Money Laundering Flashcards
Under the Financial Action Task Force (FATF) Recommendations, which of the following should be subject to requirements for reporting suspicious transactions related to potential money laundering or terrorist financing?
A. Casinos
B. Securities brokers
C. Banks
D. All of the above
D. All of the above
The Financial Action Task Force (FATF) Recommendations advise that countries should require financial institutions to keep certain records and establish anti-money laundering (AML) policies.
A. True
B. False
True
Which of the following is NOT a favorite front business for laundering money?
A. Restaurants
B. Electronics stores
C. Wholesale distribution
D. Vending machines
B. Electronics stores
XYZ Bank has an anti-money laundering (AML) program that provides for internal controls and procedures to prevent money laundering, money laundering awareness training for employees, and a regular independent audit function to test the bank’s procedures. If these are the extent of XYZ’s AML measures, which of the following elements suggested under the Financial Action Task Force (FATF) Recommendations is missing from the AML program?
A. A mandatory thirty-day waiting period before cash deposits can be transferred
B. Reporting of all foreign bank transfers to the government
C. Prohibition of large consumer cash deposits
D. The designation of a compliance officer at the management level
D. The designation of a compliance officer at the management level
Which of the following documents is significant to the international money laundering control effort?
A. The Financial Action Task Force Recommendations
B. Model Money Laundering Crime Control Act
C. The Swiss Convention
D. The Hague Convention
A. The Financial Action Task Force Recommendations
Both Country A and Country B follow the Financial Action Task Force (FATF) Recommendations concerning cross-border transfers of currency. Jessica is about to travel from Country A to Country B while carrying $17,000 in cash, which exceeds Country A’s reporting threshold for cross-border currency transfers. Will Jessica be required to disclose to Country A the amount of currency she is carrying?
A. Yes, because she is transferring currency above the reporting threshold out of Country A.
B. No, because she is traveling to Country B, which also requires the disclosure of cross-border currency transportation.
C. Yes, because a disclosure is required for any amount of currency physically transferred out of the country.
D. No, because disclosure is only required for currency going into Country A.
A. Yes, because she is transferring currency above the reporting threshold out of Country A.
In an insurance prepayment scheme, a money launderer purchases life insurance or a similar policy with a redemption provision and redeems the policy with the intent to make the income appear legitimate.
A. True
B. False
False
Of the choices below, which is the proper sequence of cycles in a money laundering process?
A. Placement, bank complicity, and structuring
B. Integration, structuring, and placement
C. Layering, placement, and integration
D. Placement, layering, and integration
D. Placement, layering, and integration
If a subject has purchased several bearer instruments, each for less than the jurisdiction’s threshold for mandatory reports on currency transactions, then this could be an indication of which of the following?
A. Counterfeit checks scheme
B. Structuring scheme
C. Entrapment scheme
D. Forged check scheme
B. Structuring scheme
To launder funds, a consultant reports payments for services that they never actually provided. They then deposit unrelated illicit assets disguised as payments for the fake services. This laundering technique is called overstating revenues.
A. True
B. False
True
Which of the following does NOT accurately reflect the customer due diligence (CDD) procedures for financial institutions under the Financial Action Task Force (FATF) Recommendations?
A. The customer’s identity should be verified through reliable, independent sources.
B. The institution should discover the intended nature of the customer’s account or service.
C. The institution should identify the beneficial owner of the account.
D. The customer’s business relationships and transactions should be checked once to ensure that they are consistent with the customer’s profile.
D. The customer’s business relationships and transactions should be checked once to ensure that they are consistent with the customer’s profile
Structuring is a money laundering scheme where a criminal purchases multiple life insurance contracts and exercises the redemption clauses in each of them.
A. True
B. False
False
Which of the following statements concerning digital currencies, such as bitcoin, is INCORRECT?
A. Digital currencies are appealing to money launderers because they rely on payment systems that are untraceable.
B. Digital currencies generally face regulations that are less strict than regulations for payments made through traditional financial institutions.
C. Money launderers often distribute digital currencies among many addresses or digital wallets to create a series of complex transactions that are difficult to trace.
D. Many jurisdictions require service providers that exchange or otherwise deal with digital currencies to have effective customer identification or recordkeeping practices.
A. Digital currencies are appealing to money launderers because they rely on payment systems that are untraceable.
The Financial Action Task Force (FATF) Recommendations state that countries should require certain organizations to monitor suspicious activity and file a report to disclose known or suspected criminal offenses or transactions that involve money laundering or terrorist financing. Which of the following scenarios would NOT require such a report to be filed under the FATF Recommendations?
A. Money that appears to be proceeds from illegal drug sales is deposited in a bank account.
B. A transaction that appears to involve proceeds of an illegal bribe is conducted through a bank.
C. A customer who is shopping in a jewelry store purchases an expensive ring using cash.
D. A casino customer appears to be depositing cash for money laundering purposes rather than to gamble.
C. A customer who is shopping in a jewelry store purchases an expensive ring using cash.
Bars, restaurants, and nightclubs are favorite businesses through which to launder funds because:
A. Sales are generally in cash.
B. They charge relatively low prices for services.
C. It is easy to match the cost of providing food, liquor, and entertainment with the revenues they produce.
D. All of the above choices are correct.
A. Sales are generally in cash.
Paige, a Certified Fraud Examiner (CFE), is investigating a suspect’s sources of income. Paige notices that funds available to the suspect include the suspect’s interest in a restaurant/bar. Paige has surveilled the establishment several times and notices that the business has very few customers, even during peak times. Yet the income reported from this restaurant/bar is substantial. Of the following list, in which money laundering scheme might the suspect be involved?
A. Bankruptcy scheme
B. Trade-based laundering scheme
C. Alternative remittance system scheme
D. Front business scheme
D. Front business scheme
The stage in which money laundering schemes are MOST OFTEN detected is called:
A. Integration
B. Washing
C. Placement
D. Layering
C. Placement
Assuming a jurisdiction is adhering to the Financial Action Task Force (FATF) Recommendations, if a securities broker suspects that a client might be engaging in transactions to launder money, then the broker is required to report the suspicious transactions.
A. True
B. False
True
