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ACAMS CAMS Certified Anti-Money Laundering Specialist (the 6th edition) Exam Practice Test

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Total 811 questions

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

Question 1

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 2

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 3

The branch manager notices that a number of customers come in weekly and always use the same teller to

process their deposits. The manager notices that the customers and the teller, who are from the same ethnic

group, are speaking in a foreign language and every once in a while the customers from local ethnic

restaurants will bring the teller lunch. The commercial customers that visit the teller generally deposit the same

amount of cash each time they come in.

How should the branch manager respond to this activity?

Options:

A.

Transfer the teller to another branch

B.

Conduct further investigation before taking any other action

C.

Encourage the teller to bring in more business from the ethnic community

D.

Suggest to the teller to send the customers to other tellers to avoid the opportunity for collusion

Question 4

Which two statements are true regarding the European Union Money Laundering Directives? (Choose two.)

Options:

A.

They apply to member states of the European Union

B.

They require member states to enact laws and/or regulations to comply with the directives

C.

They set forth non-binding best practices for financial institutions within the member states

D.

They have extraterritorial impact and apply to states that have diplomatic relations with member states

Question 5

A retail bank has just acquired a credit card business. The bank’s anti-money laundering policy requires that

new employees are trained within 30 days of their hire date and refresher training is delivered to all employees

on an annual basis.

Is the bank’s existing anti-money laundering training adequate to be delivered to employee of the newly

acquired credit card business?

Options:

A.

Yes, the existing training covers the bank’s policies, procedures, and processes.

B.

No, anti-money laundering training needs to be delivered face-to-face for credit card businesses.

C.

No, anti-money laundering training needs to be tailored and focused on the risks specific to the business.

D.

Yes, the existing training covers the anti-money laundering regulations that the bank is required to follow.

Question 6

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 7

What is a key risk associated with Correspondent Accounts according to the Basel Customer Due Diligence paper?

Options:

A.

It is not used on a daily basis

B.

The service fees are insufficient to cover the cost of managing the account

C.

The respondent bank’s customer acceptance and know your customer policies are ineffective

D.

The volume and value of transactions passing through the account may not be in line with the originalcorrespondent agreement

Question 8

When an institution receives a document request from law enforcement with regard to an STR that the institution has filed, what should institution do?

Options:

A.

It should turn over the documents that were previously collected to support the STR

B.

It should request a written subpoena or court order before turning over any documents

C.

It should have its outside counsel review the request and the documents before doing anything

D.

It should politely decline to provide the requested documents until the law enforcement agency can explain the nature and purpose of its inquiry

Question 9

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 10

Why do governments and multi-national bodies impose economic sanctions?

Options:

A.

To impede kleptocracy

B.

To enforce foreign policy objectives

C.

To combat an imminent terrorist threat

D.

To prevent fraudulent international trade transactions

Question 11

A bank maintains a relationship with a customer who owns a small bakery business.

Which customer action indicates potential money laundering?

Options:

A.

The customer continually makes regular cash deposits

B.

The customer has multiple bank accounts at several locations

C.

The customer purchased property insurance that is twice the value of the business

D.

The customer recently wired a large amount to a foreign jurisdiction where family is located

Question 12

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 13

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 14

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 15

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 16

An institution has made the decision to exit a client relationship due to anti-money laundering concerns. Prior

to starting the close out process, the institution receives a written request from a law enforcement agency to

keep the account open. The client is the subject of an ongoing investigation and law enforcement wants the

institution to continue to monitor the account and report any suspicious activity.

What is primary consideration the institution should keep in mind when deciding whether to agree to this

request?

Options:

A.

The anticipated cost of complying with the law enforcement request

B.

The number of suspicious transaction reports previously filed on the client

C.

The fact that the institution has a solid record in complying with law enforcement requests

D.

Whether the institution can continue to meet its regulatory obligations with the accounts open

Question 17

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 18

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 19

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 20

Outgoing foreign transactions of similar amounts trigger a monitoring alert for a customer's accounts. During the evaluation of the accounts, the bank discovers the wire transfers were very small amounts and occurred within the last 3 months following a long period of inactivity. The wire transfers appear to originate from legal sources. To assess the potential of terrorist financing, the institution must ensure the

Options:

A.

account holder presents proof the funds are legal.

B.

beneficiaries of transfers are not on a terrorist watch list.

C.

beneficiaries of transfers are not included on the Transparency International List.

D.

account holder does not reside in a country included on the U.S. State Department State Sponsors of Terrorism List.

Question 21

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 22

What must be materially true regarding transactions for United States (U.S.) sanctions laws to have

jurisdiction?

Options:

A.

Transactions are traced to illegal proceeds

B.

Transactions are processed by a U.S. person

C.

Transactions are stripped of beneficial owner information

D.

Transactions are identified as proceeds of foreign corruption

Question 23

A bank receives an anonymous tip from an employee about another employee through its confidential hotline.

Which activity warrants further review?

Options:

A.

A mortgage officer works with home loan applicants to resolve adverse credit issues

B.

An employee in bookkeeping accepts funds transfer requests from customers via telephone

C.

An employee in accounting works with customers to help understand how to reduce service charges

D.

A teller distributes bank brochures to customers who regularly conduct cash transactions below reportinglimits

Question 24

A United States (U.S.) bank was recently alerted by law enforcement of an increase in sale of large denomination U.S. bank notes to casas de cambio. They suspect that a Mexican syndicate is operating a money laundering scheme in the bank’s jurisdiction.

Which two steps should be taken to trace funds through the bank to assist law enforcement in their investigation? (Choose two.)

Options:

A.

Identify the money laundering scheme and submit a suspicious transaction report

B.

Identify if there is a decrease in the sale of large denomination U.S. bank notes to casas de cambio by thebank

C.

Identify deposits by casas de cambio that include third-party items including sequentially numberedmonetary instruments

D.

Identify multiple wire transfers initiated by casas de cambio to jurisdictions outside of Mexico that bear noapparent business relationship with that casa de cambio

Question 25

Which three conduits for moving terrorist-related funds do terrorist financing generally favor? Choose 3 answers

Options:

A.

Banks and/or other formal financial systems

B.

Informal financial systems

C.

Currency exchange firms

D.

Cash couriers

Question 26

Which three stages of money laundering are on-line banking vulnerable to?

Options:

A.

Placement

B.

Layering

C.

Integration

D.

Structuring

Question 27

Which insurance product is particularly vulnerable to money laundering?

Options:

A.

Annuity

B.

Casualty

C.

Collateral

D.

Regulated pension

Question 28

A foreign bank operating under an offshore license wants to open a correspondent account with a United

States (U.S.) bank. The foreign bank plans to provide payable through account services to some of its

customers.

What must the foreign bank provide to the U.S. bank under the USA PATRIOT Act?

Options:

A.

A list of politically exposed persons who are owners of the correspondent bank

B.

A list of account holders at the financial institution who will use the payable through account

C.

The person in the United States who can receive service of legal process for the correspondent bank

D.

A list of anti-money laundering training records for the financial institution employees monitoring payablethrough account transactions

Question 29

The Wolfsberg Anti-Money Laundering Principles for Private Banking require new clients to be approved by

whom?

Options:

A.

The board of directors

B.

Only the private banker

C.

The private banker’s supervisor

D.

At least one person other than the private banker

Question 30

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 31

A close relative of a privately-owned bank's senior manager requests to open an account. Because of this relationship, the staff expedites the opening of the account without following established account-opening procedures. Applying the Basel Committee on Banking Supervision principles, which of the following poses the highest operational risk?

Options:

A.

Failure to conduct proper due diligence.

B.

The possibility of lawsuits that adversely affect the operations of a bank.

C.

The bank's exposure to politically exposed persons.

D.

Not having appropriate information to share with Financial Intelligence Units.

Question 32

A money remittance business will most likely attract money launderers because it

1.deals primarily in cash transactions.

2.engages in international transactions.

3. conducts transactions for walk-in customers.

4.does not have to comply with transaction reporting.

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 33

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 34

Which red flag indicates high potential for money laundering in a real estate purchase?

Options:

A.

The purchaser is a nominee

B.

The purchaser had a previous bankruptcy

C.

The purchaser owns a cash intensive business

D.

The purchaser is not a resident where the property is located

Question 35

When creating an anti-money laundering program for a foreign bank with branches in the United States, which of the following are included among the four minimum elements required under the USA PATRIOT Act?

1. The development of a Know Your Customer program.

2. An ongoing employee training program.

3. The designation of a compliance officer.

4. An independent audit function to test the program.

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 36

According to the European Union Money Laundering Directives, "knowledge, intent or purpose"' required as an element for money laundering may be inferred from

Options:

A.

Objective factual circumstances.

B.

Subjective factual circumstances.

C.

Objective non-factual circumstances.

D.

Subjective non-factual circumstances.

Question 37

A client is a wholesale auto business that operates as a used car lot. The client regularly ships vehicles

internationally. In a four-month period, the client received wires totaling $ 1,250,000 from a dealer in Benin in

West AfricA. All wires originated from Benin and were in increments of $50,000.

