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

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Total 772 questions

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

Question 1

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 2

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 3

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 4

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 5

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 6

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 7

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 8

Which scenario should be escalated as potentially suspicious activity?

Options:

A.

A retail chain deposits cash into several operating accounts and consolidates the funds into one account.

B.

A domestic business account receives a wire transfer from an international business with no history of such activity or business needs.

C.

A convenience store makes daily deposits or withdrawals primarily in cash.

D.

A corporate account deposits large checks and wire transfers on a frequent basis from existing customers.

Question 9

A bank teller receives a written request from a police officer to review a previous customer's account on a pre-populated form with the officer's official letterhead. The officer suspects the previous customer is engaging in smurfing. Which action should the bank teller perform?

Options:

A.

Provide the police officer the customer's account information after management approval.

B.

Escalate the police officer's request for the customer's account information to the compliance officer.

C.

Reject the police officer's request for the customer's account information and escalate to the compliance officer.

D.

Provide the police officer the customer's account information.

Question 10

Which methods are typically used to launder money using insurance companies? (Choose two.)

Options:

A.

The policy holder overpays the policy and moves the funds out of the policy despite paying early withdrawal penalties.

B.

The policy holder enters a sibling as a beneficiary of the insurance policy rather than themselves.

C.

The policy holder purchases a bond and redeems it at a discount prior to its full term.

D.

The policy holder uses an offshore company to pay the insurance installments.

E.

The policy holder is strongly interested in how many costs are incurred when taking out an insurance policy.

Question 11

According to the Financial Action Task Force, as part of their risk assessment, which are important data and information that a Trust and Company Service Provider must understand when establishing and administering a trust? (Select Two.)

Options:

A.

The responsibility and authority in the structure

B.

The management structure of the trust

C.

The source of funds in the structure

D.

The general purpose behind the structure

E.

The general nature of business of the trust

Question 12

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 13

Which statements relate to the mandate, roles, and responsibilities of the Financial Action Task Force (FATF) and the FATF-Style Regional Bodies (FSRBs)? (Select Two).

Options:

A.

In the process of setting standards. FATF will only consider inputs from its member countries as part of the consultation process.

B.

FSRBs have the right to develop standards with which their member countries are bound to comply.

C.

FSRBs play an essential role in identifying and addressing AML technical assistance needs for their individual member countries.

D.

FATF and FSRBs are free-standing organizations that share the common goals of combating money laundering and the financing of terrorism and proliferation.

E.

FATF member countries cannot be members of an FSRB at the same time.

Question 14

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

Options:

A.

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

B.

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

C.

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

D.

Examining Human Resources processes for conducting criminal background checks on executives

Question 15

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 theanti-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 16

An alert has been triggered by a monitoring system and an investigation has been opened. The activity involves significant and multiple cash deposits into a personal account and transferring funds to an offshore bank on the same day. Further investigation reveals this personal account had experienced low levels of activity for the past 6 months and funds are transferred to the account of a charitable organization. Which of the following is the next step that the Compliance Officer should take?

Options:

A.

Prohibit further transactions with the charitable organization.

B.

Conduct enhanced due diligence on the charity's trustees.

C.

Place the charitable organization on the bank's internal "watchlist."

D.

File a suspicious transaction report with the competent authority.

Question 17

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 18

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 19

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 20

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

Options:

A.

MLATs are neither public nor binding under international law.

B.

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

C.

MLATs do not provide a legal basis for transmitting evidence.

D.

MLATs only involve two countries.

E.

MLATs cooperatively combat crime between countries.

F.

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

Question 21

A bank’s transaction surveillance system triggers an alert for a deposit of 250.000 USO into a client's account. According to the bank's KYC information, the client works for a financial advisory firm, and earns approximately 100,000 USD per year. Which actions should be taken? (Select Three.)

File the suspicious transaction immediately to the financial intelligence unit.

Options:

A.

Discard the alert as a false positive hit

B.

Request information and documentation from the client on the background of the transaction.

C.

Contact the client advisor to learn if he has any insight on the transaction background.

D.

Review the alert if the deposit is made in cash.

E.

Review the transaction background in the bank's transaction platform.

Question 22

When may Office of Foreign Assets Control (OFAC) sanctioned-related transactions be allowed that would otherwise be prohibited?

Options:

A.

When the bank's board of directors approves the OFAC risk appetite for sanction-related transactions

B.

Through an OFAC licensing process to determine that the transaction does not undermine the US policy objectives

C.

Only when the federal banking regulator provides OFAC approval before the transactions are processed

D.

After going through a robust internal OFAC audit process that reviews sanction-related risks

Question 23

After a FATF mutual evaluation process, which are resulting actions for jurisdictions that are determined to have strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing? (Choose two.)

Options:

A.

Expect private statements from FATF regarding the level of compliance of the jurisdiction, when insufficient progress is made.

B.

Appeal to FATF for a technical compliance re-rating based on the jurisdiction's own experts criteria.

C.

Demonstrate a high-level commitment to swiftly resolve the identified deficiencies in the FATF mutual evaluation report.

D.

Request FATF for an extension of deadlines in order to provide local awareness on the improvements that are necessary to solve the deficiencies.

E.

Report to FATF on the implementation of their progress under the enhanced follow-up mechanism.

Question 24

Which of the following is the main reason Internet gambling is an ideal web-based money laundering method?

Options:

A.

Ease of connection and low subscription rate with major Internet service providers.

B.

High credibility of gambling websites.

C.

Ability to transfer value across jurisdictions.

D.

Large number of offshore websites located in known high-crime areas.

Question 25

Which factors specific to the securities industry increase the exposure to money laundering risk? (Select Two.)

Options:

A.

The increase of sector-specific guidance

B.

The practice of brokerage firms maintaining securities as nominees

C.

The complexity of the securities business

D.

The link to sanctioned countries

E.

The speed of the transactions

Question 26

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

Options:

A.

Business registry activities state promotion of environmental protection

B.

High number of transactions through company's connected bank accounts

C.

Paper packaging demand production

D.

Expeditious shipment of wood to far away jurisdictions

E.

Use of heavy machinery in non-protected areas

F.

Executive's association with politically exposed persons

Question 27

A new customer has just been onboarded in a securities firm. After a few weeks, there are unusual trading patterns that are being flagged. Which pattern is most concerning to the compliance officer?

Options:

A.

The customer engages in large trading in securities that are liquid or highly priced from the trading account.

B.

The customer's repeated trading in securities that are low priced and low volume counters.

C.

The customer receives many incoming wire transfers from related parties to the trading account.

D.

The customer accumulates securities of a low volume counter in small increments on a weekly basis.

Question 28

An accounting firm opened an account at a bank that is intended to be used as the operational account for the business. After a few months, a comprehensive review of the account was triggered due to unusual activity on the account. Which most likely triggered the review?

