How do drug traffickers and other criminals use the fine art industry to disguise illicit proceeds?
A. They use forged or fraudulent invoicing of
... [Show More] priceless works of art by auction houses B. They commingle legitimate and illicit proceeds by principals for payment of fine art C. They immediately resell priceless works of art after purchase from a foreign auction house D. They use anonymous agents to buy the art and have the payment wired from offshore havens - ANSWER-D
An anti-money laundering specialist at a large institution is responsible for informing senior management about the status of the anti-money laundering program across the organization. Which report is the most useful?
A. The total credit exposure for non-cooperative countries and territories B. Results of related audits and examinations C. Details on inquiries received from law enforcement D. Notification of management changes in the different major divisions - ANSWER-B
What is most valuable when using the internet as an investigative source?
A. A team of AML investigators B. A reference list of websites known to yield credible information C. A combination of independent thinking and technical skills D. A powerful search engine - ANSWER-B
What should senior management do in order to promote a culture of anti-money laundering compliance?
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 - ANSWER-A
What is the result of an increased awareness of the potential for gatekeepers to assist in money laundering in recent years?
A. The IMF has raised the profile of gatekeepers, requiring that countries regulate them B. Lawyers who represent money launderers can more easily be prosecuted C. Accountants are no longer considered gatekeepers, since they are not permitted to set up companies or trusts D. The FATF recommendations cover lawyers performing financial transactions - ANSWER-B
Which three are principles found in the document "Principles of information Exchange between Financial Intelligence Units (FIUs)"?
A. The exchange of information between FIUs should take place as informally and as rapidly as possible and with no prerequisites, while guaranteeing protection of privacy and confidentiality of the shared data B. Differences in the definition of offenses that fall under the competence of FIUs should be before free exchange of information takes place C. The Egmont principle of free exchange of information at the FIU level should be possible on the basis of reciprocity, including spontaneous exchange D. It should be possible for communication between FIUs to take place directly and without intermediaries - ANSWER-A,C,D
What are three risk factors a financial institution should examine with regard to a proposed new product? A. The complexity of the product B. The need to verify the identification of the customer C. Whether the product is easily transferable D. Whether other financial institutions are marketing the product - ANSWER-A,B,C
In some instances, a financial institution may receive a warrant from law enforcement authorities to search its premises. A search warrant is a grant of permission from a court for a law enforcement agency to search certain designated premises and seize specific categories of items or information. Generally, what is the required threshold for the requesting agency to establish in order to obtain a search warrant of a financial institution?
A. Reasonable belief B. Probable cause C. A preponderance of the evidence D. Clear and Convincing proof - ANSWER-A
Which three characteristics make non-profit organizations vulnerable to misuse for terrorist financing? A. Enjoying the public trust B. Having access to a considerable sources of funds C. Being listed as government nonprofit organization D. Having a global presence for national and international operations and financial transactions - ANSWER-A, B, D
An anti-money laundering specialist at a financial institution has received a legal request to provide all transaction records for a specific individual since 2004. Which three items should be delivered?
A. Monthly statements and transaction activities for that individual since 2004 B. All wire transfer for that individual since 2004 C. All security trading activities for that individual since 2004 D. Signature cards from accounts opened by that individual since 2004 - ANSWER-A,B,C
How do payable through accounts (PTAs) differ from normal foreign correspondent accounts? A. The customers do not have to worry about sanctions list screening such as OFAC B. The customers have the ability to directly control funds at the correspondent bank C. The customers can contact the correspondent bank directly to send wire transfers D. The customers can hide their identity through the use of cover payments in U.S. dollars - ANSWER-A
What is the term for trading through multiple accounts, where an individual generates offsetting profits and losses and transfers of positions through accounts that do not appear to be commonly controlled?
