Practice Questions Flashcards
(35 cards)
When can the US government file a civil forfeiture complaint?
A) A defendant contests the forfeiture complaint in court filings and provides proof of legitimate income sources
B) An allegation is made that money or property was involved in or represents the proceeds of a crime
C) An allegation is made that the government has unlawfully seized assets from a non-US person
D) A defendant has plead guilty and admitted to laundering funds from a specified unlawful activity
B) An allegation is made that money or property was involved in or represents the proceeds of a crime
Which three statements are true about the Fourth EU Directive on Money Laundering?
A) It updates European Community legislation to be further in line with the Financial Action Task Force (FATF) 40 Recommendations
B) It repeats the definition of a politically exposed person in previous directives
C) It repeats the customer due diligence requirements of the previous directives but adds more detail to the requirements by, for example, including a specific requirement to identify the beneficial owner and includes ongoing monitoring requirements
D) It includes new definitions for correspondent relationships and senior management
A) It updates European Community legislation to be further in line with the Financial Action Task Force (FATF) 40 Recommendations
C) It repeats the customer due diligence requirements of the previous directives but adds more detail to the requirements by, for example, including a specific requirement to identify the beneficial owner and includes ongoing monitoring requirements
D) It includes new definitions for correspondent relationships and senior management
Which statement is true?
A. Bust-out schemes are popular in creating large bankrupt-cy frauds where businesses secure increasing loans in excess of the actual value of the company or property and then run with the money, leaving the lender to foreclose and take a substantial loss.
B. Cuckoo smurfing is a significant money laundering technique identified by the Financial Action Task Force, where a form of structuring uses nested accounts with shell banks in secrecy havens.
C. In its 40 Recommendations, the FATF issued a list of “designated categories of offense” that asserts crimes for a money laundering prosecution.
D. E-cash is not attractive to the money launderer because it cannot be completely anonymous and does not allow for large amounts to be “transported” quickly and easily.
A. Bust-out schemes are popular in creating large bankruptcy frauds where businesses secure in-creasing loans in excess of the actual value of the company or property and then run with the mon-ey, leaving the lender to foreclose and take a substantial loss.
The FinCen “Advisory to US Financial Institutions on Promoting a Culture of Compliance”, published in 2014, listed six areas of emphasis. Which three areas below are included in that list:
A. Leadership Should Be Engaged.
B. Information Should Be Shared Throughout the Organization.
C. Leadership and Staff Should Understand How Their BSA Reports are Used.
D. The Organization must have an Appropriately Qualified Compliance Officer.
A. Leadership Should Be Engaged.
B. Information Should Be Shared Throughout the Organization.
C. Leadership and Staff Should Understand How Their BSA Reports are Used.
Which of the following should a national legislature consider when criminalizing money laundering in line with the CFATF 19 Recommendations (choose three)?
A. Do not limit the number of specific predicate offenses for money laundering.
B. Criminalize conspiracy or association to engage in money laundering.
C. Indicate whether it is relevant that a predicate offense may have been committed outside the local jurisdiction.
D. Require money laundering offenses to prove that the offender has actual knowledge of a criminal connection to the funds.
B. Criminalize conspiracy or association to engage in money laundering.
C. Indicate whether it is relevant that a predicate offense may have been committed outside the local jurisdiction.
D. Require money laundering offenses to prove that the offender has actual knowledge of a criminal connection to the funds.
Although the Guide says ABC, A is not mentioned anywhere in the source document.
Which three statements are true about the 4th EU Directive on Money Laundering? It:
A. Updates European Community legislation to be further in line with the Financial Action Task Force (FATF) 40 Recommendations.
B. Repeats the definition of a politically exposed person in previous Directives.
C. Repeats the customer due diligence requirements of the previous Directives, but adds more detail to the requirements by, for example, including a specific requirement to identify the beneficial owner and includes ongoing monitoring requirements.
D. Requires firms to apply the customer due diligence requirements to existing customers at appropriate times on a risk sensitive basis.
A. Updates European Community legislation to be further in line with the Financial Action Task Force (FATF) 40 Recommendations.
C. Repeats the customer due diligence requirements of the previous Directives, but adds more detail to the requirements by, for example, including a specific requirement to identify the beneficial owner and includes ongoing monitoring requirements.
D. Requires firms to apply the customer due diligence requirements to existing customers at appropriate times on a risk sensitive basis.
Which one of the following statements is correct in respect of the FATF 40 Recommendations which state that countries should:
A. Not allow bearer shares and legal persons that are able to issue bearer shares.
B. Gather statistics on STRs; prosecutions and convictions; on property frozen, seized and confiscated; and on mutual legal assistance, but not necessarily on other international requests for co- operation.
C. Consider the feasibility of a system where banks and other financial institutions and intermediaries would report currency transactions without indicating a minimum fixed amount.
D. Not approve the establishment or accept the continued operation of shell banks.
D. Not approve the establishment or accept the continued operation of shell banks.
Which of the following statements is true?