Options:

A.

The account receives international payments that are substantially higher than other fees they typically receive.

B.

The account sends monthly donations to several charities that operate in the same communities as the accounting firm.

C.

The account receives several payments a day from multiple customers who operate in different industries.

D.

The account receives international wires from companies in the Middle East where the accounting firm has several branches.

Question 29

Which should authorities do to safeguard AML information exchanged with other countries?

Options:

A.

Protect exchanged information as they would protect similar information received from domestic sources.

B.

Require the use of non-disclosure agreements with anyone accessing the exchanged information.

C.

Use the court system to ensure confidentiality of exchanged information through court orders.

D.

Destroy the information once the investigation is complete.

Question 30

The Chief Compliance Officer (CCO) of a financial institution has been asked by a manufacturing customer reliant upon imported raw materials if there will be repercussions to his business following the weak assessment of the recent publicly issued Financial Action Task Force (FATF) Mutual Evaluation Report (MER). How should the CCO respond?

Options:

A.

Delayed processing of cross-border transfer of funds between countries may occur due to increased scrutiny to determine the legitimacy of each transfer.

B.

Citing inaccurate content of the MER. the president of the country has called upon the FATF to publicly withdraw the MER and commission an independent review of findings.

C.

Mandate termination of all cross-border trading until evidence can be provided to show an improved position of compliance for the weaknesses stated in the MER.

D.

Negative consequences will not occur because the manufacturing customer has been trading with reputable countries and suppliers for many years without incident.

Question 31

Which of the following is the most likely reason for the Financial Action Task Force to remove a jurisdiction from the Non-Cooperative Countries and Territories list?

Options:

A.

Conducting successful annual self-assessments.

B.

Entering into a mutual legal assistance treaty.

C.

Joining the Wolfsberg Group.

D.

Receiving a favorable mutual evaluation.

Question 32

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 33

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

Options:

A.

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

B.

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

C.

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

D.

FIs adequately apply preventive measures.

Question 34

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 35

One of the red flags of microstructuring is:

Options:

A.

depositing sequentially numbered checks.

B.

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

C.

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

D.

frequent visits to make cash deposits of nominal amounts.

Question 36

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 37

Which does the USA PATRIOT Act stipulate for foreign banks concerning correspondent banking?

Options:

A.

US banks that maintain correspondent accounts for foreign banks must keep identification records of foreign bank owners with 50% or more ownership in the bank

B.

A subpoena issued to a foreign bank that maintains a correspondent account in the US can require the bank to submit any records except for records in a foreign jurisdiction.

C.

The US federal banking agency can require foreign banks to produce records or information related to any account opened in the US or other countries.

D.

Illicit funds deposited with a foreign bank can be seized by the US government by confiscating the same amount of funds deposited in a correspondent account in the US.

Question 38

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

Options:

A.

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

B.

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

C.

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

D.

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

E.

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

Question 39

A non-U.S. bank asks its U.S. correspondent whether there is risk of having funds seized in their correspondent account if a customer is involved in a predicate offense.The correspondent bank's reply should be,

Options:

A.

"No, only U.S. accounts for U.S. citizens can be seized and forfeited by the competent authority."

B.

"No, only correspondent accounts of U.S. banks can be seized and forfeited by govern-ment agencies."

C.

"Yes, if it is suspected that money laundering has occurred solely in the U.S."

D.

"Yes, also if the customer's account is used in a country other than the U.S. by suspected money launderers."

Question 40

The findings of an internal audit discover that a large group of employees do not know how to handle Politically Exposed Persons (PEPs). Which is the next course of action that should be taken?

Options:

A.

Create a company-wide training program.

B.

Revamp the compliance program to better identify PEPs.

C.

Ensure all new-hire individuals have in-depth knowledge of PEPs.

D.

De-risk all PEPs from the financial institution (FI) to ensure compliance.

Question 41

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 42

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 43

What is an example of a legal risk a financial institution (FI) could face if it is sanctioned for failure to report suspected fraud activity?

Options:

A.

Foreign correspondents could terminate their relationships with the sanctioned bank.

B.

Clients of the bank might draw down the reserves of the bank and lead to liquidity issues.

C.

The bank could be forced to reimburse the victims of the fraudster for the losses suffered.

D.

The bank could see higher default rates on loans granted to companies owned by the fraudster.

Question 44

Which elements can trigger a review of the existing relationship during the opening of a new account? (Select Two.)

Options:

A.

Regular checks on the flow of funds

B.

Recent adverse media on the client

C.

A false positive result for name screening

D.

Incoming transfers from high-risk jurisdictions

E.

Estimated total income decrease

Question 45

During the course of work on behalf of a client, a lawyer participated in the movement of money. If the lawyer suspects an act of money laundering, which of the following should the lawyer do according to European Union Money Laundering Directives?

Options:

A.

Follow bank secrecy laws.

B.

Report the facts to the competent authorities.

C.

Inform the client of the intent to terminate services.

D.

Adhere to business confidentiality laws.

Question 46

The Egmont Group is a world wide organization of

Options:

A.

banking regulators.

B.

financial intelligence units.

C.

law enforcement authorities.

D.

central banks.

Question 47

A retail bank prepares a yearly AML risk assessment. Which inherent risk factor is likely the most relevant?

Options:

A.

The provision of remote check deposit services

B.

The provision of cash services

C.

The provision of payable through accounts

D.

The provision of brokerage services

Question 48

An anti-money laundering specialist at a large institution is responsible for informing senior management about the status of the anti-money laundering program across the organization. The global institution handles retail banking, commercial banking, global markets, private banking and has an affiliated securities dealer. The specialist and the team provide corporate strategic direction to these areas on anti-money laundering related subjects. The following information is reported to executive management on a regular basis:

•Total number of suspicious transactions identified and reported

•Suspicious transaction trends

•Training that has occurred for the various units

•Status report on the anti-money laundering regulatory environment

•Summary of exception reports

Which of the following additional elements is the most useful?

Options:

A.

The total credit exposure for non-cooperative countries and territories.

B.

Results of related audits and examinations.

C.

Details on inquiries received from law enforcement.

D.

Notification of management changes in the different major divisions.

Question 49

Which transaction monitoring processes would alert a bank for red flag activity?

Options:

A.

A client who does not typically make extravagant credit card purchases books an airline ticket on a travel website.

B.

The company has a name that is similar to that of a company whose directors are named on the bank's internal blacklist.

C.

A client makes a prepayment on their credit card and a week later makes multiple cash withdrawals using an automated teller machine (ATM) in a foreign country.

D.

A charity account receives multiple electronic transfers and then sends a wire transfer to a higher-risk country.

