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

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Total 860 questions

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

Question 1

The primary objectives of the United Nations in developing sanctions regimes include: (Select Three.)

Options:

A.

to force developing nations to adopt liberal or substantive democracies.

B.

to support governments and regimes in the peaceful resolution of conflict.

C.

to punish governments for having weak financial crime controls.

D.

to deter non-democratic and non-constitutional changes within countries.

E.

to support the protection of human rights.

Question 2

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

property in Florida.

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

LLC was established by a New York-based attorney.

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

payment.

Which aspect indicates potential for money laundering?

Options:

A.

The LLC’s ownership is not disclosed to the bank

B.

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

C.

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

D.

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

Question 3

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

Options:

A.

Frequently travels to countries considered tax havens.

B.

Engages clients with high-net worth in foreign countries.

C.

Represents persons accused of crimes against financial institutions.

D.

Creates corporate entities to disguise true beneficial ownership of clients.

Question 4

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

Options:

A.

Malware

B.

Cryptojacking

C.

Spear phishing

D.

Tumbling

Question 5

Which is a goal of Financial Action Task Force Regional-Style Bodies?

Options:

A.

Executing sound AML processes in response to recommendations

B.

Enforcing local AML laws and regulations

C.

Analyzing new or developing methods in which criminals or terrorists abuse the financial system in their region

D.

Setting standards to assess whether members have an adequate AML regime

Question 6

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

Options:

A.

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

B.

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

C.

Proactively ask the agents as many questions as time allows.

D.

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

E.

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

Question 7

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

Options:

A.

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

B.

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

C.

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

D.

Maintain a record of the transaction activity that generated the alert

Question 8

A financial institution's monitoring system triggers an alert and an internal investigation has confirmed the activity as suspicious. Which of the following should an anti-money laundering specialist do before submitting the suspicious transaction report?

Options:

A.

Secure documents related to the suspicious circumstances and the decision to report.

B.

Check with other financial institutions in accordance with the relevant law.

C.

Add information related to the suspicious activity to the customer's account-opening file.

D.

Contact the customer for further information without disclosing the suspicion.

Question 9

How can violations of anti-money laundering laws be a risk to individuals?

Options:

A.

Violations can result in civil and criminal fines and penalties against the individuals.

B.

Violations can result in additional legislation that the individuals have to comply with.

C.

Violations can result in enforcement actions that damage the reputation of the individual’s employer.

D.

Violations can result in additional and more stringent anti-money laundering training for individuals.

Question 10

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 11

Which scenario indicatespotential money laundering activity by a lawyer?

Options:

A.

A lawyer's trust account regularly receives wire transfers from unknown remitters from a higher-risk country and immediately transfers the same amount of funds received to a known beneficiary's account in a low-risk country.

B.

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

C.

A lawyer's trust account receives a large-value wire transfer from a regulated insurance company and immediately transfers the same amount of funds received to the beneficiary's bank account located in a low-risk country.

D.

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

Question 12

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 13

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 14

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

Which authorities could have issued the report?

Options:

A.

A banking sector self-regulatory body

B.

Law enforcement authority

C.

Financial Action Task Force (FATF)

D.

AML supervisory authority

Question 15

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

Options:

A.

Concealment

B.

Coordinated betting

C.

Player-to-player transfers

D.

Chip dumping

Question 16

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 17

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

Options:

A.

Making small cash deposits over the course of a week.

B.

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

C.

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

D.

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

Question 18

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

Options:

A.

Customer profile

B.

Adverse media search

C.

Account activity

D.

Open source information

Question 19

Which of the following are included in the11 Immediate Outcomesoutlined in the Financial Action Task Force (FATF) methodology for assessing technical compliance with the FATF Recommendations and the effectiveness of AML/CFT/CPF systems during mutual evaluations? (Select Three.)

Options:

A.

International cooperation provides actionable information to use against criminals.

B.

Supervisors regulate financial institutions and non-bank financial institutions and their risk-based AML/CFT programs.

C.

Financial intelligence information is collected by authorities and shared with the FATF for further investigation.

D.

Those convicted of money laundering offenses are denied access to basic banking services.

E.

Money laundering offenses are investigated and criminally prosecuted.

Question 20

A high-volume dealer of precious metals and stones in a high-risk jurisdiction is approached by a new customer interested in selling gold worth $200,000. The customer was referred by a longtime family friend of the dealer and provides no indication ofbackground or business purpose for the sale. The dealer agrees to make the purchase based solely on the reference.

What is the money laundering red flag?

Options:

A.

The customer was referred by a longtime friend of the dealer

B.

The precious metals dealer is operating in a high-risk jurisdiction

C.

A new customer is selling gold worth $200,000 to a high volume dealer

D.

The customer provides no background information or business purpose for the transaction

Question 21

Which of the following is a common strategy employed by non-governmental organizations (NGOs) to combat money laundering?

Options:

A.

Helping Financial Intelligence Units (FIUs) to analyze the suspicious activity reports (SARs)

B.

Directly prosecuting money launderers in court

C.

Providing financial assistance to governments to strengthen their anti-money laundering efforts

D.

Raising awareness about the issue of money laundering and its consequences

Question 22

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

Options:

A.

invokes reporting requirements through a lump sum payment.

B.

refers to casino associates by their first name.

C.

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

D.

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

Question 23

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

Options:

A.

Exchange operational information between public authorities and obliged entities

B.

Exchange strategic information between FIUs and obliged entities

C.

Exchange strategic information between financial institutions

D.

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

Question 24

Abank organized under foreign lawand located outside of the U.S. maintains acorrespondent banking relationshipwith aU.S.-based bankto handlefinancial transactions in U.S. dollarsfor its clients.

In compliance with theUSA PATRIOT Act of 2001, allU.S. banks and broker-dealers in securities must obtain a signed certificationfrom allnon-U.S. foreign bank clients conducting business with them.

What information does theUSA PATRIOT Act of 2001require theforeign bank to certify to the U.S. bank? (Select Three.)

Options:

A.

The ownership details of the foreign bank.

B.

The foreign bank will not allow indirect use of the correspondent bank accounts by Politically Exposed Persons (PEPs).

C.

The jurisdictions in which the foreign bank maintains a physical presence.

D.

The foreign bank’s operations will be limited to the country of incorporation.

E.

The foreign bank will not allow indirect use of the correspondent bank accounts by shell banks.

Question 25

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 26

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 27

A well-developed anti-money laundering compliance program is unlikely to achieve institutional goals without

Options:

A.

Screening all staff.

B.

Training appropriate employees.

C.

Verification of account owners.

D.

Endorsement by a competent authority.

Question 28

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 29

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 30

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 31

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

Options:

A.

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

B.

in the names of unrelated thud patties.

C.

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

D.

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

E.

using loans backed by cash or certificates of deposit.

Question 32

A national Financial Intelligence Unit, which is responsible for receiving, analyzing and disseminating disclosure of financial information, should consider becoming a member of what organization?

Options:

A.

The Egmont Group

B.

The Wolfsberg Group

C.

The Financial Action Task Force

D.

