateral

D.

Regulated pension

Question 69

A foreign politically exposed person (PEP) requests to add a beneficiary to a file insurance policy.

How should the request be processed to mitigate risk?

Options:

A.

Perform due diligence on the beneficiary

B.

Determine the source of wealth and source of funds

C.

Decline the request if the beneficiary is a foreign PEP

D.

Decline the request to add a beneficiary due to increased risk

Question 70

Which three should real estate agents include in the criteria to assess their company’s potential money laundering and terrorist financing risks when implementing a reasonable risk-based approach?

Options:

A.

Credit Risk

B.

Customer Risk

C.

Transaction Risk

D.

Geographic Risk

Question 71

What was cited by the Wolfsberg Group in its Statement on the Suppression of the Financing of Terrorism as being vulnerable to terrorist financing?

Options:

A.

Private banking

B.

Correspondent banking

C.

Alternative remittance

D.

Trade finance

Question 72

A compliance officer learns from an Information Technology (IT) source of a potential new financial service being discussed by the new product approval committee.

What is the correct next course of action?

Options:

A.

Request that the new product approval committee include the compliance officer.

B.

Go to the board of directors and try to shut the new service down immediately because the committee didnot communicate with the compliance officer.

C.

Get as much information as possible from the source so that potential risks can be researched and a reportprepared and presented to the head of marketing.

D.

Start initial research into potential risks but wait until notified that the service has been approved by thecommittee before initiating extensive research.

Question 73

As a result of an audit, a policy exception was identified that had been approved by the compliance officer.

The auditor determined that the policy exception is a violation of a regulatory requirement.

What should the auditor do?

Options:

A.

Advise the compliance officer on how to appropriately respond to policy exceptions.

B.

Include the regulatory violation in the audit report and report it to the board of directors.

C.

Consult with legal counsel to determine if the approval of the policy exception was acceptable.

D.

Include the regulatory violation in the audit report and recommend the compliance officer be subject todisciplinary action by the board of directors.

Question 74

Which method is used to launder money in casinos?

Options:

A.

Purchase chips with cash and play at a table

B.

Purchase chips with cash and redeem for cash

C.

Purchase chips with cash and redeem for a check

D.

Purchase chips with cash and sell to another person for cash

Question 75

Which two statements in the Wolfsberg Group’s “Suppression of the Financing of Terrorism” define the role financial institutions should play in the fight against terrorism? (Choose two.)

Options:

A.

Financial institutions need to assist competent authorities in fighting terrorist financing through prevention, detection and information sharing.

B.

Financial institutions need to continuously analyze the types of activity related to terrorist financing anddevelop models that in the long term will drive down terrorism.

C.

Financial institutions should have financial intelligence units dedicated to the investigation of activity that would lead to the detection of terrorist financing as a means to decrease global terrorism.

D.

Financial institutions should apply extra due diligence whenever they see suspicious or irregular activities, especially when customers are engaged in sectors or activities that have been identified by competentauthorities as being used for the financing of terrorism.

Question 76

A customer brings $15,000 worth of chips into a casino and plays various games. The customer redeems all

the remaining chips and requests a wire transfer of the proceeds to an unrelated third party.

What are two red flags that indicate money laundering? (Choose two.)

Options:

A.

Customer redeeming all remaining chips

B.

Playing various games before cashing out

C.

Bringing $15,000 worth of chips into the casino

D.

Requesting a wire transfer to an unrelated third party

Question 77

In the summer, an institution identifies anti-money laundering concerns regarding a customer’s account

activity. The customer, an ice cream, has deposited a lot of checks drawn on banks in foreign countries, sent

large number of high dollar international wires to different countries, made cash deposits of a few hundred

dollars every few days and written multiple checks for a few hundred dollars to the same dozen payees every

two weeks.

Which two transaction types warrant investigation? (Choose two.)

Options:

A.

Regular cash deposits

B.

The wires to foreign countries

C.

Repeated checks to the same payees

D.

Checks drawn on banks in foreign countries

Question 78

A junior account manager within an international private bank in Country A was asked by one of his valued customers, who has held an account for several years in the institution, about depositing a large sum of cash into her account. The junior account manager informed his customer that his bank does not accept cash. The junior account manager later reviewed a customer activity report and noticed a number of smaller dollar wires from banks in neighboring Country B, which has lax currency controls, that totaled about as much as the customer intended to deposit.

What should the junior account manager do?

Options:

A.

Close the account

B.

File a suspicious transaction report with the Financial Intelligence Unit

C.

Notify the anti-money laundering specialist of his bank, but do not call the customer

D.

Offer the customer a more secure method of depositing in the hope of learning something more during the conversation

Question 79

An account officer who maintains an excellent relationship with the finance manager for a correspondent bank customer learns that many records for the correspondent bank have been requested by law enforcement. In the interest of maintaining a good relationship with the customer, the account officer sets up a meeting to discuss the legalrequest with the customer. The account officer intends to discuss points related to the investigation during the meeting.

What should an anti-money laundering specialist recommend?

Options:

A.

Discuss all the points being investigated by law enforcement to ensure the correspondent bank is well prepared when approached

B.

Let the account manager’s manager know what conversations have taken place with the customer and document the account file accordingly

C.

Limit discussions about the investigation with the customer and by satisfied that the account manager has provided proper notice to the customer

D.

Cancelled the meeting as he has already behaved inappropriately by alerting to the investigation

Question 80

What does the Financial Action Task Force 40 Recommendations address on transparency of beneficial ownership?

Options:

A.

Gatekeepers

B.

Correspondent banking

C.

Payable through accounts

D.

Legal persons and arrangements

Question 81

Upon a routine account review a money laundering investigator identified a number of large round dollar wire transfer deposits into a business account owned by a local auto repair shop. The wire transfers all originated from a country that is a known financial secrecy haven with poor anti-money laundering controls. The investigator concludes there appears to be no legitimate business purpose for the wire transfers and files a

suspicious transaction report. The owner of the auto repair shop is popular in the community and is a wellknown philanthropist.

To whom should the investigator escalate these concerns?

Options:

A.

Audit committee

B.

Chairman of the Board

C.

The owner of the auto repair shop

D.

The bank anti-money laundering officer

Question 82

Under which two circumstances may law enforcement be given access to a financial institution customer’s

financial records? (Choose two.)

Options:

A.

If the person is named in a suspicious transaction report

B.

If law enforcement serves a legal summons or subpoena

C.

If the investigation of a customer is made public in the media

D.

If law enforcement has circumstantial evidence to suspect money laundering

Question 83

A compliance officer identifies a potentially significant risk in a popular financial product. Further investigation

reveals there is no mitigating control.

Which course of action should the compliance officer take?

Options:

A.

Launch a long-term project to remediate the control deficiency

B.

Note the risk and address it during the next round of policy and procedure review

C.

Immediately cease providing the product and only offer it after effective permanent mitigation is implemented

D.

Implement a temporary mitigation that enables effective management of the risk until a permanent plan can be developed

Question 84

The compliance officer at a crowd funding website is in charge of monitoring new crowd funding projects.

Recently, the number of crowd funding projects has significantly increased.

Which red flag indicates the highest anti-money laundering risk?

Options:

A.

Those with the largest number of donors

B.

Projects that get funding within days of their start

C.

Projects with the highest monetary success threshold

D.

Projects that start and close and are fully funded within a very short period

Question 85

A banker in the credit department wants to assess the risk of all customers, and contacts the compliance officer to request a list of customers with suspicious transaction report filings.

What should be done to protect suspicious transaction report information?

Options:

A.

Provide the suspicious transaction report information to the credit department

B.

Decline to provide the suspicious transaction report information to the credit department

C.

Seek approval from the board of directors to disclose the suspicious transaction report information

D.

Contact the credit department manager to determine how the suspicious transaction report information canbe provided

Question 86

A customer has held an account at a local credit institution for 10 years. The account has received deposits twice weekly for the same amount and has never shown signs of suspect behavior. Monitoring software indicated that in the past few months the account has received several large deposits that were not in line with the account history.

When asked, the customer states she recently sold a piece of property, which is supported with a proof of sale.

Which of the following should the compliance officer do next?

Options:

A.

Investigate these unusual transactions further.

B.

Contact the local Financial Intelligence Unit for advice.

C.

File a suspicious transaction report with the competent authorities.

D.

Document reasons for not filing a suspicious transaction report.

Question 87

An offshore company is owned by four equal partners that reside in separate jurisdictions. One partner presents an authenticated power of attorney apparentlyexecuted by the remaining three partners in his favor and requests that a bank account be opened on behalf of all partners. He needs this done quickly because there is a large deposit pending. The account-opening officer contacts the bank's anti-money laundering officer for advice. Which of the following should the anti-money laundering officer advise as an initial step?

Options:

A.

Verify the identity of all the partners.

B.

Verify the source of the deposit.

C.

File a suspicious transaction report with the appropriate Financial Intelligence Unit.

D.

File a suspicious transaction report with the Egmont Group.

Question 88

Which of the following reflect money laundering risk indicators in relation to a securities account?

1. A high level of activity in that securities account immediately followed by a high volume of securities transactions.

2. Frequent wire transfers into an account immediately followed by debit card transactions.

3. Frequent wire transfers into an account immediately followed by checks (cheques) or other payment instruments drawn on the account.