Question 50

A financial institution recently purchased anti-money laundering software. The software routinely generates more alerts than the anti-money laundering staff can properly analyze as a result of limited staffing. These alerts are generated by default software rules. Which of the following should the individual responsible for setting the anti-money laundering software parameters recommend?

Options:

A.

Reset software parameters to reduce risk sensitivity.

B.

Disable the software until more staff are trained to process alerts.

C.

Ensure alert parameters are based on risk.

D.

Adjust software parameters so the number of alerts decrease gradually.

Question 51

Which is a valid extraterritorial effect of the USA PATRIOT Act?

Options:

A.

Foreign branches of US banks can maintain correspondent accounts with banks that do not have a physical presence in any country.

B.

Financial institutions are allowed to specifically direct client transactions that move their funds into, out of, or through an internal bank concentration account ^

C.

Broker-dealers cannot have correspondent accounts with a foreign bank that does not have a physical presence in any country.

D.

Any deposits into foreign banks are not considered to have been deposited into any interbank account the foreign bank may have in the US.

Question 52

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 53

An anti-money laundering specialist is employed by a large multi-national bank. The bank is planning to open an international department that will be responsible for expanding services to various countries. The head of the new international department has asked the specialist to assess risks associated with the bank's expansion plans. Which of the following materials should be included as a reference?

1. USA PATRIOT Act

2. Financial Action Task Force 40 Recommendations

3. Customer Due Diligence for Banks issued by the Basel Committee on Banking Supervision

4. The Egmont Group Statement of Purpose

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 54

The most effective tool used to detect structured transactions is

Options:

A.

Verification of the source of funds.

B.

A comprehensive account-opening procedure.

C.

An employee training program to detect suspicious transactions.

D.

A software program that can link apparently unrelated transactions.

Question 55

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 56

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 57

A financial institution is reorganizing and the anti-money laundering officer is now required to report to the Sales Director. Which of the following statements about this situation is most correct?

Options:

A.

The reorganization will ensure communication of anti-money laundering issues to the board.

B.

The reorganization will enhance the compliance framework.

C.

The anti-money laundering officer should be elevated to a position on the Board.

D.

The anti-money laundering officer should be independent of business functions.

Question 58

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 59

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 60

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 61

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 62

A local law enforcement officer, who is conducting a criminal investigation, requests information about a customer.

Which two actions should the bank take? (Choose two.)

Options:

A.

Close the account immediately

B.

File a suspicious transaction report

C.

Monitor the account for suspicious activity

D.

Review the money laundering risk posed by the account

Question 63

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 64

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 65

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 66

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 67

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 68

A Money Laundering Reporting Officer's (MLRO) lack of action led to deficiencies in the bank's AML program and a civil monetary penalty being levied against the MLRO. Why was this direct action taken against the MLRO?

Options:

A.

The MLRO is the only individual that can be held responsible for AML program deficiencies.

B.

MLROs can be held to an individual accountability standard and face potential penalties for contributing to AML program deficiencies.

C.

The MLRO agreed to the civil penalty so that the bank would not be found liable for the AML program deficiencies.

D.

Action was brought against the MLRO because banks cannot be found liable for AML program deficiencies.

Question 69

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

Options:

A.

The FinCEN CDD Final Rule

B.

The 6th EU AML Directive

C.

Regulations of the OFAC, US Department of Treasury

D.

The USA PATRIOT Act

Question 70

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 71

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 72

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 73

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

Options:

A.

Intermediaries transacting with US banks

B.

Foreign banks with US customers

C.

Foreign subsidiaries of US banks

D.

US branches of a foreign bank

E.

Foreign import-export companies

Question 74

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 75

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

Options:

A.

first line of defense should establish its own policies independently.

B.

revenue generating business sectors should have precedence over compliance.

C.

relevant information should be shared throughout the organization.

D.

cost of compliance should increase proportionately to revenues.

Question 76

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

Options:

A.

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

B.

The type and size of the business the customer runs

C.

The legal structure of the customer’s business

D.

The previous financial institutions where the customer has banked

Question 77

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.

Question 78

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

Options:

A.

Rely on a credit report from OFAC

B.

Conduct a key-word search on the Internet

C.

Use the consolidated Sanctions List Search screen on the OFAC website

D.

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

Question 79

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 80

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

Options:

A.

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

B.

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

C.

To mandate stricter money laundering controls across the continent.

D.

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

Question 81

After review of the financial institution's enterprise-wide anti-money laundering risk assessment, the new compliance officer identifies several deficiencies that need attention.

Which deficiency could lead to the highest potential for unmitigated risk?

Options:

A.

The risk assessment is several years old and does not cover all current products and services.

B.

The risk assessment is revisited too frequently thereby diverting critical resources from other compliance tasks.

C.

The risk assessment is managed by a different team from the previous assessment therefore disrupting continuity of institutional knowledge.

D.

The risk assessment does not anticipate potential risks even though the financial institution has no immediate plans involving those risks.

Question 82

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

What action should the compliance officer take?

Options:

A.

Inform the board of directors

B.

Call the employee and demand an explanation

C.

Allow access to the bank's documents immediately

D.

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

Question 83

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 84

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 85

Which method to finance terrorism involves falsifying transaction-related documents?

Options:

A.

Bribery

B.

Black market peso exchange

C.

Trade-based money laundering

D.

Informal value transfer system

Question 86

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 87

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 88

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 89

In which two ways do Financial Action Task Force-style regional bodies influence anti-money laundering and terrorist financing standards within their respective regions? (Choose two.)

Options:

A.

They issue typologies specific to their geographical region.

B.

They administer mutual evaluations of participating members.

C.

They enforce the laws of the member countries in their geographic region.

D.

They require participating countries to adopt laws in line with their recommendations.

Question 90

Which action should an FIU consider taking when it has information that might be useful to another FIU?

Options:

A.

In accordance with Wolfsberg guidelines, submit the information to the other FIU in written form

B.

Supply the information to the other FIU spontaneously as soon as the relevance of sharing the information is identified

C.

Take no action until contacted by the other FIU

D.

Request approval from the Egmont Group prior to sharing the information with the other FIU

Question 91

Which product is considered to be of highest money laundering risk?

Options:

A.

Credit cards

B.

Savings accounts

C.

Time deposit accounts

D.

International wire transfers

Question 92

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

Which new customer warrants enhanced due diligence?

Options:

A.

A non-profit hospital

B.

A fundraising organization

C.

An employee benefit plan trust

D.

A medical practice limited partnership

Question 93

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 94

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 95

A prospective AML officer comes highly recommended by a banks up-stream correspondent institution of similar size and make-up, located in a different city in the same country. The bank is interested in hiring the individual. What should be the next step taken by the Board of Directors?

Options:

A.

Do a thorough background check

B.

Confer with its regulatory agency to determine whether it is appropriate to hire the person

C.

Hire the individual, relying on the recommendation of its correspondent

D.