The Basel Committee

Question 33

Which of the following should an anti-money laundering specialist consider the most serious deficiency when detected during a regulatory audit of the anti-money laundering program?

Options:

A.

The compliance officer fails to have on-going meetings with upper management to keep them apprised of current money laundering trends.

B.

The company's anti-money laundering manual has not been updated to reflect a recent internal control enhancement.

C.

The company has failed to download the most recent regulation from the Financial Intelligence Unit web site.

D.

The company has not implemented an anti-money laundering training program.

Question 34

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 35

A bank receives a request for a subpoena (or a client who has been the subject of monitoring for several months. The bank wishes to close the account in order to mitigate any additional risk. However, the government requires that the account remain open. What document must be provided to the bank to keep the account open?

Options:

A.

An email agreement between the government and the financial institution to keep the account open

B.

A request in writing under proper letterhead and authority from the government

C.

An order to keep the account open but with the funds frozen

D.

An authorization from the board of directors

Question 36

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

Options:

A.

Loss of professional accounting and legal designations

B.

Civil and criminal prosecution, fines, and imprisonment

C.

Ban from employment in the financial services industry

D.

Recommend termination of employment from the FI

E.

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

F.

Prohibition from dealing with goods on the Wassenaar List

Question 37

A charity has unaudited accounts. Which of the following represents the highest risk factor for terrorist financing?

Options:

A.

Disbursement of funds to entities unrelated to the purpose of the charity.

B.

An international board composed of politically exposed persons.

C.

Frequent deposits from third parties into the charity's bank account.

D.

Frequent changes to the senior management of the charity.

Question 38

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 39

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

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

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

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

a bank in London.

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

Options:

A.

The clients are foreign

B.

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

C.

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

D.

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

Question 40

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 41

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

Options:

A.

address KYC deficiencies in account opening procedures.

B.

ensure policies and procedures are reviewed every three months.

C.

address structure changes strictly related to new employees.

D.

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

Question 42

Which of the following is the best action to take regarding a particular account once suspicious activity is reported by the institution?

Options:

A.

Notify the client that the transaction has been reported.

B.

Freeze the funds pending notification from the competent authority.

C.

Secure all supporting documentation.

D.

Immediately close the account.

Question 43

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 financingcrimes

B.

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

C.

They conduct global research on money laundering and terrorist financing trends and report their findingsin their own typologies report

D.

They conduct regional-level research and analysis of the money laundering and terrorist financing methodsand trends using standards and templates used for FATF typologies reports

Question 44

Which event occurs most frequently in money laundering in the insurance industry?

Options:

A.

Getting a reimbursement from an overfunded policy

B.

Purchasing full-term insurance bonds

C.

Failing to take advantage of the free-look period

D.

Redeeming a policy at the end of its term

Question 45

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 46

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

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

Options:

A.

The client does business in countries with active terrorist organizations.

B.

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

C.

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

D.

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

Question 47

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

Options:

A.

Request copies of the relevant documents from the accountable institution.

B.

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

C.

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

D.

Request the documents from the FIU.

E.

Acquire a search warrant to obtain the documents.

Question 48

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 49

Which risk factors are associated with acquiring and servicing the banking activities of customers considered higher risk for financial crime activities? (Select Three.)

Options:

A.

Reputational risk

B.

Operational risk

C.

Sanctions risk

D.

Compliance risk

E.

Lending risk

Question 50

Which of the following is among the Financial Action Task Force criteria defining non-cooperative countries and territories?

Options:

A.

inadequate rules for the licensing and creation of financial institutions, including assessing backgrounds of managers and beneficial owners

B.

effective laws regarding multiple sources of beneficial owner identification by a financial institution

C.

the presence of bank secrecy provisions reasonably balanced against the government's need for information

D.

the establishment of a system for reporting "unusual" transactions, instead of "suspicious", as mentioned in the Financial Action Task force 40 Recommendations

Question 51

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 52

AnAML analyst at a financial institutionis examining analert generated by the automated transaction monitoring systemto determine whether the alert should beescalated to the AML unit for further investigation or archived as a false positive.

Whichaction might be reasonable for the AML analyst to take?

Options:

A.

Perform below-the-line testing to ensure the automated monitoring system is operating effectively.

B.

Send a request for information to the counterparty bank involved in the transaction that caused the alert.

C.

Request information from the relationship manager assigned to the account that caused the alert.

D.

Restrict the client’s access to the account.

Question 53

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

Options:

A.

Gather a list of their politically exposed customers

B.

Identify natural persons who own or control more than 5%

C.

Obtain senior management approval before establishing the relationship

D.

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

Question 54

A suspicious transaction report has been filed on an account owned by the wife of the bank’s ChiefExecutive Officer. Which of the following is the most important consideration when deciding whether to recommend closing the account?

Options:

A.

The institution’s anti-money laundering policy

B.

Requests from the competent authority

C.

Customer relations

D.

Chief Executive’s reputational risk

Question 55

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 56

According to the Financial Action Task Force, financial institutions should exit the relationship with a client in which case?

Options:

A.

The client refuses to update information.

B.

There is a change in ownership structure.

C.

The client is a politically exposed person.

D.

The country of incorporation has been elevated to high-risk.

Question 57

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 58

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 59

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 60

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 61

A financial institution (FI) has decided to revamp its compliance program to be more risk-based. Which option should the FI use as part of the new risk-based compliance program?

Options:

A.

Leadership-based

B.

Predictive-based

C.

Transaction-based

D.

Data-based

Question 62

While gaming platforms are typically used for recreational purposes, they can potentially be used for terrorist financing through games in which players can:

Options:

A.

buy in-game items with virtual in-game currencies.

B.

exchange in-game items with other players.

C.

trade in-game items with other players that can be exchanged for fiat currency

D.

obtain in-game materials by performing in-game activities.

Question 63

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

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

Options:

A.

The types of customers serviced by the bank

B.

The customer onboarding platform that will be used

C.

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

D.

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

E.

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

Question 64

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

Options:

A.

It should perform a comprehensive risk analysis

B.

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

C.

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

D.

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

Question 65

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 66

A financial institution's US Branch receives a subpoena from law enforcement requesting detailed records of a customer's account activity. The customer is part of an ongoing investigation into a money laundering operation. At the same time, the institution has received a FinCEN 314(b) information-sharing request from another bank seeking details on transactions linked to the same customer. The compliance team is tasked with responding to both the subpoena and the FinCEN 314(b) request.

What should the compliance officer prioritize in responding to these requests while ensuring that all legal and regulatory obligations are met?

Options:

A.

Notify the customer of the information-sharing request from the other financial institution and seek their consent before responding

B.

Consult the institution's legal counsel to validate the subpoena, then respond directly to law enforcement while ensuring all documentation is properly recorded

C.

Respond to the FinCEN 314(b) request first, as it allows for voluntary information sharing with partner organizations

D.

Provide the requested records to both law enforcement and the other financial institution immediately to ensure full cooperation and transparency

Question 67

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

Options:

A.

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

B.

Random testing of employees to ensure proper understanding of policies

C.

Real-life money laundering examples

D.