A. Ponzi scheme B. Market Manipulation C. Net Trading D. Wash Trading - ANSWER-D
The Wolfsberg Principles for Private Banking list circumstances that would require additional due diligence, including activities that involve which three of these choices? A. Foreign jurisdictions B. High Risk Countries, including those identified by credible sources as having inadequate Anti-Money Laundering standards C. High Risk activities, involving clients and beneficial owners whose source of wealth originates from activities known to be vulnerable to money laundering D. Public officials, including those individuals who have or had positions of public trust - ANSWER-B,C,D
Which three are examples of best practices terms of ensuring an adequate AML program? A. Engage an independent party to perform a periodic review of the program B. Review applicable domestic and international AML guidance C. Perform a risk analysis on a regular basis and compare it to the coverage of the AML program D. Review the accuracy of account opening applications - ANSWER-B,C,D
Which three statements are true regarding the extraterritorial reach of laws and legislation of the U.S.? A. The criminal anti-money laundering law can apply to transactions that occur partially overseas B. Economic and trade sanctions by OFAC may pose extraterritorial risks for financial institutions and businesses outside the U.S. C. The extraterritorial reach covers all transactions throughout the global economy D. The defendant does not need to know the funds came from an illegal activity under state, federal or foreign law - ANSWER-A,B,D
What is a criterion for FATF membership? A. The country should be democracy B. The country should be a member of a FATF-style regional body C. The country should have already implemented all of the FATF Recommendations D. The country should have already implemented the standards of the European Union Directives - ANSWER-B
According to the Second European Union Money Laundering Directive, what may knowledge of criminal conduct be inferred from? A. Subjective, factual circumstances B. Objective, factual circumstances C. Objective, non-factual circumstances D. Subjective, non-factual circumstances - ANSWER-B
In which type of banking transaction is price manipulation, as a form of money laundering, a common practice?
A. Redeeming an annuity B. Sending a wire transfer C. Issuing a letter of credit D. Subscribing to a cash management account - ANSWER-C
Which two aspects of the security broker dealer industry increase its exposure to money laundering? Choose 2 answers A. The routine use of wire transfers from, to or through multiple jurisdictions B. They easy conversion of holdings to cash with significant loss of principal C. Disposing of cash through securities purchases D. Fast paced transactions conducted electronically - ANSWER-C,D
To ensure that an institution's anti-money laundering program is current, which step should be taken?
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 - ANSWER-D
A prospective AML officer comes highly recommended by a bank's up-stream correspondent institution of similar size and make-up, located in a different city in the same country. The bank is interested in hiring the individual. What should be the next step taken by the Board of Directors? A. Do a thorough background check B. Confer with its regulatory agency to determine whether it is appropriate to hire the person C. Hire the individual, relying on the recommendation of its correspondent D. Hire the individual on a probationary basis so that the institution can determine if the individual is sufficiently experienced and capable - ANSWER-A
Which type of transactions present the highest risk? A. Wire transfers from a publicly listed company B. Payroll payments C. Social insurance payments D. Foreign exchanges - ANSWER-D
According to experts, what is the most effective way to prevent money laundering through financial institutions? A. ensuring that transaction monitoring systems can identify terrorist financing B. collecting information on beneficial owners in foreign customers C. instituting a policy prohibiting the acceptance of funds intended for terrorist financing D. implementing a sound customer due diligence program - ANSWER-D
What should a bank focus on to ensure ongoing compliance with its AML program? A. it should ensure that it develops and provides ongoing targeted training of all current and new employees B. it should subject all new employees to criminal background checks before being hired C. it should review and update its transaction monitoring system D. it should ensure that the regulators have reviewed and have approved the banks AML program - ANSWER-A
What should a compliance officer do during an ongoing investigation into a clients activities by a competent authority? A. ensure communication with regulatory and law enforcement authorities is conducted only through the board of directors B. communicate only in writing regulatory in law enforcement authorities in line with applicable local laws C. communicate with regulatory and law enforcement authorities in line with applicable local laws D only provide information that is specifically and directly requested - ANSWER-A
How can dealers in high value items be at risk for money laundering? A. the value of precious metals such as gold and silver is constantly fluctuating B. carrying large amounts of Jens of high value is physically easy C. paperwork is not required to ship precious metals and gems D. drug dealers prefer cash to precious metals and Jim - ANSWER-B
Which activity is most likely to facilitate money laundering through online systems with inadequate controls A. conducting a large volume of transactions B. providing continuous worldwide access C. conducting anonymous transactions D. conducting large value transaction - ANSWER-B
In the FATF 40 recommendations the focus on AML efforts has been expanded beyond financial institutions. which 3 businesses and or professions are covered? Choose 3 answers A. casinos when customers engage in financial transactions equal to or above a designated threshold B. Real estate agents when they are involved in transactions for clients concerning buying and selling properties C. dealers in art when they engage in any cash transaction with a customer at or above a designated threshold D. trust and company service providers - ANSWER-B, C, D
When requested by law enforcement via legal process to provide records or documentation what should the officers of financial institutions do? A. provide all records and documents the officer believes would be pertinent to the law enforcement agent's investigation B. Refuse to provide any records or documents until the agent narrows the scope of the request down to what he or she actually needs C. Not act on the legal process until the bank officer has contact with the agent and learns what the agent is investigating D. if there is no basis for contesting the requeat, provide what is requested - ANSWER-C
Which AML standards have force of law? A. standards as defined in the third European Union money laundering directive B. standards as defined by the united nations C. standards as defined by world bank/international monetary fund (IMF) D. 40 recommendations - ANSWER-A
What are some red flags pertaining to potentially suspicious transactions by a customer? Choose 3
A. Having multiple addresses and/or moving frequently B. Having a commercial account with cash deposits C. Have a common address with several other bank clients D. Having multiple individuals use the ATM card connected with the account in different cities - ANSWER-A, C, D
An anti-money laundering expert is hired by a new internet bank to assess the money laundering threat to the bank. What is the most important recommendation for the expert to make given it is an online bank?