Hire the individual on a probationary basis so that the institution can determine if the individual is sufficiently experienced and capable

Question 96

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 97

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

Options:

A.

Subjective, factual circumstances

B.

Objective, factual circumstances

C.

Objective, non-factual circumstances

D.

Subjective, non-factual circumstances

Question 98

Under the USA PATRIOT Act, in which scenario would the US not have jurisdiction?

Options:

A.

US bank subsidiaries located in foreign jurisdictions

B.

Foreign branch of a bank located in the US

C.

Foreign bank with a US correspondent account

D.

Shell banks operating in foreign jurisdictions

Question 99

An institution receives a request for credit from a local company that has been a client for many years. The information provided by the company indicates that its assets have increased substantially with the addition of several new subsidiaries. Further research performed by the institution indicates the new subsidiaries are recently created shell companies.

Could this indicate potential money laundering?

Options:

A.

No, the company has been a client for many years.

B.

Yes, shell companies are typically created to manage tax liabilities.

C.

No, it is normal for a business to diversify by creating shell companies.

D.

Yes, the shell companies could have been created to hide beneficial ownership.

Question 100

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 101

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

Options:

A.

The availability of the institution's information sharing practices

B.

The degree to which the collected client data is complete

C.

The locally applicable restrictions regarding the disclosure of client information

D.

The potential different time zones within the same jurisdiction

Question 102

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 103

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

Options:

A.

A computer-based suspicious activity monitoring system

B.

A qualified compliance officer to manage the program

C.

Annual in-person AML training for all employees

D.

An enhanced due diligence program for all new customers

Question 104

Which is a key reason why a financial institution (FI) conducts an enterprise-wide AML risk assessment?

Options:

A.

The need to assess money laundering and terrorist financing risks and ensure there are adequate controls to mitigate those risks.

B.

The identification of specific risk categories (i.e., export, inactivity, layman, and false locations) unique to the bank.

C.

The need to understand its overall budget needs for each department and for internal audit.

D.

The board of directors and senior management are required to have an AML risk assessment for the bank.

Question 105

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 106

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 107

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 108

FATF recommends the incorporation of some measures in customer due diligence (CDD) programs including:

Options:

A.

conducting the risk assessment of products and services.

B.

conducting ongoing due diligence on the business relationship and monitoring of transactions.

C.

identifying the products and services and their suitability to customers.

D.

identifying the number of beneficial owners without the verification of their true identity.

Question 109

An organization uses an automated surveillance system that generates a very large volume of anti-money laundering alerts. The monthly volume of alerts has increased over the last year causing the compliance staff to fall significantly behind reviewing the alerts. As a result, the system settings are under review to determine if they are appropriate.

Which action should be included in the evaluation of system settings?

Options:

A.

Compare settings to organizations within its peer group

B.

Flag filters with no history of generating an alert for removal

C.

Review parameter settings based on the latest risk assessment

D.

Calibrate parameters based on staffing capabilities to clear alerts

Question 110

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

Options:

A.

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

B.

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

C.

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

D.

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

E.

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

Question 111

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

Options:

A.

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

B.

Customer identification, risk assessment, customer screening, monitoring

C.

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

D.

Customer identification, risk management, customer acceptance, monitoring

Question 112

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 113

Since its last regulatory examination, a financial institution has aggressively grown by adding profitable new products and services. The institution has not historically received regulatory criticism regarding its anti-money laundering compliance program. However, a recent regulatory examination cited significant deficiencies in the anti-money laundering program that were attributed primarily to the lack of oversight by the institution’s leadership in implementing adequate controls over the new products and services.

Which area of international control should leadership first address to correct the weaknesses in the program?

Options:

A.

Anti-money laundering training

B.

Anti-money laundering policy

C.

Money laundering risk assessment

D.

Anti-money laundering compliance staff

Question 114

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

Options:

A.

U-turn payment

B.

Cover payment misuse

C.

Layering

D.

Wire stripping

Question 115

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 116

The bank for International Settlements provides the secretariat for which organization?

Options:

A.

The Basel Committee

B.

FATF

C.

The Wolfsberg Group

D.

The Egmont Group

Question 117

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 is understood.

D.

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

Question 118

What should a bank do if it suspects one of its employees may be involved in mortgage loan fraud?

Options:

A.

File a suspicious activity report on the employee's activities if management thinks it is suspicious.

B.

Conduct an investigation by gathering and analyzing information on the employee.

C.

Automatically file a police report about the employee's potential misconduct.

D.

Initiate civil litigation against the employee to recover damages for losses incurred.

Question 119

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 120

Which scenario best justifies why a customer's account might be closed by a financial institution?

Options:

A.

The account has transactions that triggered multiple suspicious activity reports.

B.

The customer uses a shipping company dealing with specially designated nationals.

C.

The customer is the object of a civil subpoena.

D.

The account shows periodic fixed amount remittances for tuition fees.

Question 121

What is therelationship between the EU Anti-Money Laundering Directives (AMLDs) and local AML regulationsin European Union (EU) member states? (Select Two.)

Options:

A.

Local AML laws and regulationsoverridethe requirements of the EU AMLD.

B.

Local AML regulations may imposeadditional or more stringentrequirements than the EU AMLD.

C.

The EU AMLD provides aframework that member countries must implementthrough local AML regulations.

D.

The EU AMLD and local AML regulations areseparate and unrelated legal frameworks.

E.

The EU AMLD and local AML regulationsmust have identical requirements.

Question 122

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 123

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

Options:

A.

Follow local regulatory requirementsfor reporting periods.

B.

Report the SAR within 30 days.

C.

Use a matrix based on the complexityof an investigation.

D.

Act on the professional judgmentof a senior manager.

Question 124

Which action does the Financial Action Task Force call on member countries to take in the most serious cases when countries have significant strategic AML deficiencies?

Options:

A.

Contribute to mutual evaluations

B.

Apply countermeasures

C.

Eliminate all financial dealings

D.

Report high-risk transactions

Question 125

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

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 126

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

Options:

A.

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

B.

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

C.

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

D.

The11 Immediate Outcomesare recommendations specific tohigh-risk jurisdictionsrequiringenhanced monitoring.

Question 127

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

Options:

A.

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

B.

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

C.

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

D.

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

E.

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

Question 128

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 129

Which of the followingare key AML measuresthat aregulated asset management companyin theEuropean Union (EU)should implement? (Select Two.)

Options:

A.

Performing negative news checksof prospective customers.

B.

Rejecting any politically exposed persons (PEPs)as customers.

C.

Inviting prospective customers for an onboarding interview.

D.

Understanding the source and origin of assets.

E.

Producing financial stability reports on interesting customers.

Question 130

According toFinCEN, whichred flagswithin abank accountmay,taken together, be indications ofmodern slavery, human trafficking, and exploitation? (Select Two.)