Lists of anti-money laundering regulations

Question 68

Under requirements for correspondent accounts in the USA PATRIOT Act, the word "certification" refers to a written representation by a

Options:

A.

federal receiver" certifying that he is not the beneficial owner of the correspondent account.

B.

respondent bank, certifying that they do not do business with politically exposed persons.

C.

correspondent bank, certifying that they do not open correspondent accounts for alternative remittance companies.

D.

respondent bank, certifying that they do not do business with shell banks.

Question 69

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 70

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 71

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 72

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 73

A client has retained a lawyer to create a financial holding company. The lawyer resides in Europe. The client provides all requested documentation to the lawyer. However, the lawyer becomes suspicious that the customer is engaged in criminal activity and intends to use the financial holding company for money laundering purposes. Which of the following should an anti-money laundering specialist recommend according to the European Union Money Laundering Directives?

Options:

A.

There is no need to file a suspicious transaction report, as this activity is covered by attor-ney-client privilege.

B.

Freeze the client's assets so that all records can be turned over to the competent authori-ties.

C.

Report the activity as suspicious to the competent authority because the lawyer is covered by these directives.

D.

Consult with the competent authority to receive advice on how to handle the transaction.

Question 74

When should new business products to evaluated for AML concerns?

Options:

A.

After they have been implemented so there is empirical data to review

B.

Before they are launched into the market

C.

At the time of the next enterprise risk assessment

D.

On an annual basis

Question 75

Which of the following attributes would enhance an AML program's effectiveness?

Options:

A.

Providing basic AML training to all employees

B.

An AML officer being appointed to the board as a working member of management with increased authority

C.

Auditors providing prescriptive guidance and support to the program following a less than satisfactory audit

D.

Providing effective challenge with AML staff and continuous cross-training

Question 76

A customer opens a corporate account with a broker-dealer on behalf of several beneficial owners, with a

stated long-term investment goal. The customer deposits $25.5 million into the account and three days later transfers $5 million to an overseas bank. Shortly thereafter, the customer begins making numerous purchases of pesos. The compliance officer receives a query regarding the movement of funds. Within a month of account opening, the customer depletes the account.

Which two red flags should prompt the firm’s compliance officer to take action? (Choose two.)

Options:

A.

The new account deposit is $25.5 million

B.

A corporate account is opened on behalf of several beneficial owners

C.

The compliance officer receives the query regarding the movement of funds

D.

The customer’s stated investment goal is not reflective of account activity

Question 77

A compliance officer is reviewing the activity of the wire transfer department for the previous month and identifies an unusual wire transfer from a customer’s account.

Which information should be included in the review of the customer’s activity?

Options:

A.

Records of the recent deposit activity

B.

Wire transfer requests initiated by phone and internet

C.

Total number of wires processed each month over the previous year

D.

Whether the bank processes wire transfers through a correspondent bank

Question 78

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

Options:

A.

Commodities traders

B.

Money services businesses

C.

Hawala operators

D.

Real estate agents

Question 79

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

Options:

A.

When new products, services or customer types are introduced

B.

When new board members are elected

C.

When the AML compliance team hires new employees

D.

When the institution faces a merger or acquisition

E.

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

Question 80

A government has instituted a new anti-money laundering laws which require all financial institutions to obtain certain information from its customers.

Which step should an institution located in this jurisdiction take to ensure compliance?

Options:

A.

Change procedures to require that the necessary information is obtained

B.

Change procedures and systems as necessary and provide employee training

C.

Send a notice to customers asking them to provide the necessary information

D.

Change systems to ensure the required information is automatically obtained from all customers

Question 81

A compliance analyst is reviewing the account activity of a customer that they suspect may be indicative of money laundering activity. Which is difficult to determine solely from the customer's account activity and KYC file?

Options:

A.

If the activity is materially different from related businesses

B.

If the account has multiple transfers to the same, related businesses

C.

If there is negative media associated with counterparties

D.

If the account is mostly dormant or has little activity

Question 82

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 83

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 84

Which ML/TF risks are associated with cryptoassets? (Select Three.)

Options:

A.

Devaluation

B.

Smart contract vulnerabilities

C.

Potential for anonymity

D.

Global reach

E.

High transaction fees

F.

Use to layer illicit funds

Question 85

In order to protect investigative materials from disclosure when conducting an internal Investigation of any employee of a financial institution, legal counsel of that financial should________?

Options:

A.

Request formal company authorization to conduct the investigation. Such authorization should be granted, if possible, by the board of directors or audit committee

B.

Refuse to provide any records or documents to law enforcement because the bank has client privilege with its bank customers

C.

Let the bank hire any and all contract investigators to conduct the internal investigation. That way Legal is not a party to the action and may remain independent

D.

Not mark files or documents with privileged and Confidential: Attorney-Client Privilege and/or Work-Product. Those marks will only encourage law enforcement

Question 86

A non-U.S. bank wants to open an account at Bank A, which is a U.S.-based bank.

Which information must Bank A obtain under the USA PATRIOT Act?

Options:

A.

A complete client list from the non-U.S. bank

B.

The identity of owners and percentage of ownership of the non-U.S. bank

C.

The structure and identity of the management team at the non-U.S. bank

D.

The details of the non-U.S. bank’s anti-money laundering compliance training program

Question 87

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

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

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

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

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

request?

Options:

A.

The anticipated cost of complying with the law enforcement request

B.

The number of suspicious transaction reports previously filed on the client

C.

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

D.

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

Question 88

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

Options:

A.

Notify the Board of Directors

B.

Update the monitoring software containing sanctioned persons

C.

Inform the customers that their funds will be frozen

D.

Update training information to include the latest names

Question 89

A high-profile, successful entrepreneur has been a client of a Swiss private bank for more than a decade. Recently, the entrepreneur launched a political career, with rather extremist

political views. On which grounds can the bank terminate the client's bank relationship? (Select Two.)

Options:

A.

The client is not able (or willing) to provide documentary evidence of tax compliance.

B.

The client's account has an increase in unusual and significant monthly inflows.

C.

A business partner of the account holder requests an asset freeze, stating a business dispute and disagreement over the quality of goods and services sold to the partner.

D.

The client has made his/her fortune in the mining and excavation industry, which the bank has deemed as a high-risk industry.

E.

Continuing the client relationship poses an increasing reputational risk, which could negatively affect the bank's future business.

Question 90

Interactions between the compliance department and other functions or departments within an organization contribute to making the anti-financial crime (AFC) compliance program more robust by addressing specific risk areas.

Which departments play a crucial role in enhancing the AFC compliance program of an organization? (Select Two.)

Options:

A.

Information security office (ISO)

B.

Marketing and sales

C.

Human resources (HR)

D.

Data privacy office (DPO)

Question 91

How canawareness be raisedwithincountries that do not have sanctions regulatory regimes? (Select Two.)

Options:

A.

Restrict trade between countries that have robust AML/CFT and sanctions regulatory regimes and those that do not.

B.

AFC (Anti-Financial Crime) and sanctions-related seminars, webinars, and training within these countries.

C.

Enforcement and pecuniary fines against these countries.

D.

Bilateral conversations and cooperation between governments.

Question 92

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

Options:

A.