Account debits made to the account were payable to various transport companies. All incoming checks

reference various vehicles purchased. Dock shipping receipts produced by the client to support account

activity identify the vehicles but cannot easily be tied to the wires receives.

What is the suspicious behavior?

Options:

A.

The dock shipping receipts match the vehicles

B.

Vehicles are regularly shipped internationally

C.

Wires received are in large, even dollar amounts

D.

Account debits are payable to transport companies

Question 38

A bank compliance officer discovers cash deposit activity inconsistent with the expected and historical cash

activity within the personal accounts of the chairman of the board. The cash activity appears structured to

avoid the local legal filing requirements for large cash transactions, and a suspicious transaction report (STR)

was filed.

How should the compliance officer report the filing of the STR to the board of directors without revealing the

existence of the filing to the subject?

Options:

A.

Inform the legal counsel of the bank

B.

Follow the financial institution’s established STR reporting policy

C.

Notify the financial institution’s regulator to disclose the activity

D.

The compliance officer and the chief executive officer should jointly interview the chairman

Question 39

An AML compliance officer receives notice of government update including the names of the latest terrorists sanctioned by the United Nations Security Council. Which would be the most appropriate step to take?

Options:

A.

Notify the Board of Directors

B.

Update the monitoring software containing sanctioned persons

C.

Inform the customers that their funds will be frozen

D.

Update training information to include the latest names

Question 40

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 41

Which action indicates possible Penza scheme activity?

Options:

A.

A licensed seller offers higher profit on investments in a high risk country

B.

An unlicensed investment advisor offers profits other investments cannot guarantee

C.

A licensed investment advisor lures aging/retired professionals to invest in securities

D.

A unlicensed investment advisor offers returns that are competitive with industry benchmarks

Question 42

Which three procedures should a compliance officer looking to revise an institution’s CTF efforts include in accordance with the Wolfsberg Group’s Statement on the Suppression of the Financing of Terrorism?

Options:

A.

Consulting applicable lists and taking appropriate actions to determine if customers appear on such lists

B.

Reporting matches from lists of known or suspected terrorists to relevant authorities

C.

Maintaining customer information to facilitate timely retrieval of such information

D.

Reviewing only original identification documents when verifying customers

Question 43

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 44

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 45

Which action should countries take related to the financing of terrorist acts in accordance with the Financial

Action Task Force 40 Recommendations?

Options:

A.

Oppose

B.

Sanction

C.

Prosecute

D.

Criminalize

Question 46

In reviewing recent activity, a compliance officer for a money transmitter that several customers are each

remitting the same amount of money but much more frequently.

How should the institution respond?

Options:

A.

File a suspicious transaction report

B.

Instruct the tellers not to process remittances for these customers in the future

C.

Conduct further investigation to determine whether this is truly suspicious activity

D.

Immediately contact the customers and ask them why they are remitting money more often

Question 47

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 48

Which function provided by lawyers can be useful to a potential money launderer as documented by FATF in its typology report 2000-2001? Choose 3 answers

Options:

A.

Creating complex legal arrangements

B.

Buying and selling property

C.

Performing financial transactions on behalf of a client

D.

Providing legal advice

Question 49

What are two requirements with respect to supporting documentation that is used to identify potentially

suspicious activity, according to Financial Action Task Force? (Choose two.)

Options:

A.

It must be retained for at least five years

B.

It must be retained for at least seven years

C.

It must be kept in a manner so that it can be provided promptly

D.

It must only be released to the government through a subpoena process

Question 50

What indicates potential money laundering activity by a lawyer?

Options:

A.

A lawyer’s trust account regularly receives wire transfers from unknown remitters in a high risk country and immediately redirects the same funds to the same remitters account in a low risk country

B.

A lawyer’s trust account receives a large value wire transfer from a publicly listed life insurance company and then immediately transfers the same funds out to an unknown individual in a low risk country

C.

A lawyer’s account in a low risk country receives a bank draft from another lawyer firm in a high risk country

D.

A lawyer’s account in a high risk country receives a cash deposit of an amount that is considerable below the reporting threshold

Question 51

Which practices are dealers in antiques, precious metals, precious stones, jewelry, and art advised to follow to reduce the element of money laundering risk? Choose 3 answers

Options:

A.

Insist on all vendors signing a declaration that the item placed by them for sale was not stolen or acquired through illegitimate means

B.

Verify the identities of all new vendors and customers and conduct due diligence on them

C.

Avoid accepting cash payment from the buyers

D.

Insist all vendors submit an appropriate license issued by enforcement agencies authorizing the sale

Question 52

Which scenario is closest to the definition of money laundering the United Nations Convention against Transnational Organized Crime and Other Protocols provided?

Options:

A.

Filing a suspicious transaction report when you know or suspect money laundering is taking place

B.

Knowingly financing a resort development with the proceeds of arms trafficking

C.

Assisting a client in a property conveyance by effecting the transfer of ownership from the seller to the purchaser when you don’t know the purchaser

D.

Discussing your suspicions with a client, thus giving the client the opportunity to switch service providers and to cover his tracks in future transactions

Question 53

The compliance officer for a private bank has been tasked with writing a policy on how the bank will deal with

intermediaries.

Which two aspects should be included in the policy in respect of intermediaries to align it with the Wolfsberg

Anti-Money Laundering Principles for Private Banking? (Choose two.)

Options:

A.

When an intermediary introduces clients to the bank, it is not necessary for the bank to perform duediligence on the intermediary’s clients.

B.

Where an intermediary introduces clients to the bank, the bank must obtain the same type of informationwith respect to an introduced client that would otherwise be obtained by the bank, absent the involvementof the intermediary.

C.

Where an intermediary manages assets on behalf of a number of clients and is the account holder with thebank, but that intermediary does not conduct the same level of due diligence as the bank, it is necessaryfor the bank to undertake due diligence on the intermediary’s clients.

D.

Where an intermediary manages assets on behalf of a number of clients and arranges for the opening ofaccounts for its clients with the bank, and that intermediary is a financial institution subject to similarregulations, it is necessary for the bank to perform due diligence on the intermediary’s clients.

Question 54

A bank located in Arizona is considering a loan application for a new client. The collateral for the loan is a

property in Florida.

The loan will be in the name of a limited company (LLC) whose ownership is not disclosed to the bank. The

LLC was established by a New York-based attorney.

The loan will be repaid by the LLC in monthly wire transfers of $9,000 which is more than the required monthly

payment.

Which aspect indicates potential for money laundering?

Options:

A.

The LLC’s ownership is not disclosed to the bank

B.

The collateral, a property in Florida, is not located in Arizona

C.

The repayment in the amount of $9,000 indicates potential structuring

D.

The attorney associated with the account is outside the bank’s lending area

Question 55

When must a United States (U.S.) bank block or reject an international funds transfer when there is an Office

of Foreign Assets Control designated party to the transaction?

Options:

A.

Only if the U.S. bank is involved in the funds transfer

B.

Only if a U.S. person or entity is the ultimate beneficiary

C.

Only if a non-U.S. person or entity is the ultimate beneficiary

D.

Only if the U.S. bank’s correspondent informs it of the involvement of the designated party

Question 56

According to the Financial Action Task Force 40 Recommendations, Designated Non-Financial Businesses and Professions include

Options:

A.

commodities traders.

B.

money services businesses.

C.

hawala operators.

D.

real estate agents.

Question 57

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 58

What are two requirements of United States financial institutions when conducting business with an

international institution as a result of the USA PATRIOT Act? (Choose two.)

Options:

A.

Performing enhanced due diligence on shell banks

B.

Performing due diligence on correspondent accounts

C.

Visiting the head office of the international financial institution

D.

Complying with Special Measures issued under the USA PATRIOT Act

Question 59

Which statement about U.S. Specified Unlawful Activities (SUA) is true?

Options:

A.

At least one SUA must be proven in order to pursue a money laundering conviction

B.

SUAs are generally limited to a small sub-set of crimes

C.

In order to secure a conviction, the defendant must be proven to have known the precise nature of the source of funds

D.

SUAs are limited to crimes that occur within the borders of the U.S. and its territories and possessions

Question 60

What is an example of the integration stage of money laundering involving a bank or another deposit-taking institution?

Options:

A.

Depositing illicit funds into an account set up for a front company

B.

Directing third parties to exchange illicit cash for negotiable instruments

C.

Wiring illicit funds from an account at one bank to an account at another bank

D.

Using illicit funds that had previously been deposited to purchase a luxury vehicle

Question 61

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 62

Which situation would require enhanced due diligence be performed on a customer?

Options:

A.

A customer closes their store location and opens a new store location across town.

B.

A prospective customer recently started and incorporated a new business.

C.

Company ownership is held in bearer share form.

D.

The low-risk rating for a customer has not changed since the relationship was established 5 years ago.

Question 63

When a regulatory body requires international assistance in a money laundering inquiry, such assistance is typically obtained by

Options:

A.

Filing a request under Egmont guidelines.

B.

Submitting a request for overseas assistance to the corresponding supervisory body.

C.

Contacting the Financial Action Task Force, Organization for Economic Co-operation and Development, or other international organizations and seeking their intervention.

D.

Communicating with the Head of Compliance for the financial institution.

Question 64

An AML specialist at a financial institution is presented with a search warrant. Which actions should be taken to comply with the search? (Select Two.)