A. The bank should limit the amount of money which can be processed per transaction B. The bank should ensure that prospective new customers can be properly identified C. The bank should set up automated programs to analyze transactions for money laundering activity D. The bank should ensure that a firewall is set up to protect the transactions - ANSWER-A
Why is the Mutual Legal Assistance Treaty (MLAT) a gateway for international cooperation?
A. They provide a legal basis for transmitting evidence that can be used for prosecution and judicial proceedings B. They receive reports of suspicious transactions from financial institutions to disseminate to lacal law enforcementy and foreign FIUs C. They obtain intelligence that might lead to evidence D. They issue the principles of information exchange between financial intelligence units (FIUs) - ANSWER-A
Which element is generally required of al anti-money laundering programs?
A. A computer based suspicious activity monitoring system B. A qualified compliance officer to manage the program C. Annual in-person AML training for all employees D. An enhanced due diligence program for all new customers - ANSWER-B
After an institution files an STR with regard to a particular account, a law enforcement agent requests the institution to keep the account open until adised otherwise directed by law enorcement. What steps should the institution take?
A. The institution should close the account in order not to be caught in the middle of a law enforcement investigation B. THe institution should follow the request of the law enforcement agent and keep the account open C. The institution should request a written letter from the law enforcement agency signed by the appropriate authorized signature D> THe institution should keep the account open only if doing so comports with the bank's own AML procedures. - ANSWER-C
A customer has held an account at a local credit institution for 1 years. The account has received deposits twice for the same amount and has never shown signs of suspect behavior. Monitoring saftware 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. What should the compliance officer do next?
A. Investigate these unusual transactions further B. Contact the local FIU for advice C. File an STR with the competent authorities D. Document reasons for not filing a STR - ANSWER-C
What is one recommendation of the Basel Committee's 2001 paper Customer Due Dilligence for Banks?
A. Numbered accounts should not be allowed B. Certain types of private banking can be exempt from KYC procedures C. Banks should develop clear descriptions of acceptable customers D. Politically Exposed Persons (PEPs) should not be accepted as customers - ANSWER-C
A remittance company received a money order from a senior political figure in the Philippines to transfer a large sum of money to a charity group in the Philippines. A review of the charity group revealed a director having close ties with a known terrorist group primarily financed through kidnapping and extortion. What is a key risk indicator associated with terrorism financing?
A. The sender is a PEP and should be subject to enhanced due diligence B. A large sum sent by money order to a charity C. There is no risk relating to terrorism financing when the charity group in operating legitimately in that country D. There is a link between the charity group and a known terrorist group - ANSWER-D
In performing a risk analysis, which factor(s) should a financial institution review?
A. The level of its gross revenue B. Recent regulatory actions against financial institutions of comparable size C. Its customer base, location, products and services D. The adequacy and completeness of its STR filings - ANSWER-C
What should law enforcement provide when asking an institution to keep an account open?
A. An explanation of the underlying conduct that is being investigated B. A written request with an explanation of the scope of the investigation C. An in-person visit by an investigating official to explain why the account must remain open D. A written request on government agency letterhead with the appropriate signature - ANSWER-D
Which example describes the vulnerability of the securities sector for money laundering?
A. A non-US person seeks to open a brokerage account with a US broker-dealer B. A broker-dealer must have a customer identification program in place C. Broker-dealers generally have a higher percentage of inexperienced staff D. Compensation for broker-dealers is generally based on commissions - ANSWER-D
Ina ddition to monitoring for suspicious activity, what are electronic monitoring systems also valuable for?