The 40 Recommendations on Money Laundering

B.

The Report on Non-Cooperative Countries and Territories

C.

The Report on Money Laundering Typologies

D.

The Special Recommendations on Terrorist Financing

Question 93

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

Options:

A.

Failure to conduct proper due diligence.

B.

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

C.

The bank's exposure to politically exposed persons.

D.

Not having appropriate information to share with Financial Intelligence Units.

Question 94

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 95

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 96

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 97

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 98

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 99

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 100

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 101

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 102

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

Options:

A.

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

B.

Prevent the suspicious transaction report from government filing.

C.

Ask the Board member to explain the transaction.

D.

Maintain standard summary statistical reporting to the Board.

Question 103

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 104

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 105

Which of the following laws or regulations can impact the application of AML/CFT programs and require financial institutions (r" Is) to balance multiple compliance requirements?

Options:

A.

Consumer protection laws may intersect will) AML/CFT requirements when handling customer complaints or disputes, potentially affecting how FIs implement their compliance programs.

B.

AML/CFT laws are the primary focus for FIs, and other regulations like data privacy and consumer protection may only indirectly influence their compliance obligations

C.

Environmental, social, and governance (ESG) frameworks can influence a Fl's risk management strategies but are generally considered separate from core AML/CFT compliance requirements

D.

Data privacy laws can restrict the sharing of customer information, while financial inclusion initiatives require FIs to avoid excessive de-risking that could exclude vulnerable populations.

Question 106

According to the Financial Action Task Force Special Recommendations on Terrorist Financing, which of the following should an anti-money laundering specialist do if the specialist has reasonable grounds to suspect funds are linked or related to terrorist acts?

Options:

A.

Conduct a full due diligence review of the client.

B.

Inform the institution's managing Board.

C.

Contact the institution's legal advisor.

D.

Promptly report to the competent authority.

Question 107

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

Options:

A.

Placing more emphasis on manufacturing

B.

Weakening of the legitimate private sector

C.

Creating a more competitive pricing environment

D.

Aligning management principles between criminal enterprises and legitimate businesses

Question 108

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

What should be done to protect suspicious transaction report information?

Options:

A.

Provide the suspicious transaction report information to the credit department

B.

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

C.

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

D.

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

Question 109

A bank compliance officer has implemented enhanced monitoring rules that have identified some unusual

activity that may be indicative of human trafficking.

Which red flag should prompt additional transactional review?

Options:

A.

Wire transfer activity from countries with significant migrant populations

B.

Cash deposits that occur in cities where the customer resides and conducts business

C.

Cash deposits that occur in cities where the customer does not reside or conduct business

D.

Cash deposits that occur in cities where the customer does not reside or conduct business followed by same-day withdrawals

Question 110

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

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

What should the auditor do?

Options:

A.

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

B.

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

C.

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

D.

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

Question 111

A bank has joined a public-private partnership (PPP) to work with law enforcement and regulators on combating financial crime. However, the bank's data protection officer is concerned about sharing sensitive customer data, and the compliance officer is worried about potential delays in receiving useful information from the government.

Which of the following best describes a benefit of PPPs in fighting financial crime?

Options:

A.

PPPs improve financial crime detection and prevention by sharing intelligence between banks and law enforcement.

B.

PPPs help banks reduce compliance costs by automating information sharing.

C.

PPPs allow banks to manage their own suspicious activity report (SAR) filing process without the need to involve the Financial Intelligence Unit (FIU).

D.

PPPs maximize the efficiency of the bank's compliance program by providing real-time intelligence from law enforcement.

Question 112

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 113

According to the Financial Action Task Force, which action must a financial institution take to fulfill customer due diligence obligations?

Options:

A.

Secure a written declaration from the customer confirming the source of the funds.

B.

Obtain information on the intended nature of the banking relationship.

C.

Identify shareholders listed on the stock exchange of corporate entities holding fifty percent of the shares.

D.

Verify the customer is not on any sanction lists.

Question 114

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 115

What should senior management do in order to promote a culture of anti-money laundering compliance?

Options:

A.

They should include compliance with AML procedures as condition of employment

B.

They should attend all training sessions with front-line employment

C.

They should have close ties with the independent auditors of the AML program

D.

They should base employee compensation on the amount of suspicious activity they detect

Question 116

To understand if the customer operates in line with the firm's risk appetite for a specific industry segment, a financial institution must:

Options:

A.

obtain sufficient customer information to understand the nature and purpose of customer relationships for the purpose of developing a customer risk profile.

B.

obtain identifying information for beneficial owners through a completed certification form from the individual opening the account on behalf of the legal entity customer.

C.

obtain the name and address, country identification number and date of birth of a non-customer who purchases a monetary instrument.

D.

obtain the name, date of birth for an individual, address and identification number from each customer before opening the account.

Question 117

In many jurisdictions, financial institutions are prohibited from hiring a person who has been convicted of what type of offense?

Options:

A.

Kidnapping

B.

Offenses involving dishonesty

C.

Driving while under the influence

D.

Protests of government action

Question 118

Abank received a subpoenaregarding one of its clients. TheFinancial Intelligence Unit (FIU) of the bankshould review the subpoena and:

Options:

A.

File a Suspicious Activity Report (SAR), including the receipt of the subpoena in the SAR narrative.

B.

Perform a transaction reviewand respond fully to the subpoena.

C.

Close the client’s accountby informing the client of the subpoena.

D.

Adjust the client's risk scoreand close the case.

Question 119

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

Options:

A.

They apply to member states of the European Union

B.

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

C.

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

D.

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

Question 120

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

What is the correct next course of action?

Options:

A.

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

B.

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

C.

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

D.

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

Question 121

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

Who should Bank A file a suspicious transaction report on?

Options:

A.

The transaction in Country A

B.

Bank B in Country A

C.

The transaction in Country B

D.

Bank C in Country C

Question 122

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

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

Options:

A.

Identify the money laundering scheme and submit a suspicious transaction report

B.

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

C.

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

D.

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

Question 123

An example of an external factor that will affect an organization's AML risk is:

Options:

A.

acceptance of new customer types.

B.

political system changes in a specific jurisdiction.

C.

introduction of a new product which will be offered to a wide range of clients.

D.

introduction of mobile banking for all clients.

Question 124

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 125

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

Options:

A.

A beneficiary of a transaction is a politically exposed person.

B.

A transaction involves funds exchanged from crypto to fiat currencies.

C.

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

D.

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

Question 126

How can a financial institution verify the nature and purpose of a business and its legitimacy?

Options:

A.

By reviewing a copy of the corporation’s latest audited reports and accounts

B.

By undertaking a company search or other commercial inquires to see that the institution has not been, or is not in the process of being dissolved of terminated

C.

By reviewing the company’s website

D.

By using an independent information verification process, such as by accessing public and private databases

Question 127

According to the Egmont Group, which benefits do public-private partnerships (PPPs) provide to Financial Intelligence Units (FIUs)? (Select Three.)

Options:

A.

Helping overcome data protection and information sharing limitations

B.

Enhancing the quality of reporting and additional informational input

C.

