C - ANSWER-The USA PATRIOT Act was passed in:
A) 1970
B) 1985
C) 2001
D) 2007
D - ANSWER-The three stages of money laundering are:
A)
... [Show More] Layering, Placement, Refining
B) Placement, Refining, Integration
C) Refining. Integration, Layering
D) Integration, Layering, Placement
D - ANSWER-Which of the following would be satisfactory elements of an Anti-Money Laundering Program?
I - A CAMS certified employee in the Investigations Unit writes up a few policies and procedures and posts them on the department bulletin board.
II - Shortly after attaining their CAMS certification, the individual provides AML training to the Investigations Unit.
III - The CAMS certified individual routinely reviews the work of the Investigations Unit.
IV - The CAMS certified individual assumes the responsibility of a compliance watchdog.
A) All of the above would be satisfactory
B) II and IV would be satisfactory
C) I and III would be satisfactory
D) None of the above would be satisfactory
The correct answer would be "D - None of the above would be satisfactory."
I - The AML program must be approved by the Board of Directors.
II - An AML training program is required of all personnel (and contractors).
III - The review of the bank's Financial Intelligence Department, as part of the audit of the AML program, must be performed by an independent (and knowledgeable) party.
IV - The Compliance Officer must be appointed by the Board of Directors (or upper management with the Board's approval).
D - ANSWER-In determining what risks a customer poses, which consideration should NOT be a major factor?
A) Where the customer resides or where the business is headquartered.
B) What is the size of your financial institution.
C) What occupation or type of business does the customer derive their income from.
D) What are the customer's ethnic heritage, sexual orientation and political beliefs.
The correct answer would be "D." The customer's ethnic heritage, sexual orientation and political beliefs are more discriminatory factors, and while they may help frame the context of certain transactions, they should not be a major factor in assessing risk.
The size of your financial institution is a critical element in determining the level of sensitivity to risks for certain customers.
Analysis questions require one to synthesize information, arrive at solutions and/or evaluate the usefulness of solutions. One needs to distinguish between facts and assumptions and to put various knowledge parts together to form a new knowledge component or solution to a problem. While this is also an important part of being a professional, it comprises only about 23% of the exam.
B - ANSWER-In general, the three phases of money laundering are said to be: Placement:
A. Structuring and manipulation.
B. Layering and integration.
C. Layering and smur ng.
D. Integration and in ltration.
A - ANSWER-Which of the following is the most common method of laundering money through a legal money services business?
A. Purchasing structured money instruments.
B. Smuggling bulk-cash.
C. Transferring funds through Payable Through Accounts (PTAs).
D. Exchanging Colombian pesos on the black market.
A - ANSWER-Which statement is true?
A. Bust-out schemes are popular in creating large bankruptcy frauds where businesses secure increasing loans in excess of the actual value of the company or property and then run with the money, leaving the lender to foreclose and take a substantial loss.
B. Cuckoo smur ng is a signi cant money laundering technique identi ed by the Financial Action Task Force, where a form of structuring uses nested accounts with shell banks in secrecy havens.
C. In its 40 Recommendations, the FATF issued a list of "designated categories of offense" that asserts crimes for a money laundering prosecution.
D. E-cash is not attractive to the money launderer because it cannot be completely anonymous and does not allow for large amounts to be "transported" quickly and easily.
BCD - ANSWER-Which three of the following is an indication of possible money laundering in an insurance industry scenario?
A. Insurance products sold through intermediaries, agents or brokers.
B. Single-premium insurance bonds, redeemed at a discount.
C. Policyholders who are unconcerned about penalties for early cancellation.
D. Policyholders who make full use of the "free look" period.
AC - ANSWER-Which two activities are typically associated with the black market peso exchange (BMPE) money laundering system?
A. Converting illicit drug proceeds from dollars or Euros to Colombian pesos.
B. Converting illicit drug proceeds from Colombian pesos to dollars or Euros.
C. Facilitating purchases by Colombian importers of goods manufactured in the United States or Europe through peso brokers.
D. Facilitating purchases by European or U.S. importers of goods manufactured in Colombia through peso brokers.
D - ANSWER-What is the Right of Reciprocity in the eld of international cooperation against money laundering?
A. The legal principle that nancial institutions that have referred customers to other nancial institutions can share information about these customers with the other institutions.
B. A rule of the Basel Committee allowing properly regulated nancial institutes of another member state of the Basel Committee to do business without additional supervision to the degree that the other state grants the same right.
C. The right of each FATF member country to delegate prosecution of a case of money laundering to another member that is already investigating the same case.
D. A rule in the law of a country allowing its authorities to cooperate with authorities of other countries to the degree that their law allows them to do the same.
C - ANSWER-The greatest risk for money laundering is for casinos that
A. Provide their customers with a wide array of gambling services.
B. Operate in a non-Egmont member country.
C. Allow customers with credit balances to withdraw funds by check in another jurisdiction.
D. Only send suspicious transaction reports to the nancial intelligence unit of the country it operates in.
B - ANSWER-Which statement is true regarding the risk of Politically Exposed Persons (PEPs)?