A.Identifying how customers are using products B. Highlighting the skills of the system analysts C. Proving to the Board of Directors that the FIU is doing its job D. Meeting mandatory regulatory requirements for system implementation - ANSWER-D
In which three situations is correspondent banking most vulnerable to money laundering? Choose 3
A. When allowing foreign banks to use the correspondent account to conduct large financial transations on behalf of their customers B. When allowing the correspondent bank account to be used as a payable through account (PTA) C. When allowing the correspondent bank account to be used by other banks D. When allowing financial institutions, without prior due dilligence, to access correspondent network for routing their financial transactions - ANSWER-A, B, C
How does a regulatory body typically obtain international assistance in a money laundering inquiry?
A. By filing a request under Egmont guidelines B. By submitting a request for overseas assistance to the corresponding supervisory body C. By contacting the FATF, Organization for Economic Co-operation and Development, or other international organizations ans seeking their intervention D. By communicating with the head of complinace for the financial institution - ANSWER-B
Federal law requires all US financial institutions to secure and maintain all records and supporting documentation used in suspicious activity reporting for how many years?
A. 2 B. 5 C. 10 D. No requirement - ANSWER-B
What is a major money laundering risk associated with a number of prepaid cards as opposed to credit or debit cards?
A. The risk of losing the prepaid cards B. The inability to load the card with cash C. The global access to cash through ATMs D. The anonymous access to funds - ANSWER-D
An audit completed the previous week revealed that a private banking customer submitted incomplete documents when establishing an account earlier in the year. The cutomer received weekly electronic fund transfers froma narcotic-producing jurisdiction. While the relationship manager who opened the account is on leave for 5 weeks, the customer requests that the institution remit a substantial sum to a country that represents a high risk for money laundering. The relationship manager is a friend of the anti-money laundering specialist. What the anti-money laundering officer do first?
A. File a suspicious transaction reprt with the competent authority B. Investigate the transfer of funds C. Suspend the transfer until the relationship manager returns D. Postpone the follow-up on the audit finding - ANSWER-A
Why would a credit card account likely not be used in the placement phase of money laundering?
A. Customer Identification is required B. Cash payments are generally restricted C. Credit refunds have a waiting period D. Credit cards can access ATMs globally - ANSWER-B
What are some red flags financial institutions should be aware of when trying to verify the identity of a customer? Choose 3
A. Customer having unusual documents from a foreign country B. Customer being new to the community C. Customer having no permanent address D. Customer not having a connected phone - ANSWER-A, C, D
A compliance officer is looking to modify procedures covering correspondent banking relationships. Which three would be recommended under the Wolfsburg Principles on Correspondent Banking? Choose 3
A. Prohibition on offering products or services to shell banks B. Risk-based rating of central and regional development banks C. Periodic risk-based reviews of cents D. Assessing the regulatory status and history of the client - ANSWER-A, C, D
When an institutioon conducts an internal investigation into an account following a law enforcement inquiry, it should consider a number of factors to independently determine if the account should be closed. Which three considerations should be made when making the determination about closing an accoutn? Choose 3
A. The institution's policies and procedures for closing an account B. Oral requests by a law enforcement agency or prosecutor for the account to be closed C. signed written requests by a law enforcement agency or prosecutor on official letterhead for the account to remain open D. The level of seriousness of the underlying conduct - ANSWER-A, B, C
A profitable customer who operated an import-export business has multiple accounts with the same institution at branches in different locations. The customer receives funds from a jurisdiction perceived as highly corrupt according to Transparency International ratings. The customer makes frequent transfers among the accounts and prefers to manage the accounts separately. What should the institution do to mitigate the risk associated with the accounts?
A. File a suspicious transaction report B. Diminish the importance of the subjective Transparency International rating C. Cnduct a trade-once manpulation analysis D. Develop a system to monitor all the activity - ANSWER-A
What should be part of an institution's monitoring and STR filing process? Choose 3
A. Review on a regular basis of all high-risk accounts and transactions B. Review of STR filing trends and typologies C. Periodic training on the identification of red flags D. Requirement that the Board of Directors approve the filing of an STR - ANSWER-A, B, C
A commission rogatoire would be used in which gateway to obtain information from another country?