Helping to alleviate the financial cost burden on law enforcement

D.

Helping to design common approaches and identify desired deliverables

E.

Offering flexibility, agility, and opportunities to adjust to the ML/TF threat environment

Question 128

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 129

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 130

Which red flags should be considered prior to establishing a relationship with a third party? (Select Two.)

Options:

A.

The third party has a lack of anti-corruption compliance clauses in agreements.

B.

The third party's amount to be paid for goods and services appears to be reasonable.

C.

The third party has requested unusual payment or billing procedures.

D.

The third party has a declaration of non-family or business ties with government officials.

E.

The third party has sufficient capability to provide the services or goods for which it is being engaged.

Question 131

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

Options:

A.

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

B.

The Egmont Group

C.

The Wolfsberg Group

D.

The International Monetary Fund (IMF)

Question 132

The United Nations Security Council (UNSC) is empowered to impose sanctions regimes against countries and terrorist organizations.

Which statements are true regarding sanctions imposed by the UNSC? (Select Two.)

Options:

A.

Attempts to circumvent or evade sanctions imposed by the UNSC can constitute a criminal offense if designated under local laws and regulations

B.

The UN can impose arms embargoes but cannot prohibit direct or indirect exports of other goods to specific countries

C.

Member countries of the United Nations are expected to implement and enforce sanctions imposed by the UNSC

D.

Direct breaches of sanctions imposed by the UNSC constitute a criminal offense in all member countries

Question 133

An institution is about to release a new peer to peer (P2P) funds transfer product to provide much needed remittance services to an under-banked population segment in the country.

The service allows customers to transfer funds through a mobile banking application to individuals worldwide entering only a name and mobile number. The new service charges less than comparable market solutions and offers real time transfer of funds. The customer onboarding process is conducted at branch locations with

identity verification.

Which three present the highest anti-money laundering or sanctions risk and will require controls prior to launch? (Choose three.)

Options:

A.

Customer onboarding

B.

Cross-border functionality

C.

Real time transfer of funds

D.

Servicing the under-banked population

E.

Limited access to counterparty information

Question 134

A commission rogatory would be used in which gateway to obtain information from another country?

Options:

A.

An FIU request under the Egmont principles

B.

An MLAT request

C.

A supervisory channel request with the Basel Committee

D.

A FATF request

Question 135

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 136

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

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

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

Options:

A.

Those with the largest number of donors

B.

Projects that get funding within days of their start

C.

Projects with the highest monetary success threshold

D.

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

Question 137

Which transaction should result in a suspicious activity report filing?

Options:

A.

A small business owner deposits checks totaling 9,950 USD on a daily basis without providing a legitimate purpose.

B.

A small business owner deposits 25.000 USD in cash proceeds with a business equipment bill of sale.

C.

A national food-chain restaurant makes multiple, anticipated cash transactions that are above the daily reporting threshold.

D.

A national food-chain restaurant with multiple cash transactions at various branch locations.

Question 138

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

What should the teller do after completing the transaction?

Options:

A.

Confer with the bank’ s account going forward

B.

File a SAR on the customer

C.

Monitor the customer’s account going forward

D.

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

Question 139

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 140

When implementing a risk-based approach related to casinos, which risks are related to the customer as an individual? (Choose two.)

Options:

A.

Transfer between customers

B.

Casual customers

C.

Improper use of third parties as customers

D.

Customer from a high-risk country

E.

Use of casino deposit accounts by the customer

Question 141

A real estate buyer purchases multiple high-value properties in cash through a series of transactions in a short period of time and without any clear economic justification.

Which of the following is the most likely money laundering risk associated with this behavior in the real estate sector?

Options:

A.

The buyer is using high-value real estate transactions to obscure the origin of the funds.

B.

The buyer is quickly diversifying their investment portfolio through structuring payments in order to take advantage of the liquidity of cash transactions in real estate.

C.

The buyer is capitalizing on favorable market conditions and using cash purchases to outbid competitors in a competitive real estate market using insider information.

D.

The buyer is a real estate developer acquiring multiple properties for a potential redevelopment project with a business partner located in a high-risk jurisdiction.

Question 142

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

Options:

A.

The Financial Intelligence Unit (FIU)

B.

FATF

C.

The Basel Committee

D.

The Wolfsberg Group

Question 143

The new KYC lead at a bank is particularly focused on enhancing the risk management component of its KYC program and refers to the Basel Committee's customer due diligence (CDD) principles.

Which of the following describe key improvements to a KYC program established in the Basel Committee's CDD principles? (Select Two.)

Options:

A.

Implementation of a blacklist of correspondent customers with previously detected and investigated suspicious activity

B.

Enhancement of a customer acceptance policy to more clearly identify high-risk customers

C.

Increased frequency of training provided to front office employees

D.

Enhancement of customer identification procedures to appropriately identify trust, nominee, and fiduciary accounts

Question 144

In May 2002, the Wolfsberg Principles on Private Banking were revised and included a section that prohibits the use of internal non-client accounts in a manner that would prevent officials from appropriate monitoring movements of funds or keep clients from being linked to the movement of funds on their behalf.

What is another name for these internal, non-client accounts?

Options:

A.

Trust accounts

B.

Correspondent accounts

C.

Concentration accounts

D.

Pay through accounts

Question 145

Who bears the ultimate responsibility for approving a financial institution's relationship with a politically exposed person?

Options:

A.

Relationship manager

B.

Enhanced due diligence compliance officer

C.

OKYC analyst

D.

Senior management

Question 146

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

Options:

A.

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

B.

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

C.

Maintaining customer information to facilitate timely retrieval of such information

D.

Reviewing only original identification documents when verifying customers

Question 147

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

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 148

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 149

Transfers of money over the last 6 months to a corporation in a jurisdiction with strict secrecy laws triggered an alert. Which of the following should cause the most suspicion of money laundering?

Options:

A.

The jurisdiction is a known tax haven.

B.

The company has bearer shares.

C.

The corporation director is a European citizen.

D.

No financial statements have been filed for 3 years.

Question 150

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 151

A bank has maintained an account for a European charity for several years. The charity provides clothing to persons in need in various countries with active terrorists’ cells.

Which action by the charity indicates possible terrorist financing?

Options:

A.

The charity frequently withdraws cash from the bank

B.

The charity has branch locations located in various countries

C.

The charity receives cash donations primarily from European countries

D.

The charity maintains a bank account for non-business-related expenses

Question 152

Which key aspect of the Office of Foreign Assets Control's extraterritorial reach specifically relates to prohibited transactions?

Options:

A.

Prohibit or reject unlicensed trade and financial transactions with specified countries, entities, and individuals

B.

Prohibit or reject licensed trade and financial transactions with specified countries, entities and U.S. individuals

C.

Prohibit or reject licensed trade and financial transactions with specified countries, entities and non-U.S. individuals

D.

Prohibit or reject unlicensed foreign trade and financial transactions with specified countries, entities, and individuals.

Question 153

Which three statements are true about on-line banking offering a significant money laundering risk to a financial institution?

Options:

A.

The nature of on-line banking can make it difficult to establish who is controlling the account

B.