Options:

A.

Remember what items the agents have seized and taken from the premise.

B.

Record the names and affiliations of the agents who conduct the search.

C.

Proactively ask the agents as many questions as time allows.

D.

Leave the premises to allow the agents to conduct the search.

E.

Obtain a copy of the warrant or photocopy the original warrant.

Question 65

Which of the following best describes the Basel Committee on Banking Supervision's principles on customer due diligence?

Options:

A.

Multilateral agreement between all members.

B.

A recommendation to members and banks.

C.

Generally accepted terms issued by big international banks.

D.

A country's initiative to increase the reputation of its financial market.

Question 66

Suspicious activity triggered a suspicious transaction report filing on a company that holds an account at a large commercial bank. Investigations revealed that a member of the bank's Board of Directors is the major shareholder of the company. Further review revealed the bank had no reasonable explanation for the activity, but could not confirm if criminal activity occurred. Which of the following is the next best course of action for the compliance officer?

Options:

A.

Include a detailed presentation of this case in the Board report.

B.

Prevent the suspicious transaction report from government filing.

C.

Ask the Board member to explain the transaction.

D.

Maintain standard summary statistical reporting to the Board.

Question 67

An oil exploration company based in France does business with oil refineries in Iran, which is subject to comprehensive Office of Foreign Assets Control (OFAC) sanctions. What type of OFAC sanctions should be imposed against the French company?

Options:

A.

Sectoral

B.

Country-based

C.

Secondary

D.

List-based

Question 68

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 69

Which actions are involved when a prosecutor instructs a bank to freeze the assets and bank accounts held by one of its clients? (Choose three.)

Options:

A.

Inform other banks in the same geographical area to freeze the client's assets if they are a member of that bank, too.

B.

Extend the account and asset freeze to the client's family members as a precautionary measure.

C.

Ensure the client and beneficiaries are unable to access any frozen assets during the freeze order.

D.

The institution does not need to comply with the request if the client's assets make the task unusually difficult or complex to access.

E.

An affidavit must accompany the freeze order for the bank to comply with the request.

F.

The institution should obtain a copy of the court order to freeze the assets of the named individuals.

Question 70

Private investment companies are potentially vulnerable to money laundering because:

Options:

A.

It can be difficult to identify the people who are the ultimate beneficial owners.

B.

they transact shares that are not traded on a stock exchange.

C.

they exist in offshore jurisdictions with tight secrecy laws to protect the privacy of their owner(s).

D.

they are shell companies formed to maintain a client's confidentiality.

Question 71

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 72

Which is a characteristic of the Financial Action Task Force (FATF) 40 recommendations?

Options:

A.

They enable FATF's active engagement in law enforcement matters, investigations, or prosecutions.

B.

They are automatically transposed into local law across the EU member states and the US.

C.

They provide a list of mandatory requirements for an effective AML regulatory framework.

D.

They comprise global standards for countering money laundering, recognized by government bodies across the world.

Question 73

According to the Financial Crimes Enforcement Network, after an initial suspicious activity report has been filed for a customer, a financial institution must perform a continuing review of the account for a period of how many days?

Options:

A.

30 days

B.

60 days

C.

90 days

D.

120 days

Question 74

A compliance officer at a small local bank reads in the newspaper that a high ranking local public official, who is a long-standing account holder, is being investigated by the competent authorities for accepting bribes from a well-known construction company with offices in the town. The compliance officer immediately checks the official's account and other recently opened accounts at the bank. The official opened a new account at the bank a few weeks ago. The compliance officer's investigation of these accounts discloses that the official's longstanding account had no unusual activity and the recently opened account had no activity since it was opened. Which of the following should the compliance officer do next?

Options:

A.

Wait until the new account receives funds and confirm their source.

B.

Call the competent authorities to assess the need to file a suspicious transaction report.

C.

Meet with staff who opened the account to understand its nature and purpose.

D.

Call the official's office to confirm the need for multiple accounts.

Question 75

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 76

One area of responsibility for the Board of Directors when implementing a successful AML program is to:

Options:

A.

ensure the appointment of a qualified chief AML officer.

B.

create a culture of compliance based on the profit expectation.

C.

manage the day-to-day processes of the compliance program.

D.

hire a third-party firm to be responsible for the AML compliance.

Question 77

What are the three basic functions of a national financial intelligence unit?

Options:

A.

Compile, assess, monitor

B.

Train, share, collect

C.

Investigate, report, record

D.

Receive, analysis, disseminate

Question 78

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 79

Which assessments are involved in the processes of mutual evaluation and follow-up by the FATF?

Options:

A.

Risk assessments and technical standards assessments

B.

Technical compliance assessments and effectiveness assessment

C.

Sanction risk assessments and the country's National Risk Assessment

D.

Country audit assessments and transaction monitoring assessments

Question 80

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 81

In accordance with Financial Action Task Force (FATF) standards, when the minimum AML requirements of the host country where a financial institution (Fl) operates are less strict than those of the Fl's home country, the Fl:

Options:

A.

should always apply additional measures on their branches and majority-owned subsidiaries in host countries to manage the money laundering and terrorist financing risk overseas.

B.

is required to ensure that their branches and majority-owned subsidiaries in host countries implement the requirements of the home country, to the extent that host country laws and regulations permit.

C.

is required to impose more strict requirements on host country branches, disregarding if host country laws and regulation permit such action.

D.

should close down its operations in the host countries where minimum AML requirements are less strict than those of the home country.

Question 82

The owner of a local retail store makes multiple deposits daily at a bank. When the owner makes these deposits, it is noted that he goes to different tellers (cashiers). The deposits consist of cash in amounts less than the currency reporting threshold. Which of the following best describes this activity?

Options:

A.

layering

B.

structuring

C.

integration

D.

commingling

Question 83

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 84

The marketing department presents to an anti-money laundering specialist a business plan targeting individuals holding important public positions. In addition to obtaining the proper identification and basic information from these customers, what else should the anti-money laundering specialist recommend a financial institution do to check the background and conduct enhanced due diligence based on public information?

1. Determine if a client appears on the Basel Committee on Banking Supervision's list of public officials.

2. Investigate the source of funds.

3. Identify people and companies that are clearly related.

4. Identify a person fully, including their political history.

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 85

Which type of formal agreement occurs between countries that wish to aid each other in the investigation and enforcement of criminal laws?

Options:

A.

Joint Comprehensive Peace Agreement

B.

Mutual Legal Assistance Treaty

C.

Foreign Information Exchange

D.

Inter-country Agreement to Combat Trafficking

Question 86

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 87

The owner of a real estate investment company deposits multiple cashier's checks that were bought using cash over a three-month period, from the sale of two apartments. This account also receives several electronic transfers from other financial institutions for 10.000 USD each. What activity is considered suspicious of money laundering?

Options:

A.

Using cash to buy multiple cashier's checks over a period of time

B.

Using cashier's checks in the transactions with the real estate investment company's account

C.

Performing operations with real estate investment companies

D.

Receiving electronic transfers for 10.000 USD amounts from other financial institutions

Question 88

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 89

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 90

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 91

Which red flag should a compliance officer prioritize first for investigation?

Options:

A.

A loan is paid off in full with cash after the sale of the vehicle that was used as collateral for the loan.

B.

Several cross-border transfers are received and immediately wired to another beneficiary.

C.

A customer has 20 monthly transactions that are repetitive but less than $500 USD per transaction.

D.

A convenience store cashes government checks for its customers in amounts less than $1,000 USD per day.

Question 92

The compliance department receives an internal referral that appears to indicate terrorist financing. What is the first step that should be taken in the investigation process?

Options:

A.

Notify the Board of Directors.

B.

Immediately file a suspicious activity report.

C.

Gather background and transaction information.

D.

Exit the relationship.

Question 93

Which is a red flag for funds transfers?

Options:

A.

Funds transfers are received in numerous small quantities from entities that are in related industries.

B.

Funds transfers are repeatedly sent to the same beneficiary out of line with the business purpose.

C.

Funds transfers are repetitive and within expected patterns.

D.

Funds transfers are to a higher-risk geographic location with a known supplier within the same industry as the originator.

Question 94

Which of the following activities conducted at a financial institution is the strongest example of avoiding reporting thresholds?

Options:

A.

Making small cash deposits over the course of a week.

B.

Performing transactions by check (cheque) or other payment instrument.

C.

Conducting small cash transactions at multiple locations during the same day.

D.

Establishing both a personal and business account and depositing cash in both.

Question 95

Which key factor would result in the decision for a financial institution (FI) to exit a client relationship?

Options:

A.

After assessing all risk factors the level of residual client risk exceeds the FI's risk appetite.

B.

The client is a registered charity known to remit funds to high risk geographies where there is limited due diligence information available.

C.

Closing the client accounts will help reduce the number of transaction monitoring alerts.

D.

Client transactions generate ongoing transaction monitoring alerts that did not result in any SAR/STR filings.

Question 96

An anti-money laundering specialist has just developed and implemented an anti-money laundering program. Which of the following is the best resource to evaluate the effectiveness of the program?