Options:

A.

Transactional activity with a registered virtual currency exchange.

B.

Frequent payments for online advertisements or non-local classified ads.

C.

Incoming fund transfers from third-party payment processors, with limited originator information.

D.

Large amounts of cash payments to migrant agricultural workers.

Question 131

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 132

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 133

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

Options:

A.

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

B.

Payments on the account reference unknown companies from high-risk jurisdictions

C.

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

D.

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

Question 134

Which scenariobest justifies why a financial institution (FI) might close a customer’s account?

Options:

A.

The account hastransactions that triggered multiple Suspicious Activity Reports (SARs).

B.

The account showsperiodic fixed amount remittances for tuition fees.

C.

The customeruses a shipping company dealing with specially designated nationals (SDNs).

D.

The customeris the object of a civil subpoena.

Question 135

Whichpersons must always comply with all Office of Foreign Assets Control (OFAC) regulations? (Select Three.)

Options:

A.

U.S. citizens regardless of location.

B.

Non-U.S. financial institutions that offer accounts in USD regardless of location.

C.

Merchants that offer U.S.-origin goods for sale regardless of location.

D.

U.S.-incorporated entities and their foreign branches.

E.

Permanent U.S. resident aliens regardless of location.

Question 136

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 137

Which of the following are best practices to raise awareness and train staff regarding the risks related to financial crime? (Select Three.)

Options:

A.

Tailor training and offer regular training to all employees

B.

Train outside of daily operations and promote awareness of Compliance

C.

Train core AML topics once per year, at a minimum, to relevant employees

D.

Use a variety of training methods and provide necessary resources to employees

E.

Communicate regularly and measure effectiveness of training

Question 138

TheFinancial Action Task Force (FATF)routinely publishes a catalog of jurisdictions requiringenhanced monitoring, which is commonly called the:

Options:

A.

Yellow notice.

B.

Red notice.

C.

Grey list.

D.

White list.

Question 139

AnAML compliance officerreceives anindependent audit reportwith a number offindings.

Anappropriate responseto thereportwould include:

Options:

A.

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

B.

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

C.

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

D.

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

Question 140

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

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

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

Options:

A.

Past employment records.

B.

Personal references from close associates.

C.

Personal resume.

D.

Internet and public media searches.

E.

Criminal history searches.

Question 141

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 142

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

Options:

A.

The customer is a shareholder of a corporation declared bankrupt.

B.

The customer is linked to an organized crime group.

C.

The customer is a politically exposed person (PEP).

D.

The customer allegedly violated a construction permit limit.

Question 143

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 144

Which of the following is an important factor to consider when setting up an anti-financial crimes (AFC) compliance program governance structure?

Options:

A.

Ensuring the structure is reviewed by an outside auditor or consultant

B.

Establishing a system of internal controls commensurate with the institution’s size and complexity

C.

Designating a qualified board of directors to monitor day-to-day compliance

D.

Establishing clear roles and responsibilities for AFC risk escalations and issues

Question 145

Thegoal of the Egmont Group of Financial Intelligence Units (FIUs)is to provide aforum for FIUsto: (Select Three.)

Options:

A.

Improve global cooperation between FIUs.

B.

Sign memoranda of cooperation that recognize and allow room for case-by-case solutions to specific problems.

C.

Securely share sensitive information in the fight against money laundering and the financing of terrorism.

D.

Propose legislation to combat financial crime, including money laundering and the financing of terrorism.

E.

Establish an environment to foster trust among countries.

Question 146

When under aregulator’s consent orderor similar action, who at an organization isultimately accountablefor the remediation ofany violations of AML/CFT laws and regulations?

Options:

A.

Chief Operating Officer (COO)

B.

Board of Directors

C.

Designated AML Compliance Officer

D.

Chief Executive Officer (CEO)

Question 147

Money laundering red flags associated with money service businesses include: (Select Two.)

Options:

A.

cash payments on insurance policies by a third party.

B.

the same customer conducts transactions in multiple locations in a short time period.

C.

repeated receipt of funds transfers from virtual currency exchanges.

D.

an employee lives a lavish lifestyle supported by his or her salary.

E.

two or more customers use the same identification for separate and unrelated transactions.

Question 148

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 149

Whichsection of the USA PATRIOT Actrelates toforfeiture of funds and allows for extraterritorial reach?

Options:

A.

Section319(a)

B.

Section314(a)

C.

Section319(b)

D.

Section314(b)

Question 150

Which activities could be considered a potential spear phishing scam? (Select Three.)

Options:

A.

An employee receives a phone call requesting that money be sent to assist someone in trouble.

B.

A courier delivers a duplicate invoice to a business that contains updated payment details of an existing supplier.

C.

Payroll receives an external email from an employee looking to update their bank account information.

D.

A business sends its employees an email warning that email passwords must be changed to prevent cyber-fraud.

E.

An employee receives an email that asks to download an attachment, but the attachment is a malware.

F.

Members of a religious organization receive a donation request by email claiming to be from their leader.

Question 151

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 152

Which regulation permits financial institutions, upon providing notice to the US Department of the Treasury, to share information with one another in order to identify and report activities that may involve money laundering or terrorist activity to the federal government?

Options:

A.

Regulation (EU) 2024/1624 of the European Parliament

B.

Collaborative Sharing of Money Laundering/Terrorism Financing (ML/TF) Information & Cases (COSMIC)

C.

USA Patriot Act Section 314(a)

D.

USA Patriot Act Section 314(b)

Question 153

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

Options:

A.

Ensuring an effective export control and treaty compliance system

B.

Administering and enforcing economic and trade sanctions

C.

Designating jurisdictions as primary money laundering concerns

D.

Managing trade agreements between the US and foreign countries

Question 154

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 155

What is thepurpose of a Risk Appetite Statement (RAS)and its linkages while implementingorganizational controls? (Select Two.)

Options:

A.

An RAS formalizes a risk appetite statement from management and informs the Board of Directors on the risk assessment performed.

B.

An RAS establishes a desired level of risk exposure in qualitative terms, covering all areas of compliance.

C.

An RAS sets limits for risk-taking by means of quantitative and qualitative metrics so that the business does not take up risk in excess of the organization’s risk tolerance.

D.

An RAS establishes a management-approved policy that identifies the organization’s risk tolerances with strategic objectives, risk profile, and risk management capabilities.

E.

An RAS sets limits in terms of residual risk and thus is strongly intertwined with the efficacy of the system of internal controls.

Question 156

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

Options:

A.

The fourth line of defense

B.

The second line of defense

C.

The third line of defense

D.

The first line of defense

Question 157

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 158

Which is often an indirect consequence of non-compliance with AML laws?

Options:

A.

Drop in stock value

B.

Punitive fines

C.

Criminal proceedings

D.