A. An FIU request under the Egmont principles B. An MLAT C. A supervisory channel request with the Basel Committee D. A FATF request - ANSWER-A
The purpose of an anti-money laundering program should be to do what?
A. Detect all illegal activity perpetrated by customers B. Avoid criticism and sanctions from government regulators C. Focus monitoring efforts on riskier transaction and customers D. Detect and report cash structuring and suspicious transactions - ANSWER-C
What facilitates law enforcement agents obtaining evidence from authorities in a foreign country relating to criminal activity?
A. MLAT B. Patriot Act communications system C. The World Wide Network of Information Sharing D. MLAT Executive Agreement - ANSWER-A
Which three entities does the Third European Union Money Laundering Directive apply to?
A. Financial institutions B. Defense attorneys C. Casinos D. Real Estate Agents - ANSWER-A, C, D
Which two statements about the Wolfsburg Group are true?
A. It is composed of representatives of financial intelligence units from around the world B. It focuses primarily on Know Your Customer, AML, and CTF guidance C. It based its original guidance combating the laundering of proceeds of narcotics trafficking D. It has no power to impose its principles/guidance - ANSWER-B, D
After evaluating recent changes to international standards, an anti-money laundering specialist should consider enhanced due diligence on accounts held by which three groups of people?
A. Lawyers B. Foreign Exchange Dealers C. Retail Account Holders D. Precious metal dealers - ANSWER-A, B, D
Which of the following is the most common risk with a Personal or Private Investment Company (PIC)?
A. They are almost always owned by politically exposed persons B. They are usually established in financial secrecy havens C. They often lack transparent ownership D. They are not publicly traded - ANSWER-C
Pursuant to the Third European Union Money Laundering Directive, how long after being out of prominent office should a person NOT be considered to be a Politically Exposed Person (PEP)?
A. 1 year B. 2 years C. 3 years D. 4 years - ANSWER-A
Which method most likely indicates the placement stage of money laundering dirty money in a land based casino?
A. Transferring substantial amounts of money from a client's credit card to a client's VIP account B. Buying casino chips against a bank draft C. Redeeming smaller denomination casino chips for largest denomination chips D. Using cash to buy casino winnings from legitimate winners at a premium - ANSWER-D
A compliance officer at a small local bank reads in the newspaper that a high ranking local public official, who is a long-standing account holder, is being investigated by the competent authorities for accepting bribes. The compliance officer immediately checks the official's account and new account the official opened at the bank a few weeks ago. The compliance officer's investigation of these accounts discloses that the official's long-standing account had no unusual activity and that the recently opened had no activity since it was opened. What should the compliance officer do next?
A. Wait until the new account receives funds and confirm their source B. Call the competent authorities to assess the need to file a suspicious transaction report C. Meet with staff who opened the account to understand its nature and purpose D. Call the office to confirm the need for multiple accounts - ANSWER-B
What is a key element required to ensure an anti-money laundering compliance program is effectively embedded into an institution's culture?
A. An internal audit B. Ongoing Training C. Peer review D. A record retention policy - ANSWER-B
In 2004, COnsolidated KYC Risk Management was issued by the Basel Committee on Banking SUpervision (BCBS). What is a key message in thie document?
A. KYC Risk Management required a yearly consolidation effort B. KYC RIsk Management means an established decentralized process for promulgating policies and prodedures C. Policies and procedures should be designed not merely to comply strictly with all relevant laws and regulations D. Consolidated KYC risk management for a group is critical and trumps jurisdictional rules that limit information sharing - ANSWER-D
In order to protect investigative material from disclosure when conducting an internal investigation of any employee of a financial institution, legal counsel of that financial_________________?
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 enorcement because the bank has client privelege 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 priveleged and confidential: Attorney-Client Privelege and/or Work-Product. THose marks will only encourage law enforcement opposing attorneys to seize those files - ANSWER-A
Which situation is the highest risk for money laundering and terrorist financing activity?
A. A customer purchases casino chips, using small denomination bank notes, but does not engage in game play before redeeming the chips for a casino check B. A customer purchases casino chips and engages in significant game play before requesting a casino check for the remainder C. A customer purchases casino chips using a credit card and engages in minimal game play before redeeming the chips for a casino check D. A customer purchases casino chips using credit from an account at an affiliated casino and engages in significant game play before redeeming the chips for a casino check - ANSWER-C
The marketing department presents a business plan targeting individuals holding important public positions. What are some steps the financial institution should implement as part of the plan to target such individuals?