The ease of access through the internet enables cross border movement of funds

C.

Due to client confidentiality, information collected on-line cannot be shared with law enforcement agencies on mere suspicion

D.

The speed of electronic transaction enables execution of multiple complex transactions within short time frame

Question 154

What three attributes do havens for money laundering and terrorist financing typically have? Choose 3 answers

Options:

A.

Limited types of institutions and persons covered by money laundering laws and regulations

B.

Little enforcement of the laws, weak penalties or provisions that make it difficult to confiscate or freeze assets related to money laundering

C.

A large number of predicate crimes for money laundering

D.

Absence of an effective FIU

Question 155

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 156

Which o! the following are considered best practices regarding senior management involvement in a financial crime compliance program? (Select Two.)

Options:

A.

Mandatory participation in all regulatory inspections

B.

Mandatory attendance and review of alt financial crime trainings

C.

Setting clear criteria for escalations to senior management

D.

Setting tone from the top

Question 157

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

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

Which of the following should the compliance officer do next?

Options:

A.

Investigate these unusual transactions further.

B.

Contact the local Financial Intelligence Unit for advice.

C.

File a suspicious transaction report with the competent authorities.

D.

Document reasons for not filing a suspicious transaction report.

Question 158

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 159

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 160

A compliance officer at a financial institution (FI) received an investigation request for a customer from a local law enforcement agency. Which action should be taken by the FI?

Options:

A.

Obtain approval from the Financial Intelligence Unit (FIU) before submitting the customer's information.

B.

Omit some responses to meet the regulatory deadline.

C.

Assign employees responsible for the customer to the investigation team.

D.

Consider retaining qualified, experienced legal counsel.

Question 161

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 162

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 163

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

have strategic deficiencies?

Options:

A.

Conduct due diligence

B.

Apply counter-measures

C.

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

D.

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

Question 164

AML training programs should extend beyond basic concepts to deliver targeted training by:

Options:

A.

offering internal policies training, such as customer identification and verification procedures and policies.

B.

offering general background and history training pertaining to money laundering controls.

C.

offering periodic refresher training on AML bases (usually annually) for existing employees.

D.

offering appropriate training tailored to the individual's specific roles, such as alerts for investigators and suspicious activity report writers.

Question 165

Which money laundering risks are posed by the misuse of trust and asset management services? (Select Three.)

Options:

A.

Concealing sources of funds

B.

Allowing for third-party custody safekeeping of funds

C.

Adding a layer of anonymity to transactions

D.

Concealing true legal and beneficial owners

E.

Establishing escrow accounts for real estate transactions

Question 166

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 167

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 168

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 169

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 170

A European Union (EU) bank has a correspondent banking relationship with a U.S. bank. Under USA PATRIOT Act Section 311, the U.S. government has enacted special measures against a designated entity that has a payable-through account with the EU bank. Which of the following actions might the U.S. bank be required to take regarding the EU bank's services for the designated entity?

Options:

A.

Ensure the designated entity's confidential information is not shared with other entities.

B.

Obtain additional information about customers permitted to use this account.

C.

Verify that the EU bank serves the designated entity.

D.

Perform enhanced due diligence on the EU bank.

Question 171

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 172

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

Options:

A.

the regulatory authorities

B.

a member of senior management

C.

the anti-money laundering specialist

D.

a qualified independent party/auditor

Question 173

Country A’s anti-corruption authorityhas been investigating themovement of potential proceeds of bribery and corruption to Country Band is now preparing to take the case to a local court.

Which method of obtaining the requiredevidence to prosecute the casewould bemost effective?

Options:

A.

Make a request for the required evidence using Country A’sMutual Legal Assistance Treaty (MLAT)with Country B.

B.

Use theEgmont Secure Webto obtain the required evidence from Country B’sFinancial Intelligence Unit (FIU).

C.

Use theInternational Criminal Police Organization (INTERPOL) networkto obtain the required evidence from Country B.

D.

Make an official requestdirectly from the head of Country A’s anti-corruption authorityto Country B’s corresponding law enforcement authority.

Question 174

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

Options:

A.

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

B.

The employee assists with transactions of a disclosed ultimate beneficiary.

C.

The employee lives a lavish lifestyle within their means.

D.

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

Question 175

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

Options:

A.

Acting as a prudential regulatory body for financial institutions

B.

Providing due diligence for foreign correspondent banks

C.

Providing expertise and input in FATF policy-making

D.

Imposing special measures for non-cooperative jurisdictions

E.

Promoting effective implementation of FATF recommendations

Question 176

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 177

A bank iscompleting a periodic KYC profile reviewfor asmall digital marketing companybased inNew York City.

Which of the following would be ared flag?

Options:

A.

The account activity includesdeposit activity into both savings and checking accounts.

B.

The account activity includesincoming funds transfers at irregular intervals from small businesses located in New York.

C.

The account activity includesfrequent purchases of tickets to industry conferences and other events.

D.

The account activity includesdeposits made in multiple branches around New York City into the same account.

Question 178

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 179

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

Improved its written AML program

Hired an experienced AML compliance officer

Demonstrated a stronger culture of compliance

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

Which of the followingare correct? (Select Two.)

Options:

A.

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

B.

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

C.

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

D.

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

E.

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

Question 180

Which of the following describes a role of the Financial Action Task Force (FATF)?

Options:

A.

Oversight of the Financial Intelligence Units in FATF Member countries

B.

Providing a unique platform for information exchange regarding anti-money laundering efforts

C.

Regulation of financial markets through directives and executive orders

D.

Enhancement of international cooperation to foster anti-money laundering efforts via recommendations and guidance

Question 181

A financial institution's transaction monitoring system flags an unusually high volume of international wire transfers originating from a small business account. The transfers are being sent to multiple jurisdictions known for limited regulatory oversight. Additionally, an employee reports suspicious behavior from the account holder during an in-person visit, where they requested a large cash withdrawal without providing a clear business justification. As part of the investigation, the compliance team must assess whether this activity is suspicious and determine the appropriate next steps.

Which of the following steps should be taken first in the investigation process to properly gather information and assess whether the transactions are suspicious?

Options:

A.

Review the transaction history of the account to identify patterns, including the frequency, destination, and purpose of the wire transfers

B.

Notify senior management and suggest account closure due to potential risks

C.

Immediately file a suspicious activity report (SAR) based on the employee's report of suspicious behavior

D.

Contact the customer directly to ask for clarification on the reason for the large cash withdrawal

Question 182

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

Options:

A.

Transfer of value to relatives

B.

Usage as a deposit account

C.

Usage of insider information

D.

Transfer funds to a third-party

Question 183

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

Options:

A.

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

B.

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

C.

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

D.

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

E.

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

F.

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

Question 184

A recent anti-money laundering audit revealed several regulatory reporting violations and lapses with the

organization’s anti-money laundering policy. As a result, the compliance officer has created a follow-up matrix

to document progress in correcting the identified deficiencies.

To whom should the compliance officer provide regular updates of corrective action to help ensure the

appropriate oversight?

Options:

A.

Audit management

B.

Human Resources

C.

Business line managers

D.