Sanctioning

Question 159

Which of the following risk factors are considered by many supervisory authorities as representing a higher inherent risk associated with MSBs? (Select Two.)

Options:

A.

The use of new technologies to facilitate the onboarding of customers remotely

B.

The prevalence of international wire transfers

C.

Domestic business with small and medium-sized enterprises

D.

The cash-intensive nature of the services offered

E.

The use of digital channels and traceable payment methods

Question 160

What is a key objective of the Egmont Group?

Options:

A.

Validate Financial Action Task Force implementations in countries and territories through a system of evaluations

B.

Provide enforcement recommendations to national law enforcement agencies pursuant to a memorandum of understanding

C.

Exchange international law interpretations among regulators through plenary sessions

D.

Foster better and secure communications across financial intelligence units through the application of technology

Question 161

A country that does not have strong predicate offenses and is lax in prosecuting AML cases could suffer which social/economic consequence?

Options:

A.

US sanctions

B.

Loss of tax revenue

C.

Increased organized crime and corruption

D.

Reputation risk for the port

Question 162

Which should be provided to the board of directors or designated specialized committee when preparing suspicious activity reports (SARs)?

Options:

A.

All possible details of SARs filed during the reported period

B.

Names of all customers subject to SARs filed during the reported period

C.

Statistical data regarding SARs filed during the reported period

D.

Copies of all SARs filed during the reported period

Question 163

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 164

Which is the most severe consequence for a financial institution if the regulator finds it is in breach of AML regulatory obligations?

Options:

A.

Loss of license

B.

Civil sanctions

C.

Monetary fines

D.

Negative reputation

Question 165

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 166

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

Options:

A.

Use ofart storage facilitieslocated intax-free zones.

B.

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

C.

Engagement ofthird-party art advisorsas representatives at art auctions.

D.

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

E.

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

Question 167

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 168

AnAML analyst at a bankis investigating cases triggered bytransaction monitoring alerts.

Whichcircumstances might cause the analyst to suspect a case involves terrorist financing? (Select Two.)

Options:

A.

Transactions involving non-profit organizations with no internet presence.

B.

Small-dollar payments sent to crowdfunding initiatives with detailed descriptions of the project being financed.

C.

Small-dollar payments sent to higher-risk jurisdictions with no prior history.

D.

Transactions involving domestic non-profit organizations providing charitable aid to refugees from higher-risk countries.

E.

Transactions involving structured currency deposits below the reporting threshold to avoid paying taxes.

Question 169

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 170

A compliance officer at a financial institution has completed an investigation into a high-risk customer's activities and determined that there are strong indications of money laundering. The compliance officer has documented their findings and is ready to recommend offboarding the customer. However, the relationship manager responsible for the customer is resistant to the idea, citing the customer’s significant revenue contribution to the institution.

What should the compliance officer do next to ensure the appropriate escalation and decision-making process is followed?

Options:

A.

Escalate the matter to the institution's high-risk client committee, presenting the investigation findings and recommending offboarding while also acknowledging the relationship manager's concerns

B.

Proceed with offboarding the customer unilaterally based on their investigation findings and anti-money laundering (AML) concerns

C.

Attempt to persuade the relationship manager to agree with the offboarding recommendation by highlighting the potential reputational and regulatory risks associated with maintaining the relationship

D.

Delay the offboarding decision and continue monitoring the customer's activities, waiting for further evidence to solidify the case for termination

Question 171

Which of the following entities could potentially pose a higher money laundering risk and require additional review prior to onboarding? (Select Two.)

Options:

A.

A large multinational corporation with extensive, documented wire transfer activity

B.

A local convenience store that replenishes the onsite automated teller machine (ATM) with cash from its till

C.

A local used car sale lot that allows individuals to pay their monthly bill in cash

D.

A virtual asset service provider (VASP), facilitating peer-to-peer cryptocurrency transactions

Question 172

Law enforcement is conducting an investigation of a financial institution (FI) and has submitted an overly broad and unduly intrusive request. Which is a Fl's most appropriate response?

Options:

A.

Ignore the request due to the unacceptable volume of information contained within.

B.

Contest the request with the company's board of directors and key senior management.

C.

Delay a response until all documents can be gathered regardless of the duration.

D.

Narrow the request through a prompt response to the law enforcement agency.

Question 173

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 174

A customer of a bank is an established art dealer. Within the KYC due diligence processes, which constitutes a triggering event that requires ongoing due diligence on this client?

Options:

A.

The customer specializes in art sale and hire, and recently started an art selection consulting service.

B.

The customer keeps adding artwork service providers to the payment beneficiary list.

C.

The customer moves their headquarters from New Zealand to China and opens a branch in Malaysia.

D.

The owner wants to exchange foreign currency for an overseas business travel.

Question 175

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 176

Trusts established in certain offshore jurisdictions make good vehicles to lay under money for which ofthe following reasons?

Options:

A.

Names of the settlor and beneficiaries are into publicly available.

B.

Trusts are typically set up to minimize taxes.

C.

Offshore jurisdictions are unfamiliar with trust.

D.

Trusts may hold assets of significant size.

Question 177

A businessman requests a European private bank to open a numbered or alternate name account. According to the Basel Committee on Banking Supervision principles, which of the following is the most important question the banker should ask?

Options:

A.

Who will control the account?

B.

Who will inherit the proceeds in the event of the businessman's death?

C.

How much money will be deposited into the account?

D.

What account-opening date should I record'!'

Question 178

A financial institution receives a regulatory enforcement action because of deficiencies in its anti-money

laundering program.

Which action should the board of directors take?

Options:

A.

Terminate the compliance officer and staff

B.

Purchase and install a new suspicious activity monitoring system

C.

Hire an attorney with instructions to protest the enforcement action

D.

Instruct the compliance officer to develop a plan to remediate the institution’s anti-money laundering

program

Question 179

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 180

An employee hears a colleague on the telephone with a customer giving advice on how to ensure that a

suspicious transaction report will not be filed as a result of a future transaction.

What action should the employee take?

Options:

A.

Report the conversation to the local police

B.

Report the conversation to the compliance officer

C.

Tell the colleague that it is against policy to give such advice

D.

Ignore the situation because the colleague is the relationship manager for that customer

Question 181

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

Options:

A.

Gatekeepers

B.

Correspondent banking

C.

Payable through accounts

D.

Legal persons and arrangements

Question 182

The branch manager calls the compliance officer and informs her that a law enforcement officer has just left

the branch and was asking a lot of QUESTION NO:s and left a business card.

What should the compliance officer do?

Options:

A.

File a suspicious transaction report

B.

Follow up to verify that the officer received all necessary information

C.

Verify that the reported officer was an actual authorized representative

D.

Require the branch manager to write a detailed memo about the request

Question 183

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

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

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

What action should the specialist take next?

Options:

A.