Options:

A.

1 and 2 only

B.

1 and 3 only

C.

2 and 3 only

D.

1, 2, and 3

Question 89

Which requirement is included in the Fourth European Union Directive on money laundering?

Options:

A.

It requires obliged entities to consider politically exposed persons as high risk for life

B.

It requires obliged entities to conduct enhanced due diligence on all prepaid card holders

C.

It requires member countries to maintain registries of the beneficial owners of legal entities

D.

It requires member states to enact economic sanctions against countries that do not cooperate withFinancial Action Task Force recommendations

Question 90

The compliance officer for a bank is reviewing on-boarding documents for a new business account for a

domestic corporation. The officer is unable to verify the identity of the beneficial owners of the company. Only

information on the nominee owners was provided, and none of the listed addresses are local. The purpose of

the business and future expected activity were disclosed to include cash letters, money orders and

international remittance transfers.

Which red flag identifies a heightened money laundering risk?

Options:

A.

Expected activity was advised to include cash letter and money orders

B.

The nature and purpose of the business include international remittance transfers

C.

The names provided at account opening are identified as the corporation’s representative nominees

D.

Account signer’s government issued identification lists addresses outside of where the branch account wasopened

Question 91

In general, what is an element that a financial institution or business does not have to specifically address in an anti-money laundering program?

Options:

A.

A system of internal policies, procedures and controls

B.

A designated compliance officer with day-to-day oversight over the AML program

C.

An ongoing employee training program

D.

A description of its OFAC program to address government watch list screening

Question 92

A bank is preparing for its anti-money laundering independent review, which is performed every two years

under the direction of the compliance officer. The bank’s corporate audit department will conduct the review.

The compliance officer will review the final report before it is released to the Board of Directors.

What is the issue with this situation?

Options:

A.

Independent reviews must be performed annually

B.

The review must be performed by a group outside of the bank

C.

The final report must be presented directly to the board of directors

D.

There is a conflict of interest with the management of the review process

Question 93

Which three methods are commonly used by an accountant to launder money? (Choose three.)

Options:

A.

Representing a client court

B.

Understanding income to take a tax loss

C.

Overstating income to hide excess cash

D.

Acting as a conduit for transferring cash between accounts

E.

Acting as a designee for someone who wishes to hide their identity

Question 94

A customer comes into the bank and appears to be ill-at-ease waiting in the teller line. When the customer gets to the teller, he become exceedingly nervous and asks for a large cashier’s check to be cashed and disbursed to him in $100 bills.

What should the teller do after completing the transaction?

Options:

A.

Confer with the bank’ s account going forward

B.

File a SAR on the customer

C.

Monitor the customer’s account going forward

D.

File a CTR on the customer by the end of the day

Question 95

Which action does the Financial Action Task Force (FATF) recommend be taken against jurisdictions that

have strategic deficiencies?

Options:

A.

Conduct due diligence

B.

Apply counter-measures

C.

Add the jurisdiction to the United Nations’ list of sanctioned jurisdictions

D.

Create an action plan to address the deficiencies without the support of the FATF

Question 96

A customer comes into a financial institution and deposits a large amount of cash. He has never done that before. When asked about the deposit, he indicates he recently sold a used car and received cash.

He does not trust forms of payment and is wary of counterfeit money orders. What should the bank do?

Options:

A.

The bank has received a plausible explanation, so it should do nothing

B.

While the explanation appears plausible, the institution should, for a period of time, monitor the account for cash transactions and suspicious activity

C.

While the explanation may be plausible, the institute should nonetheless file a Suspicious Transaction Report to protect itself

D.

The institution should close the account before another issues arise

Question 97

An anti-money laundering specialist has been asked to create internal anti-money laundering policies, procedures and controls for a recently chartered offshore financial institution.

Which three should be included? Choose 3 answers

Options:

A.

Basel Committee on Banking Supervision’s capital adequacy requirements for the host country

B.

A training program for senior management and staff

C.

An anti-money laundering compliance program, internal audit program, and procedure manual

D.

Compliance requirement of host and charting countries

Question 98

The Basel Committee on Banking Supervision issued a paper in October 2001 in which it presented a Know Your Customer framework and recommended standards applicable to

Options:

A.

Offshore banking supervisors.

B.

Financial Intelligence Units.

C.

banks in all countries.

D.

European Financial Institutions.

Question 99

According to the Financial Action Task Force 40 Recommendations, Designated Non-Financial Businesses and Professionals include which entities?

Options:

A.

Commodities traders

B.

Money services businesses

C.

Hawala operators

D.

Real estate agents

Question 100

A bank employee reviews wire transactions looking for indications of wire stripping.

Which two actions should the employee take to complete appropriate bank procedures? (Choose two.)

Options:

A.

Compare the wire transaction as it enters and after it leaves the bank

B.

Check for suspicious phrases usually used to conceal originator or beneficiary identity

C.

Identify large incoming wire transactions received on behalf of a foreign client with no explicit reason

D.

Identify wire transaction activity to or from a financial institution located in a higher risk jurisdiction

Question 101

With which of the following should an anti-money laundering officer coordinate when implementing anew hire screening program?

Options:

A.

Internal auditor

B.

Local Financial Intelligence Unit

C.

Human resources

D.

Institution’s regulator

Question 102

When a bank performs a risk assessment, what areas should an institution focus on?

Options:

A.

The type and location of the institution’s clients

B.

The nature and breadth of the services and products the institution provides

C.

The geographic locations where the institution does business

D.

The amount of the money the institution earns prior to taxes

Question 103

On who does the ultimate responsibility for an institution’s anti-money laundering program rest?

Options:

A.

The designated AML Compliance Officer

B.

The institution’s Board of Directors

C.

All employees with customer contact

D.

The government regulator examining the AML program

Question 104

Law enforcement submitted a request to a bank for information regarding one of its customers.

How should the bank respond according to Financial Action Task Force Guidance?

Options:

A.

Provide all information requested to support the investigation

B.

Ensure that the request will not violate any local privacy regulations or legislation

C.

Ensure the information is necessary to the investigation before responding to the request

D.

Contact the customer informing the person of the investigation to ensure the bank provides correctinformation

Question 105

Which of the following represents the first Financial Action Task Force initiative?

Options:

A.

The 40 Recommendations on Money Laundering

B.

The Report on Non-Cooperative Countries and Territories

C.

The Report on Money Laundering Typologies

D.

The Special Recommendations on Terrorist Financing

Question 106

An anti-money laundering specialist is concerned that several suspicious transaction reports will discuss potential illegal activity of bank employees. In this situation, which of the following is the immediate concern for the institution?

Options:

A.

Prohibiting distribution of suspicious transaction report copies to the Board.

B.

The timing of the presentation of suspicious transaction reports to the competent authority.

C.

The type of form to be used when reporting to the Board.

D.

Ensuring no delay in informing the Board.

Question 107

A bank’s anti-money laundering section receives an anonymous tip that a customer might be engaging in

possible money laundering.

Which two facts should be considered during the course of an investigation into this matter? (Choose two.)

Options:

A.

The customer has had a long-standing account at the bank

B.

The customer in on the exempt list for currency transaction reporting requirements

C.

The customer is issuing a number of wires to several relatively high-risk jurisdictions

D.

The customer’s account has had a large volume of activity, but the month-end balance is usually low

Question 108

In which two ways does a government Financial Intelligence Unit interact with public and private sectors?

(Choose two.)

Options:

A.

It governs the methods of investigation used by competent authorities

B.

It mediates disputes between financial institutions and investigative authorities

C.

It receives and analyzes disclosures filed by financial and non-bank institutions

D.

It disseminates information and the results of its analysis to competent authorities

Question 109

What do Financial Action Task Force (FATF)-style regional bodies do for their members to help combat money

laundering and terrorist financing?

Options:

A.

They provide technical assistance to members in implementing FATF recommendations

B.

They assist member countries in penalizing entities that violate FATF standards and recommendations

C.

They work with members on areas of concern outside of anti-money laundering and terrorist financing

D.

They supervise member country financial institutions relating to anti-money laundering and terroristfinancing

Question 110

Bank A is located in Country A. A wire transfer from Bank B located in Country B is processes by Bank A,where the funds are being moved to a customer at Bank C located in Country C. The wire transfer isdeemed suspicious by Bank A.

Options:

A.

The transaction in Country A.

B.

Bank B in Country A.

C.

The transaction in Country B.

D.

Bank C in Country C.

Question 111

In which situation can money laundering adversely affect a country’s currencies and interest rates due to launderers investing dirty funds?

Options:

A.

They invest in high risk ventures with high rates of return

B.

They invest in legitimate companies as a way of making their funds appear to be legitimate

C.

They invest in shell companies in secrecy havens that intentionally manipulate rates

D.

They invest in a way to hide funds rather than get a high rate of return

Question 112

Which method do terrorist financiers use to move funds without leaving an audit trail?

Options:

A.

Extortion

B.

Cash couriers

C.

Casa de cambio

D.

Virtual currency

Question 113

What is a major economic consequence of money laundering through the use of front companies?

Options:

A.

Placing more emphasis on manufacturing

B.

Weakening of the legitimate private sector

C.

Creating a more competitive pricing environment

D.