A. Credit cards are not likely to be used in the layering phase of money laundering because of restrictions in cash payments.
B. Credit cards are effective instruments for laundering money because the transactions do not create an audit trail.
C. A launderer can launder money by prepaying his credit card using funds that are already in the banking system, creating a credit balance on his account, and requesting a credit refund.
D. A launderer can use illicit funds that are already in the banking system to pay his credit card bill for goods purchased, which is an example of placement.
C. A launderer can launder money by prepaying his credit card using funds that are already in the banking system, creating a credit balance on his account, and requesting a credit refund.
According to the FATF 40 Recommendations, “designated non-financial businesses and professions” include:
A. Casinos, real estate agents and dealers in precious stones.
B. Money service businesses, gatekeepers, and issuers of electronic money.
C. Dealers in precious metals, lawyers, commodity futures traders.
D. Life insurance companies, real estate agents and notaries.
A. Casinos, real estate agents and dealers in precious stones.
Tom works as a compliance officer at ABC Bank. He is looking at the transactions of one of the bank’s customers, Mr. Brown, the owner of a check cashing company. Over the last six months, Mr. Brown has not made withdrawals of cash against check deposits. He also deposited two checks for US$2,000 each that were issued by a casino. When checking the KYC file, Tom sees that, when opening the account, Mr. Brown had requested detailed information about fees and commission that are charged by the bank. What should arouse Tom’s suspicion the most? Mr. Brown:
A. Deposited checks from casinos.
B. Did not make withdrawals of cash against check deposits.
C. Showed uncommon curiosity about commissions and fees charged.
D. Does not have an escrow account.
B. Did not make withdrawals of cash against check deposits.
Which three of the following statements are true?
A. Online gambling provides an excellent method of laundering because transactions are conducted primarily through credit or debit cards and the sites are typically unregulated offshore firms.
B. An institution can know when a credit card is used for online gambling transactions because the cards rely on codes that illustrate the type of transactions.
C. Online gambling provides an excellent method of laundering because it lends itself to any type of cash movement and there is no face-to-face contact with the customer.
D. Some banks no longer allow the use of credit cards for online gambling transactions.
A. Online gambling provides an excellent method of laundering because transactions are conducted primarily through credit or debit cards and the sites are typically unregulated offshore firms.
B. An institution can know when a credit card is used for online gambling transactions because the cards rely on codes that illustrate the type of transactions.
D. Some banks no longer allow the use of credit cards for online gambling transactions.
Identify three key aspects of OFAC sanctions that have extraterritorial reach
A) Restricting travel by U.S. citizens to certain countries
B) Economic and trade sanctions based on U.S. Foreign Policy
C) Freezing foreign assets under U.S. Juristiction
D) Blocking people on the Specially Designated Nationals and Blocked Persons List
B) Economic and trade sanctions based on U.S. Foreign Policy
C) Freezing foreign assets under U.S. Juristiction
D) Blocking people on the Specially Designated Nationals and Blocked Persons List
The Annex IV General Guide to Account Opening Consultative Document published by the Basel Committee lists information that should be obtained for the identification of legal persons. Which three items are recommended?
A) Name, legal form, status and proof of incorporation of the legal person
B) Permanent address of principal place of the legal person’s activitie
C) A report describing a visit by the account officer to the principal place of business
D) Identify natural persons who have the authority to operate the account and who exercise control of the legal person through ownership or other means
A) Name, legal form, status and proof of incorporation of the legal person
B) Permanent address of principal place of the legal person’s activitie
D) Identify natural persons who have the authority to operate the account and who exercise control of the legal person through ownership or other means
The Egmont Group is supported by five working groups. Which three are members of the five working groups?
A) Operational
B) Legal
C) Examination
D) Outreach
A) Operational
B) Legal
D) Outreach
Which is a financial crime risk organizations might incur if they have inadequate controls to identify and mitigate high-risk activities?
A) License forfeiture
B) Fines
C) Personal liability
D) Board of Directors prosecution
A) License forfeiture
What is the Right of Reciprocity in the field of international cooperation against money laundering?
A. The legal principle that financial institutions that have referred customers to other financial
institutions can share information about these customers with the other institutions.
B. A rule of the Basel Committee allowing properly regulated financial institutes of another member
state of the Basel Committee to do business without additional supervision to the degree that the
other state grants the same right.
C. The right of each FATF member country to delegate prosecution of a case of money laundering to
another member that is already investigating the same case.
D. A rule in the law of a country allowing its authorities to cooperate with authorities of other
countries to the degree that their law allows them to do the same.
D. A rule in the law of a country allowing its authorities to cooperate with authorities of other
countries to the degree that their law allows them to do the same.
The FinCen “Advisory to US Financial Institutions on Promoting a Culture of Compliance”, published in
2014, listed six areas of emphasis. Which three areas below are included in that list:
A. Leadership Should Be Engaged.
B. Information Should Be Shared Throughout the Organization.
C. Leadership and Staff Should Understand How Their BSA Reports are Used.
D. The Organization must have an Appropriately Qualified Compliance Officer.
A. Leadership Should Be Engaged.
B. Information Should Be Shared Throughout the Organization.
C. Leadership and Staff Should Understand How Their BSA Reports are Used.
Which of the following should a national legislature consider when criminalizing money laundering in
line with the CFATF 19 Recommendations (choose three)?