Recommend the immediate termination of the employee.

B.

Advise that the dealer's accounts should be closed.

C.

Consult with senior management and the legal advisor.

D.

Inform the institution's regulatory agency of the situation.

Question 184

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

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

Options:

A.

Provide all information requested to support the investigation

B.

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

C.

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

D.

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

information

Question 185

Which three circumstances are indicators for defining a customer as required additional diligence according to the Wolfsberg Principles on Private Banking? Choose 3 answers

Options:

A.

Persons residing in a having funds from countries with inadequate AML standards

B.

Persons engaged in business activities known to be susceptible to money laundering

C.

Persons who receive funds from a correspondent banking relationship

D.

Persons determined to be Politically Exposed Persons (PEPs)

Question 186

A law enforcement official calls a bank inquiring about a customer who is currently under investigation. The

law enforcement official requests information about the customer.

How should the bank respond?

Options:

A.

Confirm the customer is either a current or former customer

B.

Inform the board of directors before responding to the request

C.

Provide the requested information to help aid in the investigation

D.

Request a formal letter be submitted to verify the validity of the request

Question 187

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

Options:

A.

Placement

B.

Layering

C.

Integration

D.

Structuring

Question 188

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 189

What are two requirements for monitoring and reporting suspicious activity for correspondent banking

according to the Wolfsberg Principles? (Choose two.)

Options:

A.

Incorporate suspicious activity monitoring into periodic reviews

B.

Incorporate due diligence results such as customer risk ratings

C.

Utilize downstream correspondents to investigate and report suspicious activity

D.

Investigate and report suspicious activity only for the correspondent bank’s clients

Question 190

A customer living in a high-risk jurisdiction makes frequent, large cash deposits at a bank. The same customer

sends small wire transfers to unrelated parties in other high-risk jurisdictions.

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

Options:

A.

The bank allows cash deposits

B.

The client resides in a high-risk jurisdiction

C.

Wire transfers are to high-risk jurisdiction

D.

Large cash deposits are from a high-risk jurisdiction

Question 191

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

Options:

A.

They invest in high risk ventures with high rates of return

B.

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

C.

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

D.

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

Question 192

Which factor should a bank consider before sharing information about a customer with its broker-dealer

affiliate in the case of an investigation?

Options:

A.

Whether the broker-dealer affiliate can rely on the due diligence done by the bank

B.

Whether there is a mutual legal assistance treaty in place between the two institutions

C.

Whether privacy and data protection rules permit the bank to share the information with the affiliate

D.

Whether both institutions have an account or are in the process of opening an account for the customer

Question 193

Which method to launder money through deposit-taking institutions is closely associated with international

trade?

Options:

A.

Forming a shell company

B.

Using Black Market Peso Exchange

C.

Structuring cash deposits withdrawals

D.

Investing in legitimate business with illicit funds

Question 194

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 195

When should the anti-money laundering risk assessment be updated?

Options:

A.

Every two years

B.

After a merger or acquisition

C.

When the board of directors changes

D.

When instructed to by the Financial Action Task Force

Question 196

What are three elements of a sound Customer Due Diligence Program?

Options:

A.

Determination of what type of customer the financial institution will accept

B.

Training as to how and to what extent to identify prospective customers

C.

Obtaining date of birth and address of a prospective customer

D.

Determination of who in the institution should be assigned to the prospective customer as a liaison

Question 197

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

To whom should this situation be escalated?

Options:

A.

The board of directors

B.

The line of business executive

C.

The bank’s anti-money laundering officer

D.

The Financial Action Task Force’s PEP Hotline

Question 198

In establishing procedures for the review of suspicious transactions and filling of STRs, what thing should an institution focus on?

Options:

A.

The need to have on-going training as to potential red flags that the institution might encounter

B.

The appropriateness of having a centralized review of suspicious transactions and recommendations to file an STR to ensure consistency

C.

A system for tracking STRs and ensuring that appropriate supporting documentation is segregated and maintained

D.

The need not to ensure that the institution has a strong case of impropriety before filling an STR

Question 199

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

Options:

A.

Representing a client court

B.

Understanding income to take a tax loss

C.

Overstating income to hide excess cash

D.

Acting as a conduit for transferring cash between accounts

E.

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

Question 200

What types of things should an institution incorporate in it AML policies and procedures? Choose 3 answers

Options:

A.

On-going training, as well as initial training of new employees

B.

Periodic audits, to be performed by independent staff at least once a year

C.

Ability to incorporate relevant legislative and regulatory AML changes

D.

Review of the AML policy by the Board of Directors

Question 201

Financial Action Task Force (FATF)-style regional bodies are created and obliged to understand the inherent

money laundering and terrorist financing risks in the region of the world they serve.

What is one of the methods they use to understand these risks?

Options:

A.

They require member countries to develop statistical metrics over money laundering and terrorist financing

crimes

B.

They require participating financial institutions of their members to file suspicious transaction reports to the

regional body

C.

They conduct global research on money laundering and terrorist financing trends and report their findings

in their own typologies report

D.

They conduct regional-level research and analysis of the money laundering and terrorist financing methods

and trends using standards and templates used for FATF typologies reports

Question 202

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 203

What does designing a country as being of “prime money laundering concern” allow the U.S. government to do?

Options:

A.

Obtain transactional information from U.S.-owned subsidiary banks located outside the U.S.

B.

Close some or all correspondent or payable-through accounts

C.

Ensure the inclusion of that country onto FATF’s Non-Cooperative Country and Territory list

D.

Ensure the inclusion of that country into the office of Foreign Asset Control country sanctions programs

Question 204

Upon filing a suspicious transaction report, which of th€ following elements should be the highest anti-money laundering priority in making the decision to keep the account open?

Options:

A.

Financial impact on the institution if the account is closed.

B.

Procedures to ascertain the potential risk to the organization.

C.

Additional Administrative costs of monitoring the account.

D.

Total number of accounts the institution closed in the last month.

Question 205

A popular restaurant in town has begun depositing less cash than it has in prior years. In a review of the

customer’s accounts, you notice that credit card receipts have increased with no .

The account officer discovers that the restaurant has installed a privately-owned automated teller machine

(ATM) onsite and has begun construction on a patio dining area.

Which red flag should trigger additional investigation?

Options:

A.

Privately-owned ATM

B.

Lower cash deposits

C.

Increased credit card receipts

D.

Construction of the new patio dining area

Question 206

Who has the ultimate responsibility within a bank for ensuring that the bank has a comprehensive and

effective Bank Secrecy Act / anti-money laundering (BSA/AML) program and oversight framework that is

reasonably designed to ensure compliance with applicable regulations?

Options:

A.

Senior management

B.

Board of directors

C.

Business line managers

D.

BSA/AML compliance officer

Question 207

What are two legal risks of having inadequate privacy policies and procedures? (Choose two.)