Aligning management principles between criminal enterprises and legitimate businesses

Question 114

A U.K. real estate agent has three foreign clients interested in purchasing an apartment building, valued at £30

million, in the outskirts of London as an investment property. The clients are not willing to have their names

provided to the bank. The clients want to purchase to be made in the names of three private companies for

privacy reasons. The plan is to wire the funds into an account held in the name of another private company at

a bank in London.

Which red flag should stop the agent from discussing this potential purchase further?

Options:

A.

The clients are foreign

B.

The clients have the funds necessary to fund a £30 million purchase

C.

The clients are not willing to have their names provided to the bank

D.

The clients want to purchase to be made in the names of the private companies

Question 115

According to the Financial Action Task Force 40 Recommendations, simplified customer due diligence or reduced measures could be acceptable for which of the following types of products or transactions?

1. Life insurance policies where the annual premium is no more than USD/EUR 1,000 or a single premium of no more than USD/EUR 2,500.

2. Insurance policies for pension schemes if there is no surrender clause and the policy cannot be used as collateral.

3. A ptfiisiui i Ll idL pr uviJcfb lelir emei it bei lefils Lu employees.

4. Trusts where the settlor, trustee and beneficiaries are identified and the shares are in bearer form.

Options:

A.

1, 2, and 3 only

B.

1, 2, and 4 only

C.

1, 3, and 4 only

D.

2, 3, and 4 only

Question 116

To ensure compliance with economic sanctions established by governmental authorities in the jurisdictions

where it operates, a financial institution requires that all new and existing customers be screened at

onboarding and quarterly thereafter.

Is this step sufficient to ensure compliance?

Options:

A.

No, screening should occur promptly after list updates

B.

Yes, this is recommended by the international guidance

C.

No, it is necessary to screen and perform enhanced due diligence on new relationships

D.

Yes, screening all existing customer relationships ensures the institutions is not dealing with a sanctionedindividual or entity

Question 117

A suspicious transaction report filed on a car dealer structuring deposits initiates a criminal investigation. The dealer changes branches and begins placing transactions with a frontline employee to whom the dealer has given numerous gifts.

This employee handles all of the dealer's structured deposits and does not report the suspicious activity internally.

The competent authority has advised the anti-money laundering specialist to avoid tipping off the employee until the investigation is finalized.

What action should the specialist take next?

Options:

A.

Recommend the immediate termination of the employee.

B.

Advise that the dealer's accounts should be closed.

C.

Consult with senior management and the legal advisor.

D.

Inform the institution's regulatory agency of the situation.

Question 118

A politically exposed person (PEP) maintains an account at a bank. Last month a money laundering analyst filed a suspicious transaction report about unusual wire deposits originated by unknown individuals in the home country of the official.

To whom should this situation be escalated?

Options:

A.

The board of directors

B.

The line of business executive

C.

The bank’s anti-money laundering officer

D.

The Financial Action Task Force’s PEP Hotline

Question 119

Historically, a tour guide has made monthly cash deposits averaging $10,000. Over the past three months, the

monthly deposits have averaged $100,000. When the financial institution QUESTION NO:s the increased deposits,

the tour guide explains that there have been numerous conventions in town so business has increased

substantially.

Which further action(s) should the financial institution take?

Options:

A.

Immediately terminate the relationship

B.

Schedule a periodic review of activity

C.

Perform further investigation, it appropriate report the activity to the authorities and consider terminatingthe relationship

D.

Perform further investigation, if appropriate report the activity to the authorities and place a limit on futuretransactions

Question 120

What describes the Black Market Peso Exchange money laundering method?

Options:

A.

The best known money laundering method used by known terrorists

B.

An undercover technique to identify politically exposed persons who may assist money launderers

C.

A method primarily used by narcotics traffickers to transfer value back to the source country

D.

A method used to smuggle dollars or pesos across that border from the U.S. to Mexico, and vice versa

Question 121

A compliance officer at an insurance company has been reviewing the transaction activity of several clients.

Which transaction is considered a red flag for potential money laundering?

Options:

A.

A client paid the quarterly life insurance premium using money orders from two different banks.

B.

A client from a high-risk jurisdiction recently purchased property insurance for a real-estate development.

C.

A corporation owns several affiliates and recently opened separate group life insurance policies for each ofthe affiliates.

D.

A client established a $100,000 charitable annuity with a non-profit organization that provides health andsafety assistance internationally.

Question 122

A bank account is established for a new business customer. The business was established five years ago with an address in another state. The business website contains few details other than stating it is a real estate business.

One principal has an international telephone number and appears to be living in another country. The other principal works out of a recreational vehicle.

What warrants enhanced due diligence in this scenario?

Options:

A.

Shell company

B.

Human trafficker

C.

Politically exposed person

D.

Money laundering through real estate

Question 123

How should a financial institution deter money laundering through new accounts? Choose 3 answers

Options:

A.

Document the identity of the party opening the account

B.

Query owner’s names against FATF database

C.

Determine the beneficial owner(s) of the account

D.

Seek to determine the source of deposited funds

Question 124

Which three entities does the Third European Union Money Laundering Directive apply to?

Options:

A.

Financial Institutions

B.

Defense Attorneys

C.

Casinos

D.

Real Estate Agents

Question 125

In relationship to life insurance business, the third European Directive states that Member States may allow the identity verification of the beneficiary under the policy after the business relationship has been established, but before which events?

Options:

A.

At or before a premium payment has been accepted for the policy purchased

B.

At or before the policy is issued to the beneficiary by the insurance company

C.

At or before the time of payout or before the beneficiary intends to exercise rights vested under the policy

D.

At or before 30 days of the relationship being established under the policy

Question 126

A local law enforcement officer notifies the bank compliance officer that he is working on an insurance fraud scheme that appears to be running transactions using the account of a bank employee. The law enforcement officer refers to a kiting suspicious transaction report filed by the compliance officer and requests further information.

What action should the compliance officer take?

Options:

A.

Inform the board of directors

B.

Call the employee and demand an explanation

C.

Allow access to the bank's documents immediately

D.

Provide the information to the law enforcement in response to a formal written request

Question 127

A compliance officer for a casino may suspect money laundering if an individual:

Options:

A.

invokes reporting requirements through a lump sum payment.

B.

refers to casino associates by their first name.

C.

purchases a low volume of chips with cash and turns them in for a casino check.

D.

requests to have winnings transferred to a bank account of a third party.

Question 128

Which primary international authoritative body designates sanctions?

Options:

A.

Organization of Economic Co-operation and Development (OECD)

B.

Financial Action Task Force (FATF)

C.

International Monetary Fund (IMF)

D.

United Nations (UN)

Question 129

Which response represents a high-level principle for FATF-Style Regional Bodies (FSRB)?

Options:

A.

Membership, mission, financial procedures, and budget

B.

Dependent with different experiences to strengthen the overall effort

C.

Access to documents and assistance with meetings

D.

Reciprocity for effective participation and recognition of work

Question 130

The local manager of a remote mortgage origination department of a financial institution has just discovered that sanctions screening of new customers is not being performed.

Which action should the local manager take in this situation?

Options:

A.

Start screening new customers

B.

Immediately inform the regulators

C.

Immediately inform senior management

D.

Do nothing because the department only handles a very small number of mortgages

Question 131

Which are the two most common controls a financial institution (FI) uses to identify suspicious money-laundering activity? (Choose two.)

Options:

A.

Sanctions screening

B.

Adverse media information

C.

Governmental subpoena

D.

Search warrant

E.

Transaction monitoring rules

Question 132

What are three factors a financial institution should examine with regard to a new customer who is opening up a new account? Choose 3 answers

Options:

A.

The country or location where the customer is from or does business

B.

The type and size of the business the customer runs

C.

The legal structure of the customer’s business

D.

The previous financial institutions where the customer has banked

Question 133

An anti-money laundering analyst is reviewing a new customer list to confirm potentially high risk customers have been identified and subject to enhanced due diligence.

Which new customer warrants enhanced due diligence?

Options:

A.

A non-profit hospital

B.

A fundraising organization

C.

An employee benefit plan trust

D.

A medical practice limited partnership

Question 134

One key aspect of promoting an enterprise-wide compliance culture within a financial institution (FI) is that the:

Options:

A.

first line of defense should establish its own policies independently.

B.

revenue generating business sectors should have precedence over compliance.

C.

relevant information should be shared throughout the organization.

D.

cost of compliance should increase proportionately to revenues.

Question 135

What poses the greatest money laundering risk for a financial institution offering on-line services to customers?

Options:

A.

There is a greater difficulty in matching the customer with the provided identification documentation

B.

There is a lack of human review of the customer’s transactions

C.

Institutions offering on-line services have no possibility to properly verify the identity of their customers

D.

Customers have direct access to their accounts without being detected

Question 136

To ensure that an institution’s anti-money laundering program is current, which step should be taken?

Options:

A.

The program should be evaluated and updated at least every six months be the Board of Directors

B.

The program should be reviews by a federal law enforcement officer for gaps in controls

C.

The program should be sent to the institution’s government regulator on a periodic basis

D.

The program should be reassessed at least annually

Question 137

How can a ‘free-look provision’ as part of a life insurance policy help criminals to launder money?

Options:

A.

A policy owner can decide how to pay the premium within a pre-defined period.

B.

A policy owner is able to terminate the contract without penalties such as surrender charges.