Designated board committee

Question 185

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 186

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 187

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

Options:

A.

Economic Sanctions

B.

Commission Rogatoire

C.

Account Monitoring Order

D.

Mutual Legal Assistance Treaties

Question 188

An existing customer has changed its business scope and jurisdictions it deals with. Which are the steps the bank needs to take to manage sanctions compliance risk for this customer?

Options:

A.

Collect further customer reference data and determine what must be screened and at which frequency.

B.

Conduct further sanctions screening on the customer's directors and ultimate beneficial owners.

C.

Deploy an independent risk-based test to ensure the screening on this customer is effective.

D.

Perform politically exposed person and negative media screenings.

Question 189

An agent of a wealthy individual residing in Country A, which is on the EU list of high-risk third jurisdictions, approaches a notary in Country B, which is in the EU. The agent wants to complete a disposal of assets recently acquired at auction by the wealthy individual through an offshore company. The agent also has a power of attorney to act on behalf of the offshore company issued by a respectable law firm from Country C, which is also in the EU. The agent asks the notary to proceed with the disposal as quickly as possible without paying any specific attention to related costs or taxes to be paid as a result of this transaction. The notary notices the intended transfer price is significantly lower than the one recorded at auction, but the agent does not want to discuss this matter and claims that it is not covered by the power of attorney.

Which red flags should the notary consider? (Select Two)

Options:

A.

The agent requested a disposal of assets at a lower price than recently acquired.

B.

The assets acquired through an auction were put in the name of an offshore company

C.

The agent acted on behalf of an individual residing in a country which is on the EU's list of high-risk jurisdictions

D.

The power of attorney was issued by a law firm in a different EU country from where the transaction took place.

Question 190

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

Options:

A.

Verify the identity of all the partners.

B.

Verify the source of the deposit.

C.

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

D.

File a suspicious transaction report with the Egmont Group.

Question 191

What is a key objective of the Egmont Group?

Options:

A.

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

B.

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

C.

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

D.

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

Question 192

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 193

What kind of person should perform the independent testing of an institution’s anti-money laundering program?

Options:

A.

A certified specialist in the anti-money laundering field

B.

A former anti-money laundering officer from a similar institution

C.

A person who reports directly to the Board of Directors or a Board Committee

D.

A retired government regulator or federal law enforcement officer

Question 194

Which of the following are important AML controls for a compliance manager of a regulated asset management company in the European Union to implement? (Select Two.)

Options:

A.

Inviting prospective customers for an onboarding interview

B.

Rejecting any politically exposed persons (PEPs) as customers

C.

Understanding the source and origin of assets

D.

Performing negative news checks of prospective customers

E.

Producing financial stability reports on interesting customers

Question 195

What describes the Black Market Peso Exchange money laundering method?

Options:

A.

The best known money laundering method used by known terrorists

B.

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

C.

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

D.

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

Question 196

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 197

During a law enforcement investigative interview regarding potential money laundering, the suspect starts

making assertions and statements that the investigator believes are false.

How should the investigator respond?

Options:

A.

Inform the suspect that deception is obvious and continue the interview

B.

Advise the suspect that the interview will be terminated if there is suspicion of deception

C.

Direct the interview in another direction until there is better rapport before returning back to the troubling question

D.

Ask question of a material nature about the suspected false statements without revealing the suspected deception

Question 198

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 199

Which of the following facilitates law enforcement agents obtaining evidence from authorities in a foreign country relating to criminal activity?

Options:

A.

Mutual Legal Assistance Treaties

B.

USA PATRIOT Act Communications System

C.

The World Wide Network of Information Sharing

D.

The International Agreement for Mutual Assistance

Question 200

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 201

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 202

When considering sharing information across the institution or within the same jurisdiction, what is the key legal issue that poses challenges to sharing customer-related information?

Options:

A.

Data protection and privacy laws

B.

Consumer protection laws

C.

Conflicting AML regulations

D.

Technological inconsistencies and challenges

Question 203

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 204

An internal investigation log is primarily intended to:

Options:

A.

Provide training on investigations to the anti-money laundering officer and Financial IntelligenceUnit.

B.

Track the status of investigations into unusual activity.

C.

Report status of investigations to the Board of Directors.

D.

Report status of investigations to the Board of Directors.

E.

Detect and monitor possible suspicious activity.

Question 205

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 206

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

Options:

A.

account holder presents proof the funds are legal.

B.

beneficiaries of transfers are not on a terrorist watch list.

C.

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

D.

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

Question 207

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 afinancial 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 208

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

Options:

A.

Obtaining prior senior manager approval for all related transactions

B.

Understanding the purpose of the business relationship

C.

Performing adverse media searches on the customer

D.

Identifying and verifying the customer's identity

Question 209

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

What should the KYC team manager do?

Options:

A.

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

B.

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

C.

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

D.

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

Question 210

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 211

An organization’s automated surveillance system identifies large fluctuations in customer activity. As a result of

an audit, the compliance officer is informed that the system is not generating alerts when activity is

consistently abnormal over a long period of time. Currently the organization is evaluating new alert scenarios

in an attempt to address this problem.

Which type of scenario is helpful in mitigating this weakness?

Options:

A.

Peer

B.

Income

C.

Mapping

D.

Below-the-line

Question 212

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 213

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 214

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 215

Which regulation regarding data privacy has to be considered while carrying out a financial crime investigation?

Options:

A.

General Data Protection Regulation

B.

European Enforcement Order

C.

Securities Financing Transactions Regulation

D.

Rome II Regulation

Question 216

Which two methods have terrorist groups used to diversify their revenue stream and to fund their operations?

(Choose two.)

Options:

A.

Human trafficking

B.

Engaging in civil conflict

C.

Smuggling cultural artifacts

D.

Engaging in wire transfer activity

Question 217

To what extent should senior management and the Board of Directors be involved in the filing of any STR?

Options:

A.

They should be informed of all significant STRs and the numbers and trends of the filings

B.

They should be given copies of all STRs filed by the institution

C.

They should review and approve the filing of all STRs

D.

They should be the only designated individuals to communicate with law enforcement

Question 218

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 219

Which financial crime risks are inherent to e-commerce platforms? (Select Four.)

Options:

A.

E-commerce platforms exploited to move criminal proceeds

B.

Use of stolen bank cards for online purchases

C.

E-commerce platforms susceptible to fraud schemes

D.

E-commerce platforms used as a front for illicit transactions

E.

E-commerce platforms encouraging unregulated peer-to-peer lending

F.

Use of foreign currency to mask criminal proceeds

Question 220

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 221

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 222

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 223

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 224

Which should a financial institution implement in order to identify and investigate money laundering activity from their clients? (Select Two.)

Options:

A.

Adverse news screening

B.

Integrity policy

C.

Whistleblower hotline

D.

Code of conduct

E.

Transaction monitoring

Question 225

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

Options:

A.

An external audit highlights several deficiencies

B.

The company is merging with or acquiring another entity

C.

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

D.

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

Question 226

Which of the following is a key consideration for a global organization when managing AFC and sanctions compliance across multiple jurisdictions?

Options:

A.