Options:

A.

Diminished reputation

B.

Industry of regulatory sanctions

C.

Charges of deceptive business practices

D.

Higher marketing and public relations costs

Question 208

During an ongoing investigation into a client's activities by a competent authority, a compliance officer should

Options:

A.

Ensure communication with regulatory and law enforcement authorities is conducted only through senior management.

B.

Communicate only in writing with regulatory and law enforcement authorities in line with applicable local laws.

C.

Communicate with regulatory and law enforcement authorities in line with applicable local laws.

D.

Limit communication with regulatory and law enforcement authorities to the absolute minimum.

Question 209

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 210

Which of the following provides anti-money laundering specialists information related to money laundering trends?

1. Egmont Group's 100 Cases

2. Financial Action Task Force Typologies

3. FinCEN's SAR Activity Review

4. The Wolfsberg Principles

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 211

Which insurance product is particularly vulnerable to money laundering?

Options:

A.

Annuity

B.

Casualty

C.

Collateral

D.

Regulated pension

Question 212

Following a recent exercise which explained how a correspondent banking operation could be used by money launderers, an anti-money laundering specialist decided to re-write the due diligence procedures for entering into agreements with foreign financial institutions. Which of the following information should be included to establish a rigorous "Know Your Respondent" procedure?

1.Respondent's management, nature of license, and major business activity.

2. Computer equipment and software capability.

3. The quality of supervision in the home country.

4. Respondent's location, in particular the existence of a real physical presence.

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 213

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

How should the request be processed to mitigate risk?

Options:

A.

Perform due diligence on the beneficiary

B.

Determine the source of wealth and source of funds

C.

Decline the request if the beneficiary is a foreign PEP

D.

Decline the request to add a beneficiary due to increased risk

Question 214

What is the appropriate compliance control for identifying politically exposed persons (PEPs) according to the Basel Committee’s paper on Customer Due Diligence for Banks?

Options:

A.

Determining that a local figure is a PEP

B.

Reviewing when a relationship is established

C.

Reviewing relationships at account opening and on a periodic basis

D.

Requiring that the customer discloses that they are a PEP or an associate of a PEP

Question 215

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 216

The anti-money laundering specialist of a small bank has identified suspicious activity at a branch located in an area of town where drug dealers are known to operate. An investigation of this activity discloses that the suspicious transactions occurred within the last 3 months and were processed by the same teller (cashier). The teller (cashier) did not file an internal report of unusual activity on these transactions. When checking personnel files, the specialist finds that the teller (cashier) has been a trusted employee for over 15 years, has an impeccable work record, and has participated in several anti-money laundering training sessions. The specialist recently became aware that the employee's daughter has contracted a rare disease and is undergoing a very expensive treatment program. Regarding the teller's (cashier's) failure to report the unusual activity to the institution, the specialist should recommend

Options:

A.

Continuing to monitor the accounts.

B.

Refreshing anti-money laundering training for the teller (cashier).

C.

Directing the teller (cashier) to file a suspicious transaction report.

D.

Suspending the teller's (cashier's) employment.

Question 217

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 218

What is true regarding disclosure to a law enforcement agency by a financial institution of the supporting

documentation for a suspicious transaction report?

Options:

A.

Documentation must be provided as quickly as possible using email

B.

The financial institution may notify the account holder of the request

C.

Confirm that the request originated from a representative of the law enforcement agency

D.

A copy of all the documentation released must also be provided to the account holder’s attorney

Question 219

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

Options:

A.

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

B.

Financial institutions need to continuously analyze the types of activity related to terrorist financing and

develop models that in the long term will drive down terrorism.

C.

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

D.

Financial institutions should apply extra due diligence whenever they see suspicious or irregular activities, especially when customers are engaged in sectors or activities that have been identified by competent

authorities as being used for the financing of terrorism.

Question 220

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 221

One key aspect of the Office of Foreign Assets Control’s extraterritorial reach includes the blocking of certain

non-United States initiated transactions for or through the United States (U.S.) for benefit of a restricted person

or entity.

Under which three circumstances are U.S. banks required to block transactions? (Choose three.)

Options:

A.

The transactions are to, or go through, a blocked entity

B.

Those that are by, or on behalf of, a blocked individual or entity

C.

Those that are by or on behalf of a blocked individual and a licensed entity

D.

Those that are in connection with a transaction in which a blocked individual or entity has an interest

E.

Those that are in connection with a transaction in which a blocked individual or entity has no interest

Question 222

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 223

What should countries do to help prevent non-profit organizations from being abused for the financing of terrorism according to the Financial Action Task Force 40 Recommendations?

Options:

A.

Allow for freezing assets of non-profit organizations

B.

Require all non-profit organizations to register with the country’s financial intelligence unit

C.

Ensure non-profit organizations cannot be used to conceal or obscure the diversion of funds intended for

legitimate purposes to terrorists’ organizations

D.

Create laws that forbid non-profit organizations from completing cross-border transactions without first

running them through known terrorist data bases

Question 224

How does the Financial Acton Task Force (FATF) communicate its findings regarding jurisdictions with

strategic anti-money laundering / Counter Financing of Terrorism deficiencies?

Options:

A.

By issuing documentation to the private sector

B.

By issuing two formal documents three times per year

C.

By issuing informal communication to FATF members

D.

By issuing four formal documents to the deficient jurisdictions

Question 225

After evaluating recent changes to international standards, an anti-money laundering specialist should consider enhanced due diligence on accounts held by

1. lawyers.

2. foreign exchange dealers.

3. retail account holders.

4. precious metal dealers.

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 226

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

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

Options:

A.

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

B.

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

C.

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

D.

The institution should close the account before another issues arise

Question 227

Which of the following is the financial stage of money laundering?

Options:

A.

integration

B.

structuring

C.

off shoring

D.

placement

Question 228

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 229

According to Basel Committee on Banking Supervision's Customer Due Diligence for Banks, which of the following should provide an evaluation of a bank's policies and procedures independent from its management?

Options:

A.

The credit risk department

B.

The Board

C.

A peer institution

D.

The compliance function

Question 230

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

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

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

What is the issue with this situation?

Options:

A.

Independent reviews must be performed annually

B.

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

C.

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

D.

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

Question 231

Which two factors assist a money laundering investigation that involves multiple countries? (Choose two.)

Options:

A.

Law enforcement and other authorities should have access to financial information that is pertinent to the

investigation.

B.

Every country should share all their information with foreign law enforcement and government authorities

to facilitate rapid investigations.

C.

Law enforcement and other authorities should be allowed to establish and utilize joint investigative teams

with law enforcement in other countries.

D.

Law enforcement and other authorities should not expedite information sharing between countries to

ensure that all information is provided at the same time to avoid premature conclusions.

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Total 772 questions