C.

A policy owner has freedom to decide who the beneficiary of the policy will be and can in this way move money to a related third party.

D.

A policy owner has freedom to decide who the beneficiary of the policy will be and can in this way move money to an unrelated third party.

Question 138

A remittance company received a money order from a senior political figure m the Philippines to transfer a large sum of money to a charity group in the Philippines. A review of the charity group revealed a director having dose ties with a known terrorist group primarily financed through kidnapping and extortion.

What is a key risk indicator associated with terrorism financing?

Options:

A.

The sender is a Political Exposed Person (PEP) and should be subject to enhanced due diligence

B.

A large sum sent by money order to a charity

C.

There is no risk relating of terrorism financing when the charity group is operating legitimately in that country

D.

There is a link between the charity group and a known terrorist group

Question 139

A profitable commercial customer who operates an import-export business has multiple accounts with the same institution at branches m different locations. The customer receives funds from a jurisdiction perceived as highly corrupt according to Transparency International ratings. The customer makes frequent transfers among the accounts and prefers to manage the accounts separately. What should the institution do to mitigate the risk associated with these accounts?

Options:

A.

File a suspicious transaction report

B.

Diminish the importance of the subjective Transparency International rating

C.

Conduct a trade-price manipulation analysis

D.

Develop a system to monitor all the activity

Question 140

Which action should financial institutions with cross border correspondent banking activity be required to perform according to the Financial Action Task Force 40 Recommendations?

Options:

A.

Gather a list of their politically exposed customers

B.

Identify natural persons who own or control more than 5%

C.

Obtain senior management approval before establishing the relationship

D.

Obtain a third party independent review of the respondent’s anti-money laundering program

Question 141

A financial institution (FI) is being investigated for possible money laundering. When cooperating with law enforcement agencies, which additional steps should the FI ensure are taken? (Choose two.)

Options:

A.

Centralized control is maintained over all requests and responses to ensure completeness and timely responses.

B.

Make employees, including corporate officers, unavailable for interviews and refuse documents upon receipt of a subpoena.

C.

Subpoenas and other information requests should be reviewed by senior management and an investigations group or counsel.

D.

Address the document destruction policy to ensure the relevant documents are destroyed.

E.

Inquiries from the media are not answered directly, but rather are addressed by replying, "No comment."

Question 142

What should an effective anti-money laundering training program include?

Options:

A.

Computer-based modules titles differently for each job description in the bank

B.

Random testing of employees to ensure proper understanding of policies

C.

Real-life money laundering examples

D.

Lists of anti-money laundering regulations

Question 143

Who has the day-to-day responsibility of communicating and reinforcing the established anti-money laundering compliance culture and program?

Options:

A.

Business lines

B.

Senior management

C.

Board of directors

D.

Compliance officer

Question 144

A client who owns a swimming pool company requests to open 19 accounts at a bank, each with a debit card for its swimming pool technicians. When asked about the purpose of each account, the client explains that each technician needs a separate checking account to purchase pool chemicals.

Which available source could be used in the bank’s internal investigation on this client’s activities?

Options:

A.

Client’s credit bureau report

B.

Local law enforcement investigation report

C.

Interview swimming pool technicians and chemical suppliers

D.

Internet search showing how such business are typically operated

Question 145

In addition to monitoring for suspicious activity, what are electronic monitoring systems also valuable for?

Options:

A.

Identifying how customers are using products

B.

Highlighting the skills of the system analysts

C.

Proving to the Board of Directors that the FIU is doing its job

D.

Meeting mandatory regulatory requirements for system implementation

Question 146

The new compliance officer has reviewed the bank’s anti-money laundering training program. The program consists of online training for all new employees within 30 days of hire date and annual refresher training to all employees. In addition, there is specialized training for areas that deal with higher risk products and customers.

Over the last year, there have been no regulatory changes and no new products or services have been introduced. The compliance officer wants to propose to the board of directors that the annual refresher training is still current and can be delivered unchanged to all employees.

Which two critical pieces of information could be missed by taking this approach? (Choose two.)

Options:

A.

Any new trends, developments, or risks

B.

Results of the previous year’s risk assessment

C.

Changes to internal policies, procedures, and processes

D.

Links to enforcement actions identifying violations in other financial institutions

Question 147

A bank receives a wire transfer that references the sale of equipment to a sanctioned company. The bank's operations team removes the sanctioned company reference and allows the wire transfer to process. This is a description of what type of activity?

Options:

A.

U-turn payment

B.

Cover payment misuse

C.

Layering

D.

Wire stripping

Question 148

What are three indicators of money laundering associated with using electronic funds transfers? Choose 3 answers

Options:

A.

Funds transfers to or from a financial secrecy haven without an apparent business reason

B.

Regular and frequent transfers from the account of a large company said to be payment for goods bought on credit

C.

Funds transfers are received or sent from the same person to or from different accounts

D.

Payment or receipts with no apparent link to legitimate contracts, goods or services

Question 149

Which measure to mitigate risk does the Basel Committee’s Customer Due Diligence Principles suggest banks apply when accepting business from non-face-to-face customers?

Options:

A.

Certification of documents presented

B.

Requiring an in person interview with the customer

C.

Imposing a limit on permissible account activity for a defined period of time

D.

Requiring additional review of account opening documents by senior management

Question 150

Enhanced due diligence (EDD) may be bypassed for which situation?

Options:

A.

On-boarding a branch or majority-owned subsidiary of an EU or US FI located in a high-risk third country that fully complies with group-wide policies and procedures.

B.

On-boarding a subsidiary in a high-risk country with a complex ownership structure of a long-standing and reputable customer based in the EU or US.

C.

On-boarding a casino headquartered in the EU or US that is part of an international hotel chain, provides less than 50% of overall revenue and that fully complies with group-wide policies and procedures.

D.

On-boarding a reputable Politically Exposed Person (PEP) from the EU onto the wealth management arm of a US financial institution (FI).

Question 151

A new AML Officer for a US-based money service business (MSB) is drafting procedures around types of activity that require further review. Which should be included? (Choose two.)

Options:

A.

A customer visiting multiple branches of the MSB on the same day in order to transfer funds internationally.

B.

A customer buying several money orders totaling over $10,000 USD using debit card on the same day using government-issued identification.

C.

A customer sending funds to a family member living in a high-risk jurisdiction that is subject to civil unrest.

D.

A customer buying multiple money orders for $250 totaling $2,000 USD.

E.

A customer attempting to buy money orders under $3,000 USD in cash multiple times a day.

Question 152

Financial Intelligence Units (FIUs) are responsible for:

Options:

A.

the timely dissemination of cases to law enforcement agencies.

B.

responding to requests from law enforcement agencies for information contained in regulatory reports.

C.

sharing evidence with other FIUs.

D.

receiving confirmed reports about committed crimes from accountable and reporting institutions.

Question 153

A company service provider in Country A sets up a corporate structure for a client from Country B, which is known for corruption. The corporate structure includes a holding company in Country A with a bank account in one of the international banks located there.

During on-boarding, the client's wealth was estimated at $7 million. Shortly thereafter, the client's father became president of Country B. During a routine client review two years later, it was identified that client's wealth had grown to $510 million.

What are two red flags that indicate money laundering or financial terrorism? (Choose two.)

Options:

A.

The client is from a country known for corruption.

B.

The substantial growth in wealth during a short period of time.

C.

The client is a family member of a PEP from a country known for corruption.

D.

The holding company is in Country A with a bank account in one of the international banks.

Question 154

Which three areas do FATF’s 40 recommendations cover? Choose 3 answers

Options:

A.

International Cooperation

B.

Prescriptive sentences for predicate offenses

C.

Financial systems and their regulation

D.

The criminal justice system

Question 155

Which statement is true about when an institute becomes aware that a particular employee is under investigation by law enforcement as a result of a subpoena or warrant?

Options:

A.

Under no circumstances can the employee be interviewed by the institution without the consent of law enforcement for fear of tipping the employee off

B.

If an independent investigation provides grounds to interview the employee, they can be interviewed and, if necessary, terminated buy not advised that they are under investigation

C.

The employee can and should be interviewed, as well as notified of the investigation to demonstrate the seriousness of the offence and to get the employee’s full attention and cooperation

D.

The institute has a duty as an employer to inform the employee he or she is under investigation by law enforcement, buy must not inform them that a warrant or subpoena has been received

Question 156

A benefit of using bearer shares in corporate formations is that bearer shares are:

Options:

A.

widely accepted in the financial world.

B.

entered in the register of owners.

C.

associated with lower costs in setting up a company.

D.

easily transferred so the holder claims ownership.

Question 157

A financial institution has expanded its scope of services so that it is attracting the business of politically exposed persons (PEPs) who had previously never been part of the customer base.

Which two courses of action should the compliance officer include in the institution’s procedures for considering PEPs as customers? (Choose two.)

Options:

A.

Conduct enhanced ongoing monitoring of the business relationship

B.

Expedite due diligence when a PEP is pre-approved by a member of senior management

C.

Obtain appropriate senior management approval for establishing a business relationship with a PEP from a high risk country

D.

Take adequate measures to establish the source of wealth and source of funds which are involved in the business relationship or occasional transaction

Question 158

Which step should be taken to understand the types of financial institutions to whom the services are being offered when a correspondent bank permits “nested” relationships according to the Wolfsberg Group?