Options:

A.

the regulatory authorities

B.

a member of senior management

C.

the anti-money laundering specialist

D.

a qualified independent party/auditor

Question 97

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 98

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 99

When performing an investigation, which key steps should be taken to maintain and secure supporting documentation used to perform an investigation of a suspicious activity?

Options:

A.

Disseminate the rationale for the investigative approach and the objective basis for the determination.

B.

Perform the alerting transaction with alternative thresholds to ensure they are calibrated correctly.

C.

Ensure that a secure archive has information available to the client.

D.

Maintain a record of the transaction activity that generated the alert

Question 100

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 101

A bank in an offshore jurisdiction approaches an institution about opening a new correspondent banking relationship. Prior to opening the account, the new account representative obtains copies of the offshore bank's anti-money laundering policies and procedures, and all appropriate legal documentation for the bank; ascertains no third parties will be able to access the accounts; and determines the owners of the bank, the bank's primary business activities, and the business address of the bank. Which of the following steps does the Basel Committee on Banking Supervision's Customer Due Diligence for Banks Paper recommend the banker take prior to opening Oils correspondent account?

1. Conduct a site visit and meet all the principals and beneficial owners in person.

2. Verify the bank has a physical presence in the country where it is incorporated.

3. Confirm the bank is subject to regulatory supervision with adequate anti-money laundering laws.

4. Obtain and maintain a complete listing of the correspondent bank's customers, including politically exposed persons.

Options:

A.

1 and 2 only

B.

1 and 4 only

C.

2 and 3 only

D.

3 and 4 only

Question 102

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 103

Which situations would require a financial institution (FI) to update its ML/TF risk assessment? (Choose two.)

Options:

A.

When new products, services or customer types are introduced

B.

When new board members are elected

C.

When the AML compliance team hires new employees

D.

When the institution faces a merger or acquisition

E.

When opening a sales point in a new location in the same city

Question 104

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

Options:

A.

There is greater difficulty in matching the customer with the provided identification doc-umentation.

B.

There is no human scrutinizing the customer's transactions, thus increasing the potential for large transactions.

C.

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

D.

Customers can directly access their accounts without being detected.

Question 105

How does the Asian/Pacific Financial Action Task Force -Style Regional Body help its members implement recommendations from the FATF? (Select Two.)

Options:

A.

Promotes laws that allow judicial challenges to seizure orders by an administrative body

B.

Endorses regulations that define money laundering based on the model laws issued by the respective member states

C.

Facilitates the adoption and implementation of internationally accepted AMI measures by member jurisdictions

D.

Encourages cooperative AML efforts in the region

E.

Requires members to maintain lists of regional money laundering and terrorists financing issues relevant to their region

Question 106

The bank's internal financial intelligence unit (FIU) has reviewed activity related to a politically exposed person (PEP); the activity in the account contains a large, round number, one time wire to an obscure organization. Which would not be a sufficient reason to file a SAR/STR?

Options:

A.

Beneficiary is largely unknown

B.

Maintain the bank's reputation

C.

Wire is a large amount

D.

Customer activity is unreasonable

Question 107

Which is a key aspect in the FATF Recommendations that best describes the essential foundation for allocating resources in AML/CFT regimes for countries and financial institutions (FIs)?

Options:

A.

Implementing targeted financial sanctions

B.

Performing country peer-to-peer evaluations

C.

Enforcing mutual legal assistance

D.

Applying a risk-based approach

Question 108

An anti-money laundering consultant audits a bank's current anti-money laundering policies, procedures and controls. The bank serves high-income, high net-worth clients who include non-residents and offshore businesses. During a review of the custom list, the anti-money laundering consultant determines that he and the bank have mutual clients. The bank's written anti-money laundering program includes a process for the bank to establish the identity of the person with whom they conduct business, but does not address monitoring of customer account activity.

The consultant should recommend the bank:

Options:

A.

Continue to follow the current written anti-money laundering program.

B.

Focus on high-risk customer acceptance procedures.

C.

Reduce the risk rating on the mutual customers.

D.

Revise the procedures to better assess ongoing customer activity.

Question 109

A compliance analyst is reviewing recent activity between a publicly traded company and a company in a high risk jurisdiction. Which detail suggests that escalation is warranted?

Options:

A.

The activity is a reputational risk to the financial institution.

B.

It is the first time the originator wires the beneficiary.

C.

Beneficiary is active in a related industry.

D.

Payments to the beneficiary are for large dollar amounts.

Question 110

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 111

According to recommendations from the Financial Action Task Force, what role does a country's financial intelligence unit play in safeguarding against money laundering?

Options:

A.

Monitors monthly public statistics on the economy

B.

Generates currency transaction reports to send to the central bank

C.

Assists the pursuit of criminal activity by producing suspicious activity reports

D.

Analyzes data on suspicious activity reports

Question 112

Client A is flagged for a high volume of outgoing transfers. Further investigation reveals Client A has a potentially key role in a network linked to human trafficking. After filing a suspicious activity report, what step should the investigator take next?

Options:

A.

Prepare a summary for senior management recommending client off-boarding.

B.

Inform other local financial institutions about the client so they can halt potential services.

C.

Restrain or block the client's account(s) until law enforcement makes an arrest.

D.

Contact the Federal Bureau of Investigation (FBI) to communicate the investigation findings.

Question 113

According to the Financial Action Task Force, financial institutions should be required to implement:

Options:

A.

special procedures for encryption of information to be exchanged with affiliates and branches.

B.

independent AML programs to ensure privacy and safeguard confidential information.

C.

a process to designate an officer at a senior level who ensures a safe exchange of information for AML and terrorism financing purposes.

D.

group-wide programs, including policies and procedures regarding AML compliance.

Question 114

Which safeguard is in place for Financial Intelligence Units (FIUs) to share information securely according to Egmont?

Options:

A.

A computer with access to the Egmont Secure Web is accessible to all members of the FIU.

B.

Information sharing is conducted according to processes contained in Memoranda of Understanding.

C.

Intelligence is shared via messaging applications.

D.

Investigators are allowed to request information from a foreign FIU directly.

Question 115

Which are essential elements of a KYC program identified by the Base1 Committee on Banking Supervision? (Select Two.)

Options:

A.

Internal control

B.

Customer acceptance policy

C.

Code of conduct

D.

Risk appetite

E.

Risk management

Question 116

How does the Financial Action Task Force (FAT F) measure the effectiveness of a country's efforts to combat money laundering and terrorist financing?

Options:

A.

Mutual evaluation

B.

FATF Evaluation Committee

C.

Basel Committee

D.

Series of internal audits followed by reporting to FATF

Question 117

Which is an emerging risk associated with cyber-enabled fraud?

Options:

A.

Multiple people colluding to place funds in the financial market

B.

Receipt of joint account wire transfers

C.

Mismatch between account names and government-issued documentation

D.

Frequent transactions in round or whole dollars

Question 118

A key element required to ensure an anti-money laundering compliance program is effectively embedded into an institution's culture is

Options:

A.

an internal audit.

B.

ongoing training.

C.

peer review.

D.

a record retention policy.

Question 119

Financial institutions (FIs) perform AML risk assessments to ensure:

Options:

A.

a record for regulators indicating an AML risk assessment was completed at least once.

B.

internal audit assurance that all AML-related policy and procedures are board approved.

C.

satisfaction of the board of directors' approved risk appetite.

D.

proper controls surrounding higher-risk products, services, customers, and geographic locations.

Question 120

Cybersecurity risk can result in identity theft by:

Options:

A.

executing false transactions.

B.

compromising individual's personal data.

C.

issuing false passwords.

D.

identifying bugs in personal data processors.

Question 121

An internal review of anti-money laundering training documentation revealed only new agents employed by a financial institution that sells life insurance products were trained. Additionally, it typically took the institution 8 months to begin training for new actuaries. The compliance officer explained training was limited to actuaries because they perform the only high-risk function. The institution relied on e-learning techniques without follow-up assessment.

Which of the following issues would the internal review most likely recommend?

Options:

A.

All staff, apart from the Board of Directors, must be trained.

B.

Pro duct-specific anti-money laundering training should be provided company-wide.

C.

The institution must provide anti-money laundering training to actuaries within 6 months.

D.

Continue using e-learning to emphasize anti-money laundering content during training.

Question 122

A law enforcement agency is conducting an investigation of a financial institution (Fl). How should the Fl respond to the law enforcement agency's requests?

Options:

A.

Disregard requests when there is a justifiable reason for doing so.

B.

Share information about the investigation with analysts so they are aware.

C.

Delay responses by informing senior management of requests.

D.

Address all requests completely and in a timely manner.

Question 123

Which statements describe risks that are associated with international business corporations? (Select Two.)

Options:

A.

They are inexpensive to acquire.

B.

They are established as an off-shore company.

C.

They are created in a tax haven.

D.

They facilitate asset protection.

E.

They are established with nominee directors.

Question 124

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 125

The primary roles of a Country's Financial Intelligence Unit (FIU) include: (Select Two.)

Options:

A.

collaborating with law enforcement agencies, financial institutions, and other stakeholders to detect and prevent Illicit financial activities.

B.

conducting examinations of financial institutions to ensure compliance with anti-money laundering regulations.