A. Investigate the source of funds B. Determine the purpose of the account C. Deermine if the client appears on the Basel Committee on Banking Supervision's list of public officials D. Take all resaonable steps to check the background of the individual based on public information - ANSWER-A, B, D
The board of directors and the senior management of a financial institution should ensure that which three are established and followed with regard to an effective AML program?
A. There is a strong compliance program B. International guidance is followed and understood C. They are kept informed of all major AML issues D. Regulatory compliance is made part of all relevant job descriptions - ANSWER-A, C, D
What is operational risk?
A. THe potential for loss of public confidence in an organization's integrity B. The potential for loss resulting from too much credit or loan exposure to one borrower C. The potential for loss due to inadequate processes, people, systems, or external events D. The potential for law suits, fines, and penalties increasing an organizations's expenses - ANSWER-C
How should a financial institution deter money laundering through new accounts? Choose 3
A. Document the identity of the party opening the account B. Query owner's names against FATF database C. Determine the beneficial owner(s) of the account D. Seek to determine the source of deposited funds - ANSWER-A, C, D
What are the European Union Directives on Money Laudering?
A. They are voluntary codes of best practice for the financial sector B. They are written by the Wolfsberg Group C. They require members to implement certain laws to prevent money laundering D. They require financial institutions to report suspicious activity to the Egmont Group in Brussels - ANSWER-C
Why do government entities around the world believe that a risk-based approach to AML/CFT compliance is a preferable prescriptive measure?
A. It is easier for examiners to make subjective criticisms B. It is more flexible, effective, and proportionate C. It allows institutions to focus their attention on only high risk customers D. It allows the creation of hard and fast rules that must be followe - ANSWER-B
When providing reporting of STRs to the board, which of the following should be provided?
A. A numerical summary of all the STRs B. A numerical summary of all the STRs and a summary of key STRs, including PEPs, key employees C. A summary fo all key STRs, including PEPs, and key employees D. All the STRs filed with the national FIU - ANSWER-C
Why do trusts established in certain offshore jurisdictions make good vehicles to lanuder money?
A. Names of the settlor and beneficiaries are not publicly available B. Trusts are typically set up to minimize taxes C. Offshore jurisdictions are unfamiliar with trusts D. Trusts may hold assets of significant size - ANSWER-D
What are some of the methods for sharing information and cooperating on an international basis? Choose 3
A. Mutual Assistance Legal Treaties B. International Money Laundering Information Network C. Regulatory sharing through Supervisory Channels D. Issuant subpoenas - ANSWER-A, B, C
What are three indicators of money laundering associated with using electronic finds transfers? Choose 3
A. Funds transfers to or from a financial secrecy haven without an apparent business reason B. Regular and frequent transfers from the account of a large company said to be payment for goods bought on credit C. Funds transfers are received or sent from the same person to or from different accounts D. Payment or receipts with no apparent link to legitimate contracts, goods, or services - ANSWER-A, C, D
A quarterly review is conducted on a retail customer's account at a bank located in a jurisdiction with currency reporting thresholds. A number of large deposits of financial instruments drawn on other institutions in amounts under the thresholds were noted. This activity did not fit the account's historical profile. A suspicious transaction report will most likely be filed if what also occured?
A. The customer has defaulted on a large loan with the bank B. The deposited financial instruments were sequntially numbered C. Four deposits were made during this period that exceeded the trhresholds D. The customer purchased financial instruments exceeding the threshold on three occasions - ANSWER-B
What kind of person should perform the independent testing of an institution's anti-money laundering program?
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 - ANSWER-A
What is suspicious activity or red flag with regard to a customer's activity? Choose 3
A. Paying the tellers he deals with a regular gratuity B. Exchanging small denomination bills for large ones C. Engaging in wire transactions with an offshore account D. Asking about the bank's fee schedule for a series of transactions - ANSWER-A, B, C
An anti-money laundering specialist working at a bank just received a legal request from a law enforcement agency mandating the release of all financial transaction records relating to an account at the bank. The specialist immediately recognizes the account as one owned by the bank Chief Executive Officer's brother. During research to gather the requested documents, the specialist finds several internal memos he had sent to this account The specialist recalls the bank president verbally responded to each memo with an explanation of the activity and indicated there was no cause for concern. What should the specialist do with respect to these internal memos?