Options:

A.

Review peer-group clients by risk category

B.

Understand the type and volume of accounts serviced

C.

Evaluate the distribution of downstream correspondents and identify any direct or indirect issues

D.

Obtain independent audits or examination reports for “nested” relationships to determine risk levels

Question 159

Bank A is located in Country A. A wire transfer from Bank B located in Country B is processes by Bank A, where the funds are being moved to a customer at Bank C located in Country C. The wire transfer is deemed suspicious by Bank A.

Who should Bank A file a suspicious transaction report on?

Options:

A.

The transaction in Country A

B.

Bank B in Country A

C.

The transaction in Country B

D.

Bank C in Country C

Question 160

A quarterly review is conducted on a retail customers account at a bank located in a jurisdiction with currency reporting thresholds. A number of large deposits of financial instruments drawn on other institutions in amounts under thresholds were noted. This activity did not fit the accounts historical profile. A suspicious transaction report will most likely be filed if what also occurred?

Options:

A.

The customer has defaulted on a large loan with the bank

B.

The deposited financial instruments were sequentially numbered

C.

Four deposits were made during this period that exceeded the thresholds

D.

The customer purchased financial instruments exceeding the threshold on three occasions

Question 161

When providing reporting of STRs to the board, which of the following should be provided?

Options:

A.

A numerical summary of all the STRs

B.

A numerical summary of all the STRs and a summary of key STRs, including PEPs, key employees

C.

A summary of all key STRs, including PEPs and key employees

D.

All the STRs filed with the national FIU

Question 162

A foreign bank maintains a correspondent account in the US. According to an investigation carried out by US authorities, the specific correspondent account seems to have facilitated a transaction involving tainted funds. Which allows the US authorities to seize the funds of the foreign bank held with the US bank?

Options:

A.

The FinCEN CDD Final Rule

B.

The 6th EU AML Directive

C.

Regulations of the OFAC, US Department of Treasury

D.

The USA PATRIOT Act

Question 163

Which statement about a multinational institution’s ability to fully investigate unusual activity in all its foreign operations is correct?

Options:

A.

Local privacy and data protection laws may prevent an affiliate from sharing information.

B.

Certain account documents may be stored only in local language which will prohibit a global assessment.

C.

The institution should consult with the customer and request permission to conduct a full investigation into all the accounts.

D.

Enterprise-wide compliance oversight rules issued in the global institution’s headquarters country will override any local limitations in other countries.

Question 164

Which statement identifies one of the duties of a government Financial Intelligence Unit?

Options:

A.

It serves as the central agency for the receipt of disclosures filed by reporting entities.

B.

It administers and enforces economic and trade sanctions based on a government’s foreign policy and national security goals.

C.

It supervises and regulates banking institutions to ensure the safety and soundness of the nation’s banking and financial system.

D.

It prosecutes suspected money launderers and terrorist financiers based on financial institution suspicious transaction report filings.

Question 165

A bank maintains a number of United States (U.S.) dollar correspondent accounts for foreign financial institutions. Upon a routine review of a U.S. dollar correspondent account owned by Foreign Bank A, a number of transactions appear to have been originated by Foreign Bank B outside the expected activity for this account. These transactions appear suspicious and a suspicious transaction report was filed by the compliance officer.

Which step should the compliance officer take?

Options:

A.

File a report with the appropriate tax authorities in the jurisdictions of Foreign Bank A and Foreign Bank B

B.

Notify senior management of the money laundering risks by allowing Foreign Bank A to maintain its U.S. dollar correspondent account

C.

Notify Foreign Bank A of the discovery and seek documentation supporting Foreign Bank A was collusive and a willing partner with Foreign Bank B in the activity

D.

Notify other U.S. financial institutions who maintain U.S. dollar correspondent accounts for Foreign Bank A and Foreign Bank B in an effort to shut down the activity

Question 166

A precious metals dealer opens a new account with a bank. Which requires a referral to AML Investigations for further review?

Options:

A.

International outgoing wires to diamond dealers that are part of the diamond pipeline.

B.

Payments received on the account reference unknown companies in the instructions.

C.

International incoming payments from foreign companies in which the precious metals dealer has an established relationship.

D.

Multiple daily point of sale transactions from third parties that appear to be individuals.

Question 167

A compliance officer is conducting a review of the automated transaction monitoring system. What would be most likely to result in a change in the monitoring system parameters?

Options:

A.

The local paper runs stories that sully the institution’s reputation in the marketplace

B.

Law enforcement issues a subpoena for a particular customer’s account records

C.

The national Financial intelligence Unit issues new risk indicators

D.

The institution’s creditworthiness thresholds change

Question 168

Which activity would require an update to the first line training program?

Options:

A.

The implementation of a new system that provides information for monitoring customer accounts.

B.

The expansion to customer segments that will utilize newly established products.

C.

The maintenance of regulatory requirements for onboarding documentation collections of a customer base.

D.

The onboarding of a new customer type which was previously reviewed and risk rated.

Question 169

An auction house dealing in fine art and antiques sells a well-known painting at a price of $12 million to an agent bidding for a group of local investors. The same painting sold ten years prior at auction for $5 million. The auction house receives payment for the painting via wire transfer from an account maintained in an offshore jurisdiction by the investor group. No beneficial ownership information is available for the account.

What are the two money laundering red flags? (Choose two.)

Options:

A.

The payment is received via wire transfer.

B.

An agent bids on the painting for a group of investors.

C.

The painting has more than doubled its value in ten years.

D.

Payment is received from an account in an offshore jurisdiction.

E.

Lack of beneficial ownership details for the originating account.

Question 170

A compliance officer is tasked with implementing an enterprise-wide anti-money laundering program for a bank, which operates in multiple countries. Not all the bank products and services are available in all countries.

Which three factors should be considered as part of the approach? (Choose three.)

Options:

A.

The types of customers serviced by the bank

B.

The customer onboarding platform that will be used

C.

The extent of anti-money laundering regulations in the various countries

D.

The anti-money laundering risk posed by the products and services offered by the bank

E.

The amount of resources needed to implement the anti-money laundering program in the countries

Question 171

Which situation is the highest risk for money laundering and terrorist financing activity?

Options:

A.

A customer purchases casino chips, using small denomination bank notes, but does not engage in game play before redeeming the chips for a casino check

B.

A customer purchases casino chips and engages in significant game play before requesting a casino check for the remainder

C.

A customer purchases casino chips using a credit card and engages in minimal game play before redeeming the chips for a casino check

D.

A customer purchases casino chips using credit from an account at an affiliated casino and engages in significant game play before redeeming the chips for a

Question 172

OFAC-issued regulations apply to which entities? (Choose two.)

Options:

A.

Intermediaries transacting with US banks

B.

Foreign banks with US customers

C.

Foreign subsidiaries of US banks

D.

US branches of a foreign bank

E.

Foreign import-export companies

Question 173

A law enforcement agency is reviewing a suspicious transaction report (STR) filed by a financial institution for suspicious activity on a client's account.

Subsequently, the agency requests further information.

Which supporting documentation might the law enforcement agency request from the institution to facilitate its investigation?

Options:

A.

Previously filed STRs on the same customer

B.

Account opening documents and account statements

C.

Copies of promotional materials sent to the customer

D.

A copy of the institution's STR policy and procedures

Question 174

Bank A is a non-United States (U.S.) bank that has $5 million in a correspondent account at a bank in New York City. The Worldwide Terrorist Syndicate (WTS) has $1 million in its account at a non-US branch of Bank A. The U.S. government has initiated forfeiture action against the WTS.

Which potential action can the U.S. take under the USA PATRIOT ACT pursuant to the issuance seizure warrant?

Options:

A.

Seize Bank A’s $5 million correspondent account in the U.S.

B.

Seize WTS’ $1 million account at the non-U.S. branch of Bank A.

C.

Seize $1 million from Bank A’s correspondent account in the U.S.

D.

Seize $5 million from the non-U.S. branch of Bank A where the WTS’ account is located.

Question 175

What are four key elements that a KYC program should contain according to the Basel Committee requirements?

Options:

A.

Customer onboarding, sanction monitoring, customer acceptance, customer due diligence

B.

Customer identification, risk assessment, customer screening, monitoring

C.

Customer onboarding, risk monitoring, customer acceptance, enhanced due diligence

D.

Customer identification, risk management, customer acceptance, monitoring

Question 176

According to the Second European Union Money Laundering Directive, what may knowledge of criminal conduct be inferred from?

Options:

A.

Subjective, factual circumstances

B.

Objective, factual circumstances

C.

Objective, non-factual circumstances

D.

Subjective, non-factual circumstances

Question 177

A comprehensive set of risk-based guidelines for maintaining business relationships is being developed.

Which situation indicates that the institution should terminate the relationship with a client?

Options:

A.

The client does business in countries with active terrorist organizations.

B.

The client conducts international financial transactions exceeding U.S. $500 million.

C.

The client exceeds the criteria of an acceptable risk model created by another institution that is not similar in size and complexity.

D.

The client exceeds the criteria of an acceptable risk model created by the institution and does not perform acceptable remedial actions.

Question 178

What can a compliance officer do in the absence of automated software to conduct U.S. Department of the Treasury Office of Foreign Assets Control (OFAC) sanction screens?