A. Do not limit the number of specific predicate offenses for money laundering.
B. Criminalize conspiracy or association to engage in money laundering.
C. Indicate whether it is relevant that a predicate offense may have been committed outside the local
jurisdiction.
D. Require money laundering offenses to prove that the offender has actual knowledge of a criminal
connection to the funds.
B. Criminalize conspiracy or association to engage in money laundering.
C. Indicate whether it is relevant that a predicate offense may have been committed outside the local
jurisdiction.
D. Require money laundering offenses to prove that the offender has actual knowledge of a criminal
connection to the funds.
This answer was false in the Study Guide but was verified with the source document.
Which three statements are true about the 4th EU Directive on Money Laundering? It:
A. Updates European Community legislation to be further in line with the Financial Action Task Force
(FATF) 40 Recommendations.
B. Repeats the definition of a politically exposed person in previous Directives.
C. Repeats the customer due diligence requirements of the previous Directives, but adds more detail
to the requirements by, for example, including a specific requirement to identify the beneficial
owner and includes ongoing monitoring requirements.
D. Requires firms to apply the customer due diligence requirements to existing customers at
appropriate times on a risk sensitive basis.
A. Updates European Community legislation to be further in line with the Financial Action Task Force
(FATF) 40 Recommendations.
C. Repeats the customer due diligence requirements of the previous Directives, but adds more detail
to the requirements by, for example, including a specific requirement to identify the beneficial
owner and includes ongoing monitoring requirements.
D. Requires firms to apply the customer due diligence requirements to existing customers at
appropriate times on a risk sensitive basis.
A financial institution is looking to establish an online account opening service. The institution plans
to offer this product to new and existing customers within the country. Which of the following would
be the best plan of action for an AML specialist to recommend enabling the institution to verify the
customer’s identity?
A. Do not offer the product, as it is too high risk as the customer cannot be seen to verify their identity.
B. Require all customers to send a copy of valid photo identification to the institution.
C. Ensure that the institution has a reliable third party source that will enable verification of the
customer.
D. Allow customers to enter required information, but require all customers to come to the institution
in person for verification.
C. Ensure that the institution has a reliable third party source that will enable verification of the
customer.
Source: p. 64 Old Study Guide
The guidance also stated that the risk of money laundering and terrorist financing in NPMs may be
mitigated when the following are considered: CDD: Corroborating customer information in non face-to-face verification using third party data-bases, but also using open-source information readily available on the internet or social media.
Suzy is an AML compliance officer at an institution that is looking to open treasury management
services (e.g., wires, check clearing, foreign draft issuance) for correspondent banking customers.
Which of the following should Suzy be most concerned about regarding the institution’s capabilities
regarding these customers?
A. Whether the new account systems will be able to handle customers with foreign names.
B. Whether the correspondent accounts will be approved by government regulators.
C. Whether the correspondent accounts will be able to provide evidence of their customers’ identities
at account opening
D. Whether the correspondent accounts will be able to be monitored by the institution’s monitoring
systems.
D. Whether the correspondent accounts will be able to be monitored by the institution’s monitoring
systems.
A financial institution branch manager who has been in place for over ten years has not taken a vacation
for almost four years. The company does not allow employees to roll vacation over from year to year.
An AML compliance officer has noticed unusual activity in several accounts at the branch location.
What should the AML officer do?
A. Insist that the manager take a vacation, as not taking one is a red flag.
B. Report the manager to authorities for engaging in suspicious activity.
C. Determine whether the manager has engaged in transactions in the accounts where the unusual
activity has occurred.
D. Conduct a background check to see if the manager has been convicted of criminal activity.
C. Determine whether the manager has engaged in transactions in the accounts where the unusual
activity has occurred.
A compliance officer is looking to improve a compliance program for a financial institution that
operates in several countries. The institution has developed consistent customer due diligence
(CDD) requirements for all customers of the institution that exceed each of the individual country’s
requirements. When looking to provide management reporting on the CDD compliance efforts of the
institution, which of the following would make most sense?
A. Report by each country’s compliance with the legal requirements within their country.
B. Report on compliance with the company’s stated requirements.
C. Report on compliance with each country’s requirements only for those customers that are
serviced by branches in multiple countries; all others should be reported on the company’s stated
requirements.
D. Report on the level of monitoring performed on the activity in the accounts.
B. Report on compliance with the company’s stated requirements.
When documenting ongoing training efforts, which of the following should be documented to
demonstrate the distribution of the training to appropriate employees?
A. Whether the training was provided to the board of directors.
B. The topics the training addressed.
C. The names and areas of the employees who took the training.
D. Whether the employees who took the training passed the post-training assessment.
C. The names and areas of the employees who took the training.