A. PEPs provide access to third parties on whom the nancial institution has not conducted suf cient due diligence.
B. PEPs have signi cantly greater exposure to the politically corrupt funds, including accepting bribes or misappropriating government funds.
C. PEPs are foreign customers who inherently present additional risk as they are engaged in cross-border transactions.
D. PEPs generally do not pose enhanced risks to an institution due to their political standing; rather, PEPs increase the prestige of an institution.
B - ANSWER-Dirty money, derived from criminal activities of
Belgian Criminal A, is sent to a foreign bank account
of Corporation B. Then in Belgium, a new investment Company C is incorporated. Criminal A is appointed as a director of Company C. Company C borrows money from the foreign Company B and buys real estate in Belgium. The real estate is rented to third parties. Director (Criminal) A also rents an apartment in the building. With the funds generated by the rent, Company C pays off
the loan to Corporation B, and the salary of Director A. Criminal A now converted his dirty money in legal funds. This laundering method is commonly referred to as what?
A. Offsetting real estate transactions.
B. Loan back.
C. Cuckoo smur ng.
D. Loan manipulation.
ACD - ANSWER-A new customer approaches a bank to open a commercial account. The customer provides an address for the account located across the city from the branch. When asked by the account representative if the customer requires any additional banking services, the customer responds she is also interested in opening a personal investment account. The account representative refers the customer to their broker-dealer. The customer tells the rm representative she has never had a brokerage account before and has a few questions about how an investment account works. The customer asks how deposits can be made into her account, if there are any reporting requirements, and how to go about moving balances out of the account using wire transfers. No questions are asked about fees associated with these transactions. Which three items would be considered suspicious?
A. The customer asks many questions about the brokerage account, but none of them are related to investing.
B. The customer is opening a commercial account and at the same time a personal investment account.
C. The address of the account holder and the branch where the customer came to open the account are not close to each other.
D. That the customer appears unconcerned about the fees.
A - ANSWER-International trade in goods and services can be used as either a cover for money laundering or as the laundering mechanism itself. What is MOST important for the launderer when engaging in this method? The ability:
A. To over- or under-invoice the goods.
B. To sell the exported goods for as much as possible.
C. To use goods that do not need to be declared.
D. To use high-value assets such as luxury cars or boats.
C - ANSWER-Which of the following statements is true? Correspondent banking is MOST vulnerable to money laundering when the correspondent account is:
A. Maintained for foreign nancial institutions that are banks.
B. Not used to provide services directly to third parties.
C. Maintained for a foreign bank that does not have a physical presence in any country.
D. Maintained for a foreign private bank that is publicly traded and is a quali ed intermediary.
D - ANSWER-Which statement is true? Lawyers:
A. In FATF member countries can generally not be used to serve as formation agents to set up trusts, front companies or shell companies.
B. And similar professional "gatekeepers" are called money services businesses.
C. Can generally not be used to act as a nominee shareholder for a bene cial owner.
D. Can be abused by launderers by using the accounts they set up for them for the placement and layering of funds.
A - ANSWER-The Third EU Money Laundering Directive of 2005 applies to which of the following rms?
A. Auditors, estate agents based in the EU.
B. U.S. Financial institutions covered by the USA
Patriot Act.
C. Shell rms inside and outside the EU.
D. EU based high value good dealers who deal in cash of 10,000 Euro or more.
C - ANSWER-According to the EU Directives of 2001, an independent legal professional is obligated to report suspicion of money laundering in a client relationship when:
A. Representing a client in a legal matter.
B. Ascertaining the legal position for a client.
C. Participating in nancial or corporate transactions.
D. Obtaining information associated with a judicial proceeding.
A - ANSWER-Which of the following is the most dif cult regulatory challenge facing a foreign nancial institution with a correspondent banking relationship in the U.S.?
A. USA Patriot Act.
B. Basel Due Diligence Principles for Banks.
C. FATF Guidance on Terrorist Financing.
D. UN Security Council Resolution on Correspondent Banking.
CD - ANSWER-Which were the Basel Committee's two main motivations to encourage strong Know Your Customer programs in its paper "Customer Due Diligence for Banks?"
A. A.Mirror FATF's KYC Recommendations.
B. Meet European Union guidelines.
C. Protect the safety and soundness of banks.
D. Protect the integrity of banking systems.
B - ANSWER-What is the de nition of a predicate offense?
A. Lawful or unlawful activity that involves willful blindness, and if there is an international element to the crime, can lead to a suspicious activity report.
B. Unlawful activity whose proceeds, if involved in the transaction, can give rise to prosecution for the crime of money laundering.
C. An interface which is the underlying segment of a suspicious transaction monitoring system.
D. A speci ed unlawful activity that is committed through concentration accounts deceiving customers that are not directly related to the account.
B - ANSWER-What is considered a bene cial owner of an account? A person or entity:
A. That has direct signatory authority over an account, and whose name appears on the account.
B. That is ultimately entitled to the funds in the account, even though his name may not appear on the account.
C. That is the originator and the destination of most (but not all) transactions conducted within the account, but who does not ultimately control such funds.