A. Place these memos in his personal files in case they are subsequently requested B. Ask the bank president to document his instructions to the specialist C. Call the law enforcement agent and suggest he modify the legal request to include these memos D. Advise the bank's senior legal advisor of the situation - ANSWER-D
Which customer transaction with a securities dealer would indicate the highest suspicion of money laundering?
A. Frequent trades in unlisted securities throughout the day on a regular basis B. Recurring transfers of money into a brokerage account subsequently invested in short-term securities C. A high level of account activity with very low levels of securities transactions D. Investment in securities with a significantly lower risk than the customer's expressed risk tolerance - ANSWER-C
An anti-money laundering specialist has just developed and implemented an anti-money laundering program. What is the most effective resource to evaluate the effectiveness of the program?
A. The regulator authorities B. A member of senior management C. The anti-money laundering specialist D. A qualified independent party/auditor - ANSWER-D
An anti-money laundering officer for a financial institution has been conducting a monthly self-assessment. The officer reviews the accounts increase in compliance with a long standing know your customer policy. THe self-assessment for the latest month shows a significant increase in compliance deficiencies for the first time in more than a year. What is the next course of action for the anti-money laundering officer to take?
A. Inform the Board of DIrectors promptly of the KYC policy trend over the last six months B. Determine if there is a readily identifiable cause for the deficiencies C. Implement a revision to the account-opening trainng program D. Revise the policy to simplify KYC compliance before the report is issued - ANSWER-C
To guard against acquisition or control of a financial institution by money launderers and their associates, what should supervisory agencies require?
A. Adequate surety bonds, cash deposits, or equivalencies B. Comprehensive compliance programs C. Prospective owners have prior experience in the area of finance D. Thorough due diligence on prospective owners - ANSWER-D
What is one of the indicators of a Black Market Peso Exchange?
A. A wire transfer from a third party not connected with a transaction B. A large deposit of pesos converted into US dollars C. A transfer of US dollars to Central or South America to be converted into pesos D. An illegal entity that exchanges pesos for US dollars for illegal immigrants - ANSWER-A
What are some of the useful tools or methods in conducting an internal AML investigation? Choose 3
A. Reviewing documents, particularly of relevant accounts B. Interviewing knowlegeable employees of the institution C. Subpoenaing the owners of the relevant accounts D. Exploring leads through internet searches - ANSWER-A, B, D
What should an effective anti-money laundering training program include?
A. Computer-based modules titled 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 - ANSWER-C
When should new business products be evaluated for AML concerns?
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 - ANSWER-B
A compliance officer is looking to update an institution's private bank procedures. What should be included as recommended by the Wolfsberg AML Principles on Private Banking?
A. Approval of PEPs by at least one person other than the relationship manager B. Dedicated automated AML monitoring of client activity C. Review of client files annually if there are unusual transactions D. The institution's senior management has primary responsibility for the relationship - ANSWER-A
Which action should be taken regarding a particular account once suspicious activity is reported by the institution?
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. Immedialtely close the account - ANSWER-C
What poses the greatest money laundering risk for a financial institution offering on-line services to customers?
A. There is a greater difficulty in matching the customer with the provided identification documentation B. There is a lack of human review of the customer's transactions C. Institutions offering on-line services have no possibility to properly verify the identity of their customers D. Customers have direct access to their accounts without being detected - ANSWER-A
Which action should an FIU consider taking when it has information that might be useful to another FIU?
A. In accordance with Wolfsberg guidelines, submit the information to the other FIU in written form B. Supply the information to the other FIU spontaneously as soon as the relevance of sharing the information is identified C. Take no action until contacted by the other FIU D. Request approval from the Egmont Group prior to sharing the information with the other FIU - ANSWER-B
Which statement is true about banking regulatory agencies having the authority to obtain information from regulated institutions?
A. The regulatory agencies may only obtain information from the regulated institution's books and records by virtue of a search warrant B. A search warrnat may be substituted by a court subpoena compelling the institution to produce the information to the regulatory agency C. The agencies authority to conduct examinations negates the need for a warrant or subpoena D. If a regulatory agency intends to prosecute a regulated institution, a warrant or subpoena must first be granted before the information can be obtained - ANSWER-C
When and how should an institution appraise the AML risk of a newly developed product? Choose 3
A. The institution should request the Compliance Officer to review and evaluate the AML risk prior to the product going live B. The institution should roll the product out on a preliminary basis to determine what risks develop with regard to the product C. The institution should review the previous administrative actions to determine [Show Less]