Ensuring sanctions compliance by relying solely on international bodies like the UN because there is no requirement to adhere to local laws

B.

Ensuring group policies and procedures prioritize adherence to US regulations because they are the most influential worldwide

C.

Applying global AFC and sanctions policies to ensure consistency without the need to adapt to local regulations

D.

Ensuring group policies cater to compliance with each country's specific AML and sanctions regulations

Question 227

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 theinvestigation.

B.

Every country should share all their information with foreign law enforcement and government authoritiesto facilitate rapid investigations.

C.

Law enforcement and other authorities should be allowed to establish and utilize joint investigative teamswith law enforcement in other countries.

D.

Law enforcement and other authorities should not expedite information sharing between countries toensure that all information is provided at the same time to avoid premature conclusions.

Question 228

Which two actions should Financial Intelligence Units (FIUs) take when submitting a request to another FIU? (Choose two.)

Options:

A.

Send the same request to all FIUs

B.

Disclose the reason and purpose for the request

C.

Provide feedback on how the information was used

D.

Make best efforts to provide complete and factual information

Question 229

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

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

Options:

A.

The payment is received via wire transfer.

B.

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

C.

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

D.

Payment is received from an account in an offshore jurisdiction.

E.

Lack of beneficial ownership details for the originating account.

Question 230

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 231

UN sanctionsare themost effective and legitimate non-violent multilateral toolsto respond tointernational security threatswhen they:

Options:

A.

Can be implemented faster than other sanctions regimes.

B.

Are swiftly adopted by all member states together with a strong enforcement mechanism.

C.

Can be applied internationally while being enforced at the domestic level.

D.

Are more clearly articulated than other sanctions regimes.

Question 232

A compliance officer is developing an anti-money laundering program for a financial institution located in a Financial Action Task Force member country. The institution conducts business with customers located in countries/jurisdictions that are not members of Financia Action Task Force. Which of the following issues should be addressed in the program?

1. The requirement to identify the beneficial owners of accounts.

2. The requirement for customer identification for the opening of new accounts.

3. The financial institution's obligation to report suspicious transactions.

4. The obligation to freeze funds involved in suspicious transactions.

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 233

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 234

A Trust and Company Service Provider (TCSP) providing services should have policies and procedures in place to identify critical information of the:

Options:

A.

general manager.

B.

signatory.

C.

controller.

D.

registered address.

Question 235

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 236

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

Which approach is thebest option?

Options:

A.

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

B.

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

C.

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

D.

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

Question 237

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 238

Which statement is true regarding the FATF standards for SARs/STRs information sharing within a financial group?

Options:

A.

FIs must retain copies of SARs/STRs and supporting documentation for five years from the date of filing the STRs

B.

FIs cannot share customer information at all since it is confidential.

C.

Financial institutions (FIs) should establish sufficient safeguards concerning the confidentiality of information shared for AML purposes.

D.

FIs must require approval from regulators to share SARs/STRs information and supporting documentation.

Question 239

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 240

According to the 5th EU Money Laundering Directive, member states require entities to apply enhanced customer due diligence measures with respect to business relationships or transactions involving high-risk third country nationals. Which are included in these requirements? (Choose three.)

Options:

A.

Obtaining the approval of senior management for establishing or continuing the business relationship

B.

Obtaining copies of passports for all authorized persons

C.

Establishing and verifying the address of the client

D.

Obtaining information on the reasons for intended or performed transactions

E.

Obtaining tax reference details for the client

F.

Obtaining information on the source of funds and source of wealth of the customer and of the beneficial owner(s)

Question 241

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 242

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

1. Discuss any aspects of the reported activity.

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

3. Explain the customer's loan payment history.

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

Options:

A.

1 and 2 only

B.

1 and 4 only

C.

2 and 3 only

D.

2 and 4 only

Question 243

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

Options:

A.

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

B.

Reluctance to take a vacation when the employee has sufficient leave

C.

Failure to meet business goals for more than one period

D.

Providing longer than usual services for a certain customer

E.

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

Question 244

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

Which mechanism allowssecure information sharingbetween FIUs?

Options:

A.

Mutual Legal Assistance Treaty (MLAT)

B.

Egmont Secure Web

C.

INTERPOL Database

D.

UN Sanctions List

Question 245

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 246

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

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

Options:

A.

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

B.

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

C.

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

D.

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

Question 247

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 248

A legal instrument which is executed between two nations and governs cross-border information sharing Is known as a.

Options:

A.

mutual legal assistance treaty.

B.

memorandum of understanding.

C.

request for urgent information.

D.

declaration of understanding.

E.

memorandum of agreement.

Question 249

Who meets the standard to perform the AML audit? (Select Two.)

Options:

A.

An internal auditor with a family member employed in the AML department

B.

An internal auditor with the requisite knowledge and expertise of AML

C.

A consultant previously employed in the AML department within the past 2 years

D.

Qualified bank staff if not involved in the AML function being tested

E.

A consultant with limited knowledge and experience in AML but many years of internal audit experience

Question 250

A bank has opened a new account for a well-known attorney to manage client funds. During the first six months, bank staff observe the account receives multiple deposits via wire transfer. They also observe that the attorney withdraws cash, makes payments to various people, and transfers funds to the law firm’s account online.

What is considered a red flag for potential money laundering in this situation?

Options:

A.

Withdrawing cash

B.

Making payment to various people

C.

Receiving multiple deposits via wire transfer

D.

Transferring funds to his law firm’s account online

Question 251

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

Options:

A.

To identify risk considerations for sharing information based on Fl changes

B.

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

C.

To satisfy law enforcement when reporting suspicious activity

D.

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

Question 252

The Financial Action Task Force recommends the incorporation of some measures in customer due diligence programs including:

Options:

A.

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

B.

conducting the risk assessment of products and services.

C.

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

D.

identifying the products and services and their suitability to customers.

Question 253

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 254

According to guidelines issued by Basel Committee on Banking Supervision relating to corporate governance principles for banks, what is the role of the board of directors in addressing an institution's AML oversight and governance?

Options:

A.

The board of directors should be responsible for overseeing the management of the bank's compliance risk but not involved in establishing a compliance policy that explains the processes by which compliance risks are to be identified and managed throughout the organization.

B.

The board of directors should establish a compliance function and approve the bank's policies for identifying, assessing, monitoring, reporting, and advising on compliance risk.

C.

The compliance function must have sufficient authority, stature, independence, and resources to be effective on its own and should not have access to the board of directors.

D.

The compliance function should report directly to the CEO concerning the bank's compliance with applicable laws, rules, and standards and only update the board of directors on the bank's efforts in managing compliance risk when required.

Question 255

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 256

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

Options:

A.

layering

B.

structuring

C.

integration

D.

commingling

Question 257

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

Options:

A.

use of legal persons in jurisdictions with strict secrecy laws.

B.

structuring cash deposits into third party accounts.

C.

multi-jurisdictional wire transfers with no legal purpose.

D.

generation of rental income to legitimize illicit funds.

E.

frequent deposits to or withdrawals from bank accounts.

Question 258

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

Options:

A.

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

B.

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

C.

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

D.

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

E.

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

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Total 860 questions