Options:

A.

Rely on a credit report from OFAC

B.

Conduct a key-word search on the Internet

C.

Use the consolidated Sanctions List Search screen on the OFAC website

D.

Obtain up-to-date copies of the OFAC’s Specially Designated Nationals list

Question 179

How should a compliance officer respond to law enforcement agencies' request for information on a customer undergoing an investigation?

Options:

A.

Collaborate with the financial institution's (FI's) designated department to determine the appropriate course of action to comply with the request.

B.

Gather all requested documentation and send via secure email to the requesting authority.

C.

Share details of the investigation with respective colleagues who deal with this customer type on a daily basis.

D.

Freeze account assets and advise the customer that assets will not be released until the investigation has been completed

Question 180

Which element is generally required of all anti-money laundering programs?

Options:

A.

A computer-based suspicious activity monitoring system

B.

A qualified compliance officer to manage the program

C.

Annual in-person AML training for all employees

D.

An enhanced due diligence program for all new customers

Question 181

Which factor should a financial institution (FI) consider prior to sharing customer records within the same jurisdiction?

Options:

A.

The availability of the institution's information sharing practices

B.

The degree to which the collected client data is complete

C.

The locally applicable restrictions regarding the disclosure of client information

D.

The potential different time zones within the same jurisdiction

Question 182

What is an aspect of the USA PATRIOT Act that has extraterritorial reach?

Options:

A.

To strengthen US measures to prevent, detect and prosecute international money laundering and financing of terrorism.

B.

To implement economic and trade sanctions based on US foreign policy.

C.

To mandate stricter money laundering controls across the continent.

D.

To require scrutiny of foreign financial institutions (FIs) and classes of international transactions that are susceptible to criminal abuse.

Question 183

What do the Financial Action Task Force (FATF) mutual evaluations of each member assess?

Options:

A.

The levels of implementation of the FATF Recommendations

B.

The member’s ability to send a representative to the plenary sessions

C.

If the member has a large enough economy to maintain its membership

D.

If the member has made any suggestions for updates to the FATF Recommendations

Question 184

A potential client calls a broker-dealer wishing to purchase securities. The client does not appear to be concerned with any fees associated with the account or price of the securities. Further information provided by the potential client indicates the individual may have relatives working for a company in which the potential client wants to invest. Which type of activity is the potential client attempting to commit?

Options:

A.

Transfer of value to relatives

B.

Usage as a deposit account

C.

Usage of insider information

D.

Transfer funds to a third-party

Question 185

A financial institution accepts new on-line customers. After customers have provided acceptable identification, the institution should next

Options:

A.

Confirm the validity of the customer information.

B.

Obtain an electronic picture of each customer.

C.

Closely monitor the account for 30 days.

D.

Establish the account based on the information provided.

Question 186

Which of the following activities is most likely associated with a lawyer participating in a money laundering scheme?

Options:

A.

Frequently travels to countries considered tax havens.

B.

Engages clients with high-net worth in foreign countries.

C.

Represents persons accused of crimes against financial institutions.

D.

Creates corporate entities to disguise true beneficial ownership of clients.

Question 187

A foreign bank's compliance officer receives a request for information from a US bank, alerting the foreign bank to the possibility that it may have transferred funds on behalf of an Office of Foreign Assets Control (OFAC>-sanctioned person, who holds an account with the foreign bank. Which statements are true with respect to said funds and the information in relation to the transaction under scrutiny? (Select Two.)

Options:

A.

If the funds are seized, then the foreign bank would be within its rights to dispute such seizure.

B.

US authorities have no power (in terms of the USA PATRIOT Act) to sanction the foreign bank for transferring funds on behalf of an OFAC-sanctioned entity.

C.

The USA PATRIOT Act authorizes the Secretary of the Treasury or the Attorney General to subpoena records from the foreign bank that maintains a correspondent account with a US bank,

D.

If a US citizen were part of the foreign bank's Board deliberations where a decision was made to onboard the OFAC-sanctioned entity as a client, then they can be confronted with criminal charges.

E.

US authorities are only permitted to seize the funds transferred by the foreign bank under OFAC sanctions if there is an equivalent sanctions regime of the UN which has been contravened.

Question 188

Which trading pattern may be indicative of money laundering in capital markets?

Options:

A.

Free of payment asset transfer

B.

Remittance of a round dollar amount

C.

Trading on an account

D.

Transacting with multiple counterparties

Question 189

A long-term client of an insurance company makes changes to a policy that require payment of an additional lump sum. The amount payable is high, though within the client's means based on the KYC information collected. The payment is made via a company in another jurisdiction that is known to have lax AML controls. Which indicator of suspicious activity is present?

Options:

A.

The payment was made via a company that appears to be owned and controlled by the client being insured.

B.

The payment was made via a company in a jurisdiction known to have lax AML controls.

C.

A long-term client wants a change to a policy that is already in force.

D.

The additional premium payable appears to be within the client's means based on the KYC information collected.

Question 190

Which are primary purposes of Financial Action Task Force {FATF)-Style Regional Bodies? (Select Two.)

Options:

A.

Acting as a prudential regulatory body for financial institutions

B.

Providing due diligence for foreign correspondent banks

C.

Providing expertise and input in FATF policy-making

D.

Imposing special measures for non-cooperative jurisdictions

E.

Promoting effective implementation of FATF recommendations

Question 191

The Wolfsberg Group has issued a number of documents since its inception aiming to:

Options:

A.

provide a standardized process amongst its bank members for combatting money laundering and terrorist financing in private banking.

B.

prevent money laundering or terrorist financing by establishing consistent regulatory standards across the EU.

C.

provide advice to regulators around the world on the due diligence requirements for politically exposed persons.

D.

provide financial institutions with an industry perspective on effective financial crime risk management.

Question 192

The law enforcement agency (LEA) of a foreign jurisdiction contacts a financial institution (Fl) regarding one of the Fl's clients. The LEA advises that the client is currently wanted for prosecution as a result of a series of human trafficking charges. What should the Fl do? (Select Two.)

Options:

A.

Review the client's activity, determine if suspicious activity exists, and report accordingly.

B.

Advise the LEA that the government needs to be contacted for extradition.

C.

Comply immediately with the foreign jurisdiction and turn over all client information.

D.

Inform local LEA and regulator of the request for awareness.

E.

Close the clients accounts immediately to avoid any undue risk.

Question 193

Which are characteristics of Mutual Legal Assistance Treaties (MLATs)? (Select Three.)

Options:

A.

MLATs are neither public nor binding under international law.

B.

MLATs cannot be used for obtaining banking records from treaty partners.

C.

MLATs do not provide a legal basis for transmitting evidence.

D.

MLATs only involve two countries.

E.

MLATs cooperatively combat crime between countries.

F.

MLATs are useful for gathering evidence and intelligence in a foreign country.

Question 194

Which private banking situation requires due diligence actions to be implemented according to the AML principles of the Wolfsberg group?

Options:

A.

A local wealthy individual wants to become a customer of a local retail bank.

B.

A beneficial owner of an exchange house wants to open an account with the bank.

C.

A wealthy individual from a high-risk country wants to open an account with a private bank.

D.

A new customer asks to set up an exchange house using the bank as the correspondent.

Question 195

Which type of sanctions are likely to be used first in order to avoid escalating violent conflicts and/or proliferation of weapons?

Options:

A.

Asset freeze

B.

Financial prohibitions

C.

Export and import restrictions

D.

Arms and related materials embargo

Question 196

Under the Egmont Group Principles, information exchange among financial intelligence units (FlUs) should be conducted:

Options:

A.

with set limits on the amount of financial and administrative information provided.

B.

only if the status of the foreign FIU is related to law enforcement.

C.

freely, spontaneously, and upon request, on the basis of reciprocity.

D.

without the expectation of reciprocity on how the information will be used.

Question 197

Which test should be included in a bank's Office of Foreign Assets Control sanctions screening audit program?

Options:

A.

Reviewing wire transfer screening processes to ensure that potential name hits are investigated promptly

B.

Looking at copies of suspicious activity reports filed with regulators to ensure completeness

C.

Ensuring that all clients with foreign identification are subject to enhanced due diligence

D.

Examining Human Resources processes for conducting criminal background checks on executives

Question 198

A relationship manager in a bank has had a private banking customer for 10 years. The customer has business accounts and investments and seeks advice on the creation of a company overseas. The relationship manager refers the customer to the commercial banking manager and vouches for the customer. Which of the following risk factors is the most important?

Options:

A.

The proposed offshore jurisdiction is known for its strong privacy laws limiting access to customer information by law enforcement.

B.

The customer does not want to provide more information than when the first account was opened.

C.

The company wants to transfer funds in large, even amounts.

D.

Entities that are to receive funds from this company are located in the same country.

Question 199

Which are red-flag indicators of possible money laundering through online gambling? (Choose two.)

Options:

A.

The player is identified as a Politically Exposed Person (PEP).

B.

The player opens several accounts under the same name using different IP addresses.

C.

The customer uses their credit card to fund an online gambling account.

D.

The player deposits small amounts of funds into their online gambling account.

E.

The customer logs on to the account from multiple countries.

Question 200

Which of the following customer activities poses the highest risk of money laundering?

Options:

A.

Transferring funds to pay for flight training lessons.

B.