C.

engaging in providing financial services, including banking and investment activities, to the public and private sectors

D.

facilitating the exchange of information between the public and private sectors.

E.

enacting legislation regarding the operations of financial institutions.

Question 126

Customers of a telecommunications firm received an email explaining an issue with their last order. The customers were directed to the company website via a link in the email to provide personal information. Both the email and website were fake. What type of cybercrime has been committed?

Options:

A.

Malware

B.

Cryptojacking

C.

Spear phishing

D.

Tumbling

Question 127

Whichchanges at a financial institution (FI)should trigger anenterprise-wide reassessmentof itsinherent 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 128

Section 319(a) of the USA PATRIOT Act:

Options:

A.

Allows the appropriate federal banking agency to require a financial organization to produce, within 120 hours, records or information related to the organization's AML compliance or related to a customer of the organization or any account opened, maintained, administered, or managed in the U.S. by the financial organization.

B.

Provides the U.S. Department of Treasury with the authority to apply graduated, proportionate measures against a foreign jurisdiction, foreign financial organization, type of international transaction, or type of account.

C.

Permits the U.S. Government to seize funds from a correspondent bank account in the U.S. that has been opened and maintained for a foreign bank in the same amount as has been deposited with the foreign bank.

D.

Requires due diligence, and in certain situations enhanced due diligence (EDD), for foreign correspondent accounts, which includes virtually all account relationships that organizations can have with a foreign financial organization and private banking for non-citizens of the U.S.

Question 129

What action does the USA PATRIOT Act allow the US government to take regarding financial institutions (Fls) that are based outside of the US?

Options:

A.

Allow all US regulators to place a non-US FI on the Specially Designated Nationals and Blocked Persons List.

B.

Subpoena documents from Fls that have no presence in the US.

C.

Revoke the banking licenses of non-US Fls in countries outside the US.

D.

Sanction a country when an individual FI does not comply with US law.

Question 130

AnAML/CFT unit often compiles information about customer activity and product usagethat might be of interest toother parts of the organization.

Before allowing the unit to communicate such information internally, the organization mustreview:

Options:

A.

Applicable data privacy lawsin relevant jurisdictions and the organization’s data security and privacy policies for any limitations.

B.

Enterprise-wide risk assessmentsand the employee handbook for any limitations on sharing commercially sensitive customer data.

C.

Therisk rating of the customersto avoid sharing data relating to higher-risk customers.

D.

The organization’sAML compliance policiesto ensure that customer data can be easily shared internally and internationally.

Question 131

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 132

Which of the following is a critical consideration for private sector firms when sharing data and intelligence to combat financial crime?

Options:

A.

The preference of upper management regarding which teams should participate in the data-sharing initiative

B.

The cost of the data-sharing system and whether it its within the existing IT budget

C.

The potential return on investment (ROI) from the data shared versus the financial crime prevention effort

D.

Ensuring that the shared data complies with applicable data protection regulations while maintaining the integrity and accuracy of the information

Question 133

Whichmeasures help limit the collection and use of personal datawhen performing AML-related controls?

Options:

A.

Allowing unrestricted access to customer dataacross departments to facilitate quick decision-making.

B.

Implementing data minimization strategiesto collect only the personal data necessary for transaction monitoring.

C.

Regularly reviewing and updating data processing policiesto ensure they align with industry standards.

D.

Allowing repurposing of collected datato avoid redundant processes.

Question 134

A financial institution's (Fl's) policy is to apply enhanced due diligence (EDD) for every new client to ensure the effectiveness of the program. How should a consultant advise the Fl's management team?

Options:

A.

Suggest the management team select the clients that are chosen for EDD.

B.

Suggest the management team ask the regulator for advice on EDD measures.

C.

Suggest EDD for 50% of the clients is appropriate.

D.

Suggest the FI needs to implement a risk-based approach for EDD.

Question 135

AFinancial Intelligence Unit (FIU)in a country has received aSuspicious Activity Report (SAR)involving significant suspicious fund transfers,both domestically and internationally. TheFIU requires additional information from a foreign countryto determine whether the matter needs to be referred for prosecution locally.

Which of the following statements istruein this scenario?

Options:

A.

Sovereignty of nations means thatinformation cannot be accessed from foreign countries.

B.

It isagainst international lawson data protection to access information from foreign countries.

C.

Any information related to money laundering can bereceived from any organization at any time, regardless of jurisdiction.

D.

Countries that are members of the Egmont Group can request assistancefor information from each other.

Question 136

Law enforcement is confidentially investigating 20 individuals suspected of belonging to a criminal network allegedly involved in laundering tens of millions of euros for cybercriminals. Which actions need to be taken by the AML Specialist at a bank upon learning the alert? (Select Two.)

Options:

A.

Involve the bank's legal and compliance function to address the gravity of the matter.

B.

Perform a search on the bank's client data platform to determine if the bank has had any business with the named individuals.

C.

N Send out an email to all of the bank's client advisors to request information on any of the individuals.

D.

Report findings back to law enforcement only if they are of any significance.

E.

Respond to law enforcement that their request without a judicial order would breach the bank's General Data Protection Regulation duty with respect to its clients.

Question 137

Which actions should be taken bya financial institution (FI) when it receives a grand jury subpoena regarding a customer?

Options:

A.

Have the institution’sassigned legal counsel review the subpoena.

B.

Make copies of the customer’s documents andsubmit the originalsto the enforcement agency.

C.

Keep the customer’s accounts open at the enforcement agency’sverbal request.

D.

Notify the customer being investigatedbefore submitting documents.

Question 138

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 139

Which is a purpose of imposing sanctions?

Options:

A.

Accomplish foreign policy and national security goals

B.

Encourage business deals

C.

Deter countries from choosing a desirable course of action

D.

Limit opportunities for desirable behavior

Question 140

Ateam overseeing the governance and effectiveness of a bank’s transaction monitoring approachshould implement which strategies? (Select Two.)

Options:

A.

Periodic review of suspicious activity reports (SARs) filed with FinCEN to determine whether any should be withdrawn.

B.

Periodic and ad hoc cooperation with the legal team to appropriately investigate and monitor the transactions of subjects of subpoenas or government inquiries.

C.

Periodic review of client profiles to ensure that the most up-to-date information is on file for high-risk clients in line with the bank’s internal policies and procedures.

D.

Periodic review of the transaction monitoring scenarios and their productivity to ensure that appropriate AML typologies are reflected.

Question 141

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 142

Which step shouldfinancial institutionstake when complying withsanctions requirements?

Options:

A.

Adopt automatic screening systems to detect designated persons and entities.

B.

Change the risk profile to "high-risk" if an existing customer becomes a sanctioned entity and continue monitoring further transactions.

C.

Conduct enhanced due diligence (EDD) for prohibited entities on the sanctions list.

D.

Freeze the funds or assets of designated persons and entities once this decision is approved by the board.

Question 143

Whichkey metricwould provide themost valuable datatosenior managementabout theeffectiveness of its AML controls?

Options:

A.

The number of money laundering alerts generated by the watchlist screening system.

B.

The number of clients exited for commercial reasons.

C.

The number of high-risk customers onboarded each month.

D.

The ratio of true positives to false positives generated by the automated monitoring system.

Question 144

Aninternational bankis investigating apayment requested by a correspondent banking partner. The payment originated from acorporation located in Hong Kong, and the final beneficiary is anindividual in New York. The transaction triggered an alert in the bank’sautomated transaction monitoring system.

Which steps should the bank take first to address the alert? (Select Three.)

Options:

A.

Call the receiving individual to review identity verification documents.

B.

Confirm that neither the beneficiary nor the originator are sanctioned parties.

C.

Request supporting documents, including invoices and contracts, to confirm the purpose of the payment.

D.

Check for negative news in public sources on the sender and receiver.

E.

Send a314(b) requestto the corporation’s bank in Hong Kong.

Question 145

Which of the options below is an indicator of potential insider activity that may warrant escalation For further investigation?

Options:

A.

A relationship manager advocates for overriding the results of the company's client risk rating model that resulted in a client's high-risk rating.

B.

An If employee shares information about a firm's risk management framework with employees of other firms at an industry convention.

C.

An investigator does not complete the automated transaction monitoring system alerts assigned to them before the time required by company procedures.

D.

A relationship manager makes an exception to company policy and proceeds with onboarding a customer without documenting a passport for customer identification

Question 146

A legal instrument that isexecuted between two nationsand 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.

Question 147

When deficiencies are identified in the Financial Action Task Force (FATF) mutual evaluation report, the assessed country needs to:

Options:

A.

address the shortcomings identified in the report and agree to post-assessment monitoring by FATF.

B.

request exception from the relevant FATF-style regional body by submitting a report with the reasons.

C.

pay a penalty for the delay in adopting the FATF 40 recommendations accurately and timely.

D.

prepare a report to defend its position against the FATF secretariat, which is comprised of the assessors.

Question 148

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 149

The Head of Compliance was informed by external auditors of a finding that indicates an element of AML policy failed to comply with the regulatory requirement. Which action should the Head of Compliance take next?

Options:

A.

Make necessary updates to AML policy documents.

B.

Inform the compliance team about the finding.

C.

Agree immediately and provide corrective actions.