Paying a supplier of precious metals at regular quarterly intervals.

C.

Making multiple cash deposits slightly below a required reporting limit.

D.

Conducting business in a country that represents a high risk of money laundering.

Question 201

An EU Trust and Company Service Provider (TCSP) analyst notices some unusual activity while looking through a customer's financial statements and detailed general ledger. The customer is in the business of importing and exporting machineries. Which transaction indicator warrants further escalation to the compliance officer?

Options:

A.

Inter-company loans from the holding company to the subsidiary company to finance the shipment of machinery.

B.

The payment of virtual offices services overseas.

C.

The payment of consultancy fees to unrelated companies and service providers established in a foreign jurisdiction.

D.

The payment of company secretarial retainer fees to a foreign company in a tax efficient jurisdiction.

Question 202

Which is a FATF characteristic used to assess a country's effectiveness of its AML regime?

Options:

A.

Funds supporting and proceeding from crime or terrorism are prevented from entering the financial sector.

B.

Legal persons are prevented from misuse for money laundering or terrorist financing.

C.

Supervisors appropriately supervise, monitor, and regulate financial institutions (Fls).

D.

FIs adequately apply preventive measures.

Question 203

Money laundering can cause which consequences for a financial institution? (Select Two.)

Options:

A.

Increases in corporate taxes

B.

Increases in investigation costs and fines

C.

Reduction in number of employees

D.

Reduction or loss of profitable business

E.

Increases in correspondent banking facilities

Question 204

Which is the first valid step in the Mutual Legal Assistance Treaties (MLAT) international cooperation process?

Options:

A.

The central authority that receives the request sends it to a local judicial officer to find out if the information is available.

B.

The central authority of the requesting country sends a commission letter of request to the central authority of the other country.

C.

The investigator may remove the evidence collected without asking permission to do so.

D.

An investigator from the requesting country visits the country where the information is sought and takes statements from the identified witnesses or suspects.

Question 205

A customer runs an export business for agricultural products. There has been steady growth over the years from sales to the Caribbean region. A sudden increase is noted in this customer's account balances during the last month.

On what grounds should an anti-money laundering specialist prepare a suspicious transaction report?

Options:

A.

The increased activity is due to money order deposits.

B.

Wire transfers are coming from a Financial Action Task Force member country.

C.

The client changed his address without advising the institution.

D.

Travelers checks (cheques) were purchased for trips to a Non-Cooperative Countries and Territories.

Question 206

What is a primary responsibility of a financial intelligence unit?

Options:

A.

Provide expertise to Egmont working groups including the development of new techniques to launder money.

B.

Publish suspicious activity reports so that entities subject to money laundering obligations are aware of the identities of criminals.

C.

Act as an intermediary between the entities subject to money laundering obligations and law enforcement agencies.

D.

Legislate regulations that enhance the effectiveness of AML and sanctions compliance.

Question 207

Which information should be gathered as part of enhanced due diligence (EDD) for a high-risk customer?

Options:

A.

Explanations for changes in marital status

B.

Details on individuals with control over the account

C.

Plans for traveling in business trips

D.

Personal references

Question 208

A financial institution opens a mortgage loan for a customer. During a subsequent internal review of the loan, it was noted that the appraisal used to support the loan was performed by an appraiser who was not on the institution's approved appraiser list. This exception was approved by the senior loan underwriter. The reviewer, who had examined other loans from the same general area, noted that the value on the loan appeared significantly higher than on other comparable properties. Which of the following should the anti-money laundering specialist recommend next?

Options:

A.

Determine whether the loan underwriter reviewed the appraiser's license for validity.

B.

Alert local law enforcement regarding a potential collusive relationship between the un-derwriter and appraiser.

C.

Document the underwriter's actions prior to filing a suspicious transaction report.

D.

Train the appraiser on anti-money laundering compliance for high-end real estate loans.

Question 209

The most important anti-money laundering issue associated with on-line banking is accurately

Options:

A.

Capturing data

B.

Analyzing data

C.

Identifying clients

D.

Generating reports

Question 210

Which are the requirements of the Filth AML Directive of the EU? {Select Two.)

Options:

A.

Promoting the record keeping obligations of banks to the maximum amount of data necessary for the purposes of AML investigations

B.

Broadening the criteria for assessing high-risk third countries

C.

Extending AML rules to entities that provide virtual currency services

D.

Developing a variant approach m the strategy for the treatment of organized crime and terrorism threats

E.

Providing information access to financial intelligence units according to the differences in the nature of their functions, competences, and powers

Question 211

Which reputations risk consequence could a financial entity face for violating AML laws?

Options:

A.

Loss of high-profile customers

B.

Seizure of assets

C.

Increased audit costs to monitor behavior

D.

Monetary penalties

Question 212

Why should a financial institution (Fl) require an update of its AML risk assessment?

Options:

A.

To identify risk considerations for sharing information based on Fl changes

B.

To ensure an accurate reflection of the Fl's money laundering and other illicit financial activity risks

C.

To satisfy law enforcement when reporting suspicious activity

D.

To ensure the Fl's alignment with the board-approved strategic plan

Question 213

A US casino customer has won 55,518 USD. The customer goes to the casino cashier cage to execute some transactions. Which ^transactions are an indicator of money laundering? (Select Two.)

Options:

A.

The customer transfers 100.000 USD to another personal bank account located outside the customer's resident country,

B.

The customer requests the cashing out of the winnings in checks under 10.000 USD.

C.

The customer transfers all the winnings to another personal bank account located outside the customer's resident country.

D.

The customer requests the cashing out of the winnings in a single check.

E.

The customer transfers 50.000 USD to another personal bank account located in the customer's resident country.

Question 214

Which type of sanctions are most likely to be used in order to avoid escalating violent conflicts and/or proliferation of weapons?

Options:

A.

Financial prohibitions

B.

Export and import restrictions

C.

Arms and related materials embargo

D.

Asset freeze

Question 215

Which principles of the Egmont Group of Financial Intelligence Units (Fills) are aimed at maximizing cooperation between FlUs to more effectively combat money laundering? (Select Two.)

Options:

A.

Eliminating spontaneous information sharing between FlUs to reduce the burden of excess investigative work.

B.

Information exchange should take place informally, without too many formal prerequisites.

C.

FIU cooperation should always be channeled through designated intermediaries.

D.

Formal Egmont Group membership requirements ensure a high commitment of the eligible FlUs.

E.

It is within an FlU's authority to sign Memorandums of Understanding independently.

Question 216

A financial institution in a jurisdiction with currency reporting thresholds is undergoing a branch office compliance review. A large number of currency transactions in amounts exceeding a reporting threshold were discovered without a currency transaction report (CTR) being filed. The transactions were handled by the same teller (cashier). This teller (cashier) was recently hired and had not received anti-money laundering training yet. The branch manager received daily exception reports of all large currency transactions as well as a report of all CTR filings. Which of the following should the compliance officer recommend as the initial action?

Options:

A.

Terminate the teller's (cashier's) employment prior to the expiration of the probation peri-od.

B.

An audit should be conducted for cash transactions since the last compliance review.

C.

The branch manager should be formally reprimanded for failing to ensure proper instruc-tion was given.

D.

The teller's (cashier's) employment should be suspended with pay pending appropriate training.

Question 217

A compliance officer of a financial institution is reviewing a payment for sanctions compliance between two parties in Europe and Asia. The payment is in Euros and involves the provision of services to a company located in a jurisdiction subject to Office of Foreign Assets Control secondary sanctions. Which factor is most important in determining the compliance officer's response?

Options:

A.

Asset freezes only prohibit US companies from engaging in certain activities with counterparts from a sanctioned jurisdiction.

B.

A one-off commercial transaction conducted between parties in Europe and Asia is not subject to secondary sanctions.

C.

The threat of US sanctions against foreign individuals and entities continues to exist despite the absence of a US nexus.

D.

Secondary sanctions only target specific sectors of the economy such as the banking and finance sectors.

Question 218

An account officer who maintains an excellent relationship with the finance manager for a correspondent bank customer learns that many records for the correspondent bank have been requested by law enforcement. In the interest of maintaining a good relationship with the customer, the account officer sets up a meeting to discuss the legal request with the customer. The account officer intends to discuss points related to the investigation during this meeting. Which of the following should an anti-money laundering specialist recommend?

Options:

A.

Discuss all the points being investigated by law enforcement to ensure the correspondent bank is well prepared when approached.

B.

Let his manager know what conversations have taken place with the customer and docu-ment the account file accordingly.

C.

Limit discussions about the investigation with the customer and be satisfied that he has provided proper notice to the customer.

D.

The meeting should be cancelled as he has already behaved inappropriately by alerting the customer to the investigation.

Question 219

Based on studies executed by the Organization for Economic Cooperation and Development (OECD), which occupations are particularly vulnerable to the use of false identities and identity theft?

Options:

A.

Government officers

B.

Sea port officers

C.

Lawyers

D.

Laborers

Question 220

A large cash deposit most likely reflects money laundering when it is

1. from a customer who has never conducted a transaction in cash before.

2. transacted in segments smaller than the reporting thresholds at various times during the day.

3. followed by an immediate wire transfer to an offshore secrecy haven.

4. by a customer who operates a cash-based business.

Options:

A.

1, 2, and 3 only

B.

l, 2, and 4 only

C.