D.

Submit a corrective action plan with a target timeline.

Question 150

Whichred flag is most relevant to money laundering through capital markets?

Options:

A.

A low-priced security sees a sudden spike in investor demand with a rising price.

B.

A security sees a transactional pattern of a steady decrease in both trading volume and prices.

C.

A firm sees an unexpected increase in demand for electronically traded funds.

D.

A trading customer maintains a portfolio of securities concentrated in one specific emerging market.

Question 151

Which of the following measures isone that the FATF recommends that Financial Institutions (FIs) and Designated Non-Financial Businesses and Professions (DNFBPs) taketo mitigate risks arising from business relationships withforeign politically exposed persons (PEPs)?

Options:

A.

Subscribe tocommercial databasesto assist in the detection of PEPs.

B.

Raisetransaction monitoring thresholdsfor PEP accounts in automated systems to account forhigher transaction valuesandcomplex legal vehicles.

C.

Requireapproval from the prudential regulatorfor entering into or continuing the business relationship.

D.

Establish processes tounderstand the PEP’s source of wealth and source of funds, and to refresh that understanding regularly.

Question 152

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 153

Which approach ensures the successful implementation of a transaction monitoring system?

Options:

A.

Taking great care to minimize changes to transaction monitoring system rules and parameters once these have been certified as accurate

B.

Performing systems integration testing at key steps of development and user acceptance testing prior to going live with the transaction monitoring system

C.

Implementing third-party transaction monitoring software, taking great care not to adjust pre-programmed rules and alerting thresholds

D.

Ensuring all checks of a transaction monitoring system's rules and parameters use actual live data after the system is operational

Question 154

Whichpractices are crucialfor ensuring that anorganization effectively limits the collection and use of personal datawhen performingAML-related controls?

Options:

A.

Allowing unrestricted access to customer data across departments to facilitate quick decision-making.

B.

Implementing data minimization strategies to collect only the personal data necessary for transaction monitoring.

C.

Regularly reviewing and updating data processing policies to ensure they align with industry standards.

D.

Allowing repurposing of collected data to avoid redundant processes.

Question 155

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 156

Which of the following are common indicators of possible money laundering within the securities industry? (Select Two.)

Options:

A.

Receiving securities into an existing brokerage account following the death of a spouse

B.

Allowing fixed income securities to mature

C.

Using brokerage accounts like deposit accounts

D.

Engaging in transactions involving nominees or third parties

Question 157

AFinancial Intelligence Unit (FIU)in a country receives aSARinvolving potential money laundering. The FIU wants toshare this information with a foreign FIU.

Which mechanism allowssecure information sharingbetween FIUs?

Options:

A.

Mutual Legal Assistance Treaty (MLAT)

B.

Egmont Secure Web

C.

INTERPOL Database

D.

UN Sanctions List

Question 158

A UK national has accounts with a bank in Belgium, who maintains a branch in New York. The UK national has been recently added and screened against the Office of Foreign Assets Control (OFAC) Specially Designated Nationals and Blocked Persons List. Which action should the Belgian bank take?

Options:

A.

Allow all transactions up to the limit imposed by OFAC and report the transactions to the local financial intelligence unit.

B.

Freeze the assets of the customer and report to OFAC.

C.

Close the account and ask the customer to send the funds to a bank account in the US.

D.

Continue performing transactions as the bank's headquarters is in Belgium.

Question 159

According to Basel Committee guidelines, which level of the organization should determine whether or not to enter business relationships with higher risk customers?

Options:

A.

First-level management

B.

Senior management

C.

Account opening staff

D.

Middle management

Question 160

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 161

Which is an indicator that there is an attempt to conceal a company's true beneficial ownership?

Options:

A.

The company has a subsidiary in another jurisdiction, and the beneficial ownership of the subsidiary includes a local investor in that jurisdiction.

B.

Recent changes to the company's ownership structure have been documented internally and are reflected in documents filed with local authorities.

C.

Beneficial ownership information from the time that the company was formed several years ago does not match the current beneficial ownership information.

D.

The person filling out an application on the company's behalf indicates that a beneficial owner is a nominee for another person not named in the company's documentation.

Question 162

According to the Financial Action Task Force methodology, which situations would require a financial institution (FI) to consider filing a suspicious activity report?

Options:

A.

A beneficiary of a transaction is a politically exposed person.

B.

A transaction involves funds exchanged from crypto to fiat currencies.

C.

A FI identifies the payer is a dealer in precious metals or stones.

D.

A FI is unable to verify the relevant customer due diligence documents.

Question 163

A customer has borrowed the cash surrender value of their life insurance policies. Which requires a further investigation and filing of the suspicious activity report?

Options:

A.

The customer uses multiple currency equivalents from different sources to pay the monthly life insurance policy premiums.

B.

The customer has paid the monthly life insurance policy premiums with cash.

C.

The customer directs the payment of the money borrowed to an unrelated third party.

D.

The customer cancels the insurance contract without concern for the penalties after the money is borrowed.

Question 164

When applying new technologies to AML, application programming interfaces (APIs) allow for:

Options:

A.

Digital identification on mobile devices

B.

Different applications to connect and communicate

C.

Authentication via artificial intelligence (AI) and biometrics

D.

Quick CDD and client traits analysis during onboarding

Question 165

According to theFinancial Action Task Force (FATF) methodology, which situations would require afinancial institution (FI) to consider filing a Suspicious Activity Report (SAR)?

Options:

A.

AFI is unable to verifythe relevant customer due diligence (CDD) documents.

B.

Abeneficiary of a transactionis a politically exposed person (PEP).

C.

AFI identifies the payeras a dealer in precious metals or stones.

D.

Atransaction involves funds exchanged from crypto to fiat currencies.

Question 166

The compliance officer at an EU bank is investigating one of the customer accounts maintained with the bank for the last two years. According to bank records, the company's primary economic activity is import and export of petrochemical products Over a period of one year, the account transactions have exceeded US$500 million with various high-value inward wire transfers received from suppliers in Yemen followed by outward wire transfers to counterparties in Azerbaijan.

Which factor should give the compliance officer the greatest concern If observed in the investigation?

Options:

A.

Media searches reveal a report that the customer was accused of misconduct three years ago.

B.

The EU bank considers the origin and destination countries Involved in the transactions to be high-risk.

C.

The customer's activity includes multiple cross-border transactions involving various counterparties.

D.

The EU bank received no originator or beneficiary information for the wire transfers.

E.

The customer specializes in the import and export of petrochemical products.

Question 167

According to the Basel Committee, customer acceptance, customer due diligence, and record-keeping policies and procedures should be changed as necessary to:

Options:

A.

address KYC deficiencies in account opening procedures.

B.

ensure policies and procedures are reviewed every three months.

C.

address structure changes strictly related to new employees.

D.

address variations in risk among each line of business within the organization.

Question 168

What are themost effective measuresthat can be taken toboost risk appetite awarenessacross an organizationafter a Risk Appetite Statement (RAS) has been setand arisk appetite frameworkhas been drafted? (Select Three.)

Options:

A.

Integrate the unalignment with risk appetite into internal reporting procedures.

B.

Train all managers to understand the importance and benefits of “good” risk-taking.

C.

Describe risk controls for business colleagues.

D.

Embed the risk appetite into everyday processes and governance.

E.

Provide training to staff to understand the role risk appetite and its limits play for the safe conduct of business.

Question 169

News published in Country A reports that a politically exposed person (PEP) had received a bribe from a transnational company headquartered in a developing country of approximately USS1.5 million deposited into on account at a financial institution (Fl> located in Country B Both countries are members of the Egmont Group The account where the money was deposited belongs to the PEP's immediate family member. To corroborate the facts, the PIU of Country A sent a formal request via secure communication channels for further information from its counterpart FIU in Country B.

According to Egmont principles, the FIU of Country B can:

Options:

A.

provide the information available to them because the exchange is between two FlUs that are members of the Egmont Group, and the formal request was made using secure communication channels.

B.

provide the requested information only if a memorandum of understanding (MoU) is signed between Country A and Country

C.

direct the FIU of Country A to the Fl where the account was opened for further information.

D.

deny the request if the FIU of Country B has not received a suspicious activity report (SAR) from the Fl where the account was opened.

Question 170

In order to demonstrate commitment to AML compliance within a bank, the Board of Directors should:

Options:

A.

monitor the fulfilment of AML compliance duties within the bank.

B.

keep senior management apprised of key developments in the AML regime and the impact of applicable laws and legislations.

C.

ensure senior management maintains accountability for the effectiveness of the AML program implementation.

D.

establish a written AML policy that contains the basic principles to be followed by staff from the top down.

Question 171

When investigating an AML event, which techniques would be used to investigate suspected mule accounts? (Select Three.)

Options:

A.

Determine if the suspected accounts are being accessed by a common person, telephone number, or device.

B.

Reconcile the stated purpose of the account with actual transaction history and compare with peer groups.

C.

Submit a suspicious activity report to the national financial intelligence unit.

D.

Review the account history and determine if there are previous payments to charity accounts.

E.

Establish the frequency with which the funds are moved in and out of the accounts.

F.

Contact the appropriate law enforcement agency and report the account activity.

Question 172

When theFinancial Action Task Force (FATF)places a jurisdiction on the list of"jurisdictions under increased monitoring", also known as the"grey list", the jurisdiction:

Options:

A.

Has committed to swiftly resolving the deficiencies identified in a FATF mutual evaluation.

B.

Poses a high money laundering, terrorist financing, and proliferation financing risk and must be restricted from accessing the international financial system.

C.

Accepts to participate in an off-cycle FATF mutual evaluation to be held within the next 12 months.

D.

Must pay a fine to be removed from the list before the next FATF plenary.

Question 173

Whichred flags could indicate increased terrorist financing and money laundering risksrelated tocultural objects and high-value art? (Select Three.)

Options:

A.

Use of art storage facilities located in tax-free zones.

B.

Paying fair market value or premium prices for valuable art, gems, or precious metals at auction.

C.

Engagement of third-party art advisors as representatives at art auctions.

D.

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

E.

Use of art and antiquity experts to verify an item’s authenticity.

Question 174

Which economic and social factors could create a dependency on illicit activities and money laundering? (Select Two.)

Options:

A.

Wider exposure to organized crime and corruption

B.

Weakness of public service and governmental funding

C.

Weakness of private sector legitimacy

D.

Weaker financial inclusion

E.

Weaker development of economy and job opportunities

Question 175

TheWolfsberg Group’s AML Principles on Private Banking:

Options:

A.

Require banks to better manage reputational risk and protect the privacy of wealthy clients.

B.

Establish rules for private bankers on how to deal with politically exposed persons (PEPs) and persons residing in high-risk countries.

C.

Advise banks to accept only those clients whose source of funds and beneficial ownership isunderstood.

D.

Assist financial institutions conducting business in jurisdictions with high data privacy standards in working with industries susceptible to money laundering.

Question 176

A typical red flag regarding potential money laundering in connection with an art purchase occurs when a customer:

Options:

A.

buys a painting as an anonymous bidder and provides the source of wealth.

B.

asks to pay in installments and pays from two differently named accounts.

C.

asks to pay a large amount in cash without a comprehensible reason.

D.

pays more at an auction for a painting than the estimated maximum price.

Question 177

Based on the AML principles outlined by the Wolfsberg Group, what do private and correspondent banks have in common when monitoring for terrorist financing?

Options:

A.

Numbered or alternate name accounts will only be accepted if the bank has established the identity of the client and beneficial owner.

B.

Account and transactional activity are monitored after the proper identification and verification of customers.

C.

Cash access from a pre-paid card increases the potential that the card will be used for money laundering purposes.

D.

Transaction monitoring examines the relationship between due diligence information and account closings.

Question 178

Which statement about theextraterritorial reachofU.S. laws and legislationisaccurate?

Options:

A.

TheBank Secrecy Act (BSA)extraterritorial reach requires that theTravel Rulebe applied to all financial institutions globally, including allUSD transactions.

B.

TheAnti-Money Laundering Act of 2020 (AML Act)extraterritorial reach coversall USD transactions throughout the global economy.

C.

Section 319(b) of the USA PATRIOT Actpermits theseizure of fundsfrom acorrespondent bank accountin the U.S. that has been opened and maintained for a foreign bank.

D.

TheOffice of Foreign Assets Control’s (OFAC’s) economic and trade sanctionsmay pose extraterritorial risks for financial institutions and businesses outside of the U.S.

Question 179

Themanager of a bank’s KYC teamdiscovers that ahigh-risk customer’s activity was not reviewed last quarteras required by the bank’s internal compliance schedule.

What should the KYC team manager do?

Options:

A.

Submit a referral to file a Suspicious Activity Report (SAR).

B.

Remove the customer from the bank’s high-risk list.

C.

Contact the customer’s relationship manager to suspend account access until the periodic KYC review is completed.

D.

Evaluate the KYC review process to understand why the review did not occur as required and take corrective action as necessary.

Question 180

Which online gambling scheme involves placing bets with deposited funds and colluding with other players to obscure the money’s origin?

Options:

A.

Concealment

B.

Coordinated betting

C.

Player-to-player transfers

D.

Chip dumping

Question 181

Non-compliance with relevant anti-money laundering laws and regulations can result in: (Select Two.)

Options:

A.

increased reputation risk.

B.

inclusion on the UN Consolidated List.

C.

civil and criminal penalties

D.

delisting of public filing status.

Question 182

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 183

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 184

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 185

A money transmitter’s nation-wide agent network remits funds to a country in Africa on behalf of an immigrant community based in the United States. A terrorist group is known to operate openly in this African country. In reviewing transaction records, the compliance officer detects a pattern where two customers together visit the same agent each week and remit the same amount of funds, $2,500, to the same recipient in the country in Africa.

What should alert the compliance officer to possible money laundering or terrorist financing activity by the two customers?

Options:

A.

The customers always visit together.

B.

The customers always visit the same agent.

C.

The funds are being sent to the same recipient each week.

D.

The dollar amount of each transaction is just below the record keeping threshold.

Question 186

The Wolfsberg Principles for Private Banking list circumstances that would require additional due diligence, including activities that involve which three of these choices?

Options:

A.

Foreign jurisdictions

B.

High Risk Countries, including those identified by credible sources as having inadequate Anti-Money Laundering standards

C.

High Risk activities, involving clients and beneficial owners whose source of wealth originates from activities known to be vulnerable to money laundering

D.

Public officials, including those individuals who have or had positions of public trust

Question 187

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 188

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 189

An anti-money laundering specialist working at a bank just received a legal request from a law enforcement agency mandating the release of all financial transaction records relating to an account at the bank. The specialist immediately recognizes the account as one owned by the bank Chief Executive Officers brother. During research to gather the requested documents, the specialist finds several internal memos he had sent to the bank president with concerns regarding possible suspicious activity relating to this account. The specialist recalls the bank president verbally responded to each memo with an explanation of the activity and indicated there was no cause for concern. What should the specialist do with respect to these internal memos?

Options:

A.

Place these memos in his personal files in case they are subsequently requested

B.

Ask the bank president to document his instructions to the specialist

C.

Call the law enforcement agent and suggest he modify the legal request to include these memos

D.

Advise the bank’s senior legal advisor of the situation

Question 190

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 191

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 192

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 193

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 194

A bank sells reloadable open-loop prepaid cards to both customers and non-customers.

What is a red flag associated with these cards that may indicate money laundering?

Options:

A.

A bank customer historically purchases several prepaid cards near year-end.

B.

A non-bank customer regularly loads large amounts of cash onto several prepaid cards.

C.

A non-bank customer consistently uses the bank to obtain cash advances using a prepaid card.

D.

A bank customer routinely purchases five prepaid cards in small even-dollar amounts on a monthly basis.

Question 195

An anti-money laundering specialist has just developed and implemented an anti-money laundering program. What is the most effective resource to evaluate the effectiveness of the program?

Options:

A.

The regulator authorities

B.

A member of senior management

C.

The anti-money laundering specialist

D.

A qualified independent party/auditor

Question 196

According to experts, what is the most effective way to prevent money laundering through financial institutions?

Options:

A.

Ensuring that transaction monitoring systems can identify terrorist financing

B.

Collecting information on beneficial owners and foreign customers

C.

Instituting a policy prohibiting the acceptance of funds intended for terrorist financing

D.

Implementing a sound customer due diligence program

Question 197

In performing a risk analysis, which factor(s) should a financial institution review?

Options:

A.

The level of its gross revenue

B.

Recent regulatory actions against financial institutions of comparable size

C.

Its customer base, location, products and services

D.

The adequacy and completeness of its STR filings

Question 198

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 199

What does the Financial Action Task Force (FATF) urge its members and all other jurisdictions to do when a jurisdiction is identified as having lax anti-money laundering / counter financing of terrorism controls?

Options:

A.

Apply counter-measures to that jurisdiction

B.

Consider customers from that jurisdiction as high risk

C.

Cease doing business with that jurisdiction immediately

D.

Apply economic sanctions until otherwise notified by FATF

Question 200

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 201

What are three potential issues for foreign financial institutions maintaining correspondent accounts with U.S. banks under the Patriot Act? Choose 3 answers

Options:

A.

Cancellation of correspondent banking relationships

B.

Forfeiture of funds in a U.S. interbank account

C.

Prohibition of correspondent accounts for shell banks

D.

U.S. residents maintaining private banking accounts

Question 202

Which is a key goal of EU Directives on money laundering?

Options:

A.

Establish a consistent regulatory environment across the EU to prevent money laundering

B.

Address control of payments in EU countries to reduce money laundering

C.

Allow member states to discuss the draft legislation with the cooperation of the EU Financial Intelligence Units (FIUs)

D.

Build a network of financial institutions (FIs) that work together to prevent money laundering across the EU

Question 203

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 204

The ultimate goal of economic sanctions is to:

Options:

A.

protect the reputation of the country.

B.

prevent terrorists from profiting from trade.

C.

protect national security.

D.

reduce the profits of sanctioned countries.

Question 205

Pursuant to the Third European Union Money Laundering Directive, how long after being out of prominent office should a person NOT be considered to be a

Politically Exposed Person (PEP)?