1, 3, and 4 only

D.

2, 3, and 4 only

Question 221

Potential indicators of money laundering associated with Trust and Company Service Providers include: (Select Two.)

Options:

A.

use of legal persons in jurisdictions with strict secrecy laws.

B.

structuring cash deposits into third party accounts.

C.

multi-jurisdictional wire transfers with no legal purpose.

D.

generation of rental income to legitimize illicit funds.

E.

frequent deposits to or withdrawals from bank accounts.

Question 222

Which of the following is considered a shell bank as defined by the USA PATRIOT Act?

Options:

A.

A bank incorporated in an offshore jurisdiction without a physical presence or employees.

B.

An Internet bank operating in the U.S. providing services worldwide.

C.

A local bank with offices in a non-cooperative jurisdiction which is subject to minimal regulatory supervision.

D.

A bank run by a foreign holding company with offices and staff in an offshore jurisdic-tion.

Question 223

The recommended way lot a financial institution to respond to a request from a law enforcement agency is to:

Options:

A.

train all staff to enable them to respond to subpoenas.

B.

hand over documents that are protected by attorney-client privilege

C.

freeze the identified account immediately

D.

have an audit trail system to produce requested documentation

Question 224

According to the Basel Committee's principles on customer due diligence, a bank should:

Options:

A.

maintain systems to detect suspicious transactions based on a customer's velocity and volume patterns.

B.

refuse to conduct ongoing business with a customer who fails to provide proper identification documentation.

C.

obtain the information to establish the identity of a customer, beneficial owners, and any person acting on behalf of the customer,

D.

file a suspicious activity report when there is reason to believe the bank is being used for criminal activity.

Question 225

Which constitute red flags in connection with a company involved in illegal logging? (Select Three.)

Options:

A.

Business registry activities state promotion of environmental protection

B.

High number of transactions through company's connected bank accounts

C.

Paper packaging demand production

D.

Expeditious shipment of wood to far away jurisdictions

E.

Use of heavy machinery in non-protected areas

F.

Executive's association with politically exposed persons

Question 226

The most effective tool used to detect structured transactions is

Options:

A.

Verification of the source of funds.

B.

A comprehensive account-opening procedure.

C.

An employee training program to detect suspicious transactions.

D.

A software program that can link apparently unrelated transactions.

Question 227

Which are red flags indicating potential engagement of a bank employee in money laundering? (Select Two.)

Options:

A.

Lavish lifestyle that cannot be supported by an employee's salary

B.

Reluctance to take a vacation when the employee has sufficient leave

C.

Failure to meet business goals for more than one period

D.

Providing longer than usual services for a certain customer

E.

Maintaining friendships with customers and going to restaurants, games, and other events

Question 228

Once a financial institution has reported suspicious transactions on a valued customer, it should cooperate with competent authorities by

Options:

A.

Maintaining adequate written documentation of all individuals and transactions reported.

B.

Hinting to the customer that she should come in and explain her behavior.

C.

Submitting information upon receiving a legal request from parties involved in a civil law-suit.

D.

Providing the supporting documentation to competent authorities upon request.

Question 229

A new business opened an account at a bank. After a month of activity, the account is referred to AML Investigations for potential human trafficking activity. Which red flags most likely triggered the referral? (Select Two.)

Options:

A.

Trade in large volumes conducted with countries that are part of the diamond pipeline

B.

Several cash deposits along the country's border that are quickly withdrawn by third parties _ Multiple purchases of virtual currency at or just below the reporting threshold

C.

Several lodging and food payments made on the same day at unusual hours for a business

D.

Conducting the businesses transactions online without visiting a branch

Question 230

When using virtual assets such as Bitcoin to finance terrorism, which tactic may be used to ensure that the virtual assets are not easily seized by law enforcement?

Options:

A.

Using self-hosted wallets to create many different donation addresses that are updated continuously

B.

Posting donation addresses that are linked to accounts at centralized virtual asset service providers

C.

Using the same donation address across multiple donation campaigns and media types

D.

Forming relationships with virtual asset service providers that have strong KYC processes in place to avoid suspicion

Question 231

One of the red flags of microstructuring is:

Options:

A.

depositing sequentially numbered checks.

B.

check deposits followed by ATM withdrawals using debt card in retail store.

C.

single activity in an account immediately following the opening of the account.

D.

frequent visits to make cash deposits of nominal amounts.

Question 232

Historically, which of the following vehicles is most often used to hide beneficial ownership?

Options:

A.

an offshore company

B.

a professional association

C.

a limited liability partnership

D.

a charitable organization

Question 233

How should law enforcement obtain documentation from an institution when suspicious activity was identified? (Choose two.)

Options:

A.

Request copies of the relevant documents from the accountable institution.

B.

Pay an employee of the accountable institution to make copies of the documents.

C.

Request a Financial Intelligence Unit (FIU) share copies of suspicious transaction reports.

D.

Request the documents from the FIU.

E.

Acquire a search warrant to obtain the documents.

Question 234

What correspondent banking risk factor increases the risk for a Correspondent Bank?

Options:

A.

Multi-national financial institution with global operations

B.

Offers international funds transfer to customers

C.

Major service provider to money service businesses

D.

Limited product offering to customers in high-risk jurisdictions

Question 235

A company service provider in Country A sets up a corporate structure for a client from Country B, which is known for corruption. The corporate structure includes a holding company in Country A with a bank account in one of the international banks located there. During on-boarding, the client's wealth was estimated at 7.52 million USD. Shortly thereafter, the client's father became president of Country B During a routine client review two years later, it was identified that the client's wealth had grown to 510 million USD. Which are two red flags that indicate money laundering or financial terrorism? (Select Two.)

Options:

A.

The substantial growth in wealth during a short period of time.

B.

The client is from a country known for corruption.

C.

The client is a family member of a politically exposed person from a country known for corruption.

D.

The holding company is in Country A with a bank account in one of the international banks.

E.

The clients account has not been reviewed for 2 years.

Question 236

What national agency is responsible for analyzing and assessing the information it receives to substantiate possible existence of money laundering or terrorist financing activities?

Options:

A.

The Financial Intelligence Unit (FIU)

B.

FATF

C.

The Basel Committee

D.

The Wolfsberg Group

Question 237

How does the Egmont Group assist financial intelligence unit members to accomplish their goals? (Select Three.)

Options:

A.

Provides support to expand and systematize cooperation related to the reciprocal exchange of information

B.

Fosters better and secure communication through the application of technology

C.

Develops official lists of suspected terrorists on a globally coordinated basis by relevant authorities

D.

Encourages operational autonomy of financial intelligence units

E.

Maintains uniform global formats for funds transfers that assist in the detection of money laundering

F.

Supplies information on the common money laundering tactics used by terrorists and financial supporters of terrorism

Question 238

What reputational risk consequence could a financial entity face for violating AML laws?

Options:

A.

Seizure of assets

B.

Monetary penalties

C.

Increased audit costs to monitor behavior

D.

Loss of high-profile customers

Question 239

A prospective client walks into an accounting firm wanting to incorporate a company. The accountant feels uncomfortable after the meeting. Which two of the accountant's observations warrant escalation to the compliance officer? (Select Two.)

Options:

A.

The prospective client is unable to provide information about the beneficial owners.

B.

The prospective client is able to provide source of funds and source of wealth documents.

C.

The prospective client presents confusing details about the proposed business and has very little knowledge about the proposed business activity.

D.

The principal activities of the proposed company are importing and exporting new furniture.

E.

The prospective client exhibits confidence when speaking to the accountant when providing personal details.

Question 240

According to Basel Committee on Banking Supervision guidelines, which of the following statements best describes the relationship between the internal audit function and compliance?

Options:

A.

The internal audit methodology should include an assessment of compliance risk.

B.

An internal audit program of adequacy of the bank's compliance function should be es-tablished, but should not include review of transactions.

C.

The compliance function and internal audit function should be combined.

D.

The auditors should not discuss internal audit findings with compliance management to maintain independence.

Question 241

An individual opens an e-account in an off-shore gambling website using non-documentary verification and creates an e-wallet on a mobile device. In order to add funds to the account, the individual uses a credit card, wire transfers, cryptocurrency, and a money service business. Which source of money represents more risk of money laundering?

Options:

A.

Wire transfer

B.

Cryptocurrency

C.

Money service business

D.

Credit card

Question 242

Under the Wolfsberg Correspondent Banking Principles, which action is considered an enhanced due diligence obligation to correspondent banking clients that present greater risks?

Options:

A.

Conducting reviews on all high-risk relationships

B.

An evaluation done by the compliance officer in charge of the account

C.

Approval of a high-risk relationship by a senior management committee

D.

Ongoing monitoring of clients located in tax haven countries

Question 243

According to the Basel Committee on Banking Supervision, banks should deal with high-risk customers by:

Options:

A.

maintaining segregated records to enable easy inspection by law enforcement in case of a subpoena.

B.

assigning those customers to specified private bankers for better monitoring of their offshore transactions.

C.

performing enhanced due diligence including enhanced ongoing monitoring of the account activity.

D.

seeking approval from the board of directors before establishing the relationship.

Exam Detail
Vendor: ACAMS
Certification: AML Certification
Exam Code: CAMS
Last Update: Jun 15, 2025
CAMS Question Answers
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