Options:

A.

1 year

B.

2 years

C.

3 years

D.

4 years

Question 206

Which two steps should a financial institution take when it receives a law enforcement request to keep an account open that may be associated with suspicious or criminal activity? (Choose two.)

Options:

A.

File a suspicious transaction report on the account owner(s)

B.

Maintain account records for at least five years after the request expires

C.

Ask for a written request from the law enforcement agency that defines the duration

D.

Stop filing suspicious transaction reports because law enforcement will be monitoring the account

Question 207

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 208

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 209

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 210

What are the European Union Directives on Money Laundering?

Options:

A.

They are voluntary codes of best practice for the financial sector

B.

They are written by the Wolfsberg Group

C.

They require members to implement certain laws of prevent money laundering

D.

They require financial institutions to report suspicious activity to the Egmont Group in Brussels

Question 211

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 212

At a small community bank, the compliance officer identifies unusual activity on a customer, who with his personal and company accounts, is the bank’s largest depositor. The customer’s companies have significant balances on their outstanding loans. The compliance officer notices that there is a lot of unusual movements of money between the customer’s individual and business accounts. After filing a suspicious transaction report (STR), the compliance officer gets a call from law enforcement indicating that they want the bank to keep the account open while they conduct an investigation into the customer.

How should the compliance officer escalate this information to the board of directors?

Options:

A.

By providing a copy of the STR to the board

B.

By informing the regulator to bring it up with their next meeting with the board

C.

By providing a high level summary of the activity and the interactions with law enforcement

D.

By providing a copy of the letter from law enforcement asking the bank to keep the account open.

Question 213

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 214

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 215

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 216

A director of a financial institution was convicted of laundering money as part of a Ponzi scheme and terminated. As a result of an internal investigation evidence proved that an employee assisted in the illegal activity.

Which action should the institution take?

Options:

A.

Discipline the employee with no further action

B.

Discipline the employee and inform local authorities

C.

Since the employee was not charged, no further action is required

D.

Require all employees to complete additional anti-money laundering training

Question 217

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 218

A new accounts representative recently opened an account for individual whose stated employment is tutoring students.

Which customer action indicates possible money laundering?

Options:

A.

Continually making weekly small cash deposits

B.

Periodically initiating wire transfers to another account owned by a relative

C.

Transferring all funds to another bank on the same day of large cash deposits

D.

Opening a savings account and makes frequent transfers from the checking account

Question 219

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 220

What was the topic the Wolfsberg Group’s first guidance addressed?

Options:

A.

Enhanced due diligence for high risk customers

B.

Private banking

C.

AML training for financial institution staff

D.

Merchant acquiring activities

Question 221

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 222

The compliance officer for a private bank has been tasked with reviewing the procedure for authorized signatories on customer accounts to ensure it is in line with relevant Wolfsberg Anti-Money Laundering Principles for Private Banking.

Which three statements from the procedure are in line with Wolfsberg? (Choose three.)

Options:

A.

Where the Authorized Signatory is not a lawyer or accountant, due diligence as to the source of funds and wealth of the Authorized Signatory should be undertaken.

B.

The responsible private banker must establish the identity of a holder of general powers over an account (e.g. a signatory for the account) and, as appropriate, verify that identity.

C.

Where due diligence has been satisfactorily completed on all authorized signers, the responsible private banker may reduce the due diligence performed on the account holder and/or beneficial owner.

D.

The responsible private banker must obtain the necessary documentation establishing the authorized signer’s authority to act on behalf of the account holder or beneficial owner (e.g. a Power of Attorney).

E.

If an individual has signing authority over an account but does not act on a professional basis as a manager of funds, the responsible private banker must understand and document the relationship between that authorized signer, the account holder, and, if different, the beneficial owner of the account.

Question 223

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 224

Which unusual or suspicious activity by a financial institution's (FI's) employee requires additional investigation and scrutiny?

Options:

A.

The employee avoids taking periodic vacations despite having accrued vacation time.

B.

The employee assists with transactions of a disclosed ultimate beneficiary.

C.

The employee lives a lavish lifestyle within their means.

D.

The employee is involved in a minimal number of unresolved exceptions.

Question 225

What is a tool governments and multi-national bodies can use to prevent the proliferation of weapons of mass destruction?

Options:

A.

Economic Sanctions

B.

Commission Rogatoire

C.

Account Monitoring Order

D.

Mutual Legal Assistance Treaties

Question 226

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 227

Which three do the Office of Foreign Asset Control regulations cover? Choose 3 answers

Options:

A.

All persons and entities within the U.S.

B.

All U.S.-domiciled entities and their foreign branches

C.

All foreign-based entities that have U.S. customers

D.

All U.S. citizens

Question 228

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 229

What is the primary action a financial institution should take before formulating its anti-money laundering program?

Options:

A.

It should perform a comprehensive risk analysis

B.

It should determine how extensive and well-trained the compliance staff is

C.

It should consult with its correspondent banks to determine the nature and extent of their AML programs

D.

It should ensure that its training modules for all employees cover all relevant AML issues

Question 230

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 231

What is the term for trading through multiple accounts, where an individual generates offsetting profits and losses and transfers of positions through accounts that do not appear to be commonly controlled?

Options:

A.

Ponzi scheme

B.

Market Manipulation

C.

Net Trading

D.

Wash Trading

Question 232

Which information must a United States financial institution retain for having foreign correspondent accounts as part of the USA PATRIOT Act record keeping requirements?

Options:

A.

Records identifying the owners of each foreign bank

B.

Section 314(b) information sharing results related to foreign correspondent accounts

C.

Purchase of monetary instruments of $3,000 or more involving foreign correspondent accounts

D.

A suspicious activity report filed and the supporting documentation involving foreign correspondent accounts

Question 233

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 234

In the FATF 40 recommendations, the focus of AML efforts has been expanded beyond Financial Institutions. Which three businesses and/or professions are covered? Choose 3 answers

Options:

A.

casinos, when customers engage in financial transactions equal to or above a designated Threshold

B.

Real estate agents when they are involved in transactions for clients concerning buying and selling properties

C.

Dealers in art, when they engage in any cash transaction with a customer at or above a designated threshold

D.

Trust and company service providers

Question 235

A compliance officer at a large financial institution has been tasked by senior management to lead a team in an internal review and potential revision of the institution’s customer onboarding program following a regulatory enforcement action of another institution.

Which step should the compliance officer perform first?

Options:

A.

Reviewing the institution’s risk assessment

B.

Revising training materials for frontline staff

C.

Conducting enhanced due diligence on high risk customers

D.

Resolving substantive discrepancies in customer verification

Question 236

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 237

Why do organized crime groups often use front companies? (Choose two).

Options:

A.

Because they are not registered, front companies are not subject to income and other sales taxes.

B.

Because using multiple front companies can make it easier to control an entire sector of the economy.

C.

Because they are generally subject to lighter due diligence requirements by banks and other financial services providers.

D.

Because front companies generally charge higher prices than legitimate companies, so profit margins are higher.

E.

Because they can use the company's bank accounts to comingle deposits with those of legal businesses.

Question 238

When an institution files an STR with regard to a particular account, what steps should the institution take visa account?

Options:

A.

The institution should close the account due to the obvious risk it represents

B.

The institution should keep the account open due to the need to continue to monitor the account

C.

The institution should consult its counsel and AML compliance officer and determine whether closing the account is in accord with the institution’s procedures

D.

The institution should not close the account due to the risk of tipping off the customer and upsetting the criminal investigation

Question 239

What does the Basel Committee’s Customer Due Diligence for Banks paper suggest that a bank needs to have in place when establishing an account for a corporate business entity?

Options:

A.

An understanding of the structure of the company

B.

A policy requiring all identified beneficial owners to undergo a national police check

C.

A process to ensure that the approval of senior management is obtained prior to opening the account

D.

A fee structure that reflects the banks’ costs in monitoring the risks associated with entity’s business activities

Question 240

The board of directors receives notice from the primary regulator of the bank that potentially suspicious activity has been identified and the bank president appears to be involved. The Board asks the compliance officer for advice.

Which action should the compliance officer take when informed?

Options:

A.

Destroy all records relating to the matter

B.

Insist on the president’s immediate resignation

C.

Inform the bank’s legal counsel and follow their instructions

D.

Inform the president of the regulator’s suspicions and ask for his advice

Question 241

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 242

Which principles should be included in a FATF-Style Regional Body (FSRB) update? (Choose two.)

Options:

A.

Issue country-specific Mutual Evaluation reports

B.

Address AML/CFT technical assistance of individual members

C.

Identify jurisdictions with weak AML/CFT regimes

D.

Establish AML/CFT standards and typologies

E.

Protect the reputation and standing of FATF

Question 243

What core objective does the Egmont Group suggest would lead to an effective national Financial Intelligence Unit (FIU)?

Options:

A.

The FIU must operate from physically separated premises from other law enforcement agencies and government offices.

B.

The FIU meets the Egmont Group assessment criteria.

C.

The FIU must have absolute trust amongst national and international stakeholders before sensitive information will be exchanged with confidence.

D.

The FIU must be able to promote the value of the government's commitment to embed a corruption free society within the country.

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Total 811 questions