D. That is a gatekeeper, has the legal title to the account, and typically transfers the funds to a trust.
B - ANSWER-A bank in Italy holds a business account for an Italian company that sells gold throughout Europe and the Western Hemisphere. The bank knows the purpose of this account is to receive payment for sales. A review
of the account shows a pattern of wire transfers coming from payable-through accounts. There is also a pattern of purchases of gold bullion held in Swiss banks. The MOST important factor in assessing whether money laundering is a threat is that the:
A. Customer sells gold in regions where it carries an important or religious signi cance that adds to the high intrinsic value.
B. Payments come from third-party accounts.
C. Payments received are in the form of wire transfers instead of cash.
D. Account holder maintains gold bullion rather than nished pieces of jewelry.
ABC - ANSWER-Which of the following should a national legislature consider when criminalizing money laundering in line with the CFATF 19 Recommendations (choose three)?
A. Do not limit the number of speci c predicate offenses for money laundering.
B. Criminalize conspiracy or association to engage in money laundering.
C. Indicate whether it is relevant that a predicate offense may have been committed outside the local jurisdiction.
D. Require money laundering offenses to prove that the offender has actual knowledge of a criminal connection to the funds.
ACD - ANSWER-Which three statements are true about the 3rd EU Directive on Money Laundering of 2005? It:
A. A.Was proposed in order to update European Community legislation in line with the Financial Action Task Force (FATF) 40 Recommendations.
B. Largely replicates the de nitions included in the Second Directive, including the de nition of a politically exposed person.
C. Repeats the main customer due diligence requirements of the rst and second Directives, but adds more detail to the requirements by, for example, including a speci c requirement to identify the bene cial owner if one exists and includes ongoing monitoring requirements.
D. Requires rms to apply the customer due diligence requirements to existing customers at appropriate times on a risk sensitive basis.
D - ANSWER-The FATF 40 Recommendations say that countries should:
A. Not allow bearer shares and legal persons that are able to issue bearer shares.
B. Gather statistics on STRs; prosecutions and convictions; on property frozen, seized and con scated; and on mutual legal assistance, but not necessarily on other international requests for co- operation.
C. Consider the feasibility of a system where banks and other nancial institutions and intermediaries would report currency transactions without indicating a minimum xed amount.
D. Not approve the establishment or accept the continued operation of shell banks.
C - ANSWER-Among the Principles for Information Exchange Between Financial Intelligence Units for Money Laundering Cases, issued by the Egmont Group on June 13, 2001, we nd which of the following?
A. Information-sharing agreements must be drafted according to a model issued by the Egmont Group.
B. Information-sharing agreements should not allow room for case-by-case solutions to speci c problems in case of NCCT countries.
C. Information exchanged between FIUs may be used only for the speci c purpose for which the information was sought or provided.
D. The requesting FIU may make use of the information shared by a disclosing FIU for administrative purposes without the prior consent of the disclosing FIU.
C - ANSWER-In which stage of money laundering would you classify depositing small amounts of cash into several related accounts?
A. Integration.
B. Structuring.
C. Placement.
D. Construction.
A - ANSWER-In which stage of money laundering would you classify the use of laundered funds to purchase high value assets and luxury items?
A. Integration.
B. Structuring.
C. Placement.
D. Construction.
D - ANSWER-In most laws criminalizing money laundering, it is stated that:
A. Financial institutions are not responsible for money laundering or suspicious transactions taking place within their accounts until the government places the customer on a watch list.
B. Tipping off (telling customers that their accounts/ transactions are under investigation because of suspicion) is not punishable.
C. The dirty money undergoing money laundering will not be con scated because of privacy laws.
D. Employees of nancial institution who intentionally ignore clear signs of money laundering may be punished with imprisonment and/or nes.
D - ANSWER-The tactic in which individuals make multiple deposits in small quantities to avoid detection is called:
A. Paralleling.
B. Integration.
C. Investing.
D. Structuring.
C - ANSWER-In which case might a Suspicious Transaction Report NOT be necessary?
A. A customer who deposits money of suspicious origins and refuses to answer questions from the nancial institution's staff.
B. A customer who tries to move money that is suspected of being derived from criminal activity.
C. A customer who owns a large supermarket and deposits large amounts of cash several times a day.
D. A customer whose account is showing transaction activities which are beyond his known nancial capability.
A - ANSWER-As part of their role in ghting money laundering, nancial institutions should:
A. Designate a compliance of cer.
B. Depend solely on The State's staff for combating money laundering.
C. Refuse small cash deposits under the reporting threshold.
D. Not open accounts for people from high risk jurisdictions.
B - ANSWER-What could happen to compliance of cers if they do not comply with the anti-money laundering laws and regulations?
A. Their employers could face reputation damage, but the employee is immune from penalty.
B. Loss of job, prison penalties and nes, negative reputation to their employer.
C. Nothing. Only the nancial institution's legal counsel will be responsible for complying with laws.
D. Nothing. Only the staff directly handling transactions have to worry.
C - ANSWER-What is willful blindness de ned as?
A. Failing to le a Suspicious Transaction Report for dealing with companies or nancial institutions from offshore tax havens.
B. Not following customer identi cation procedures as set out in the institution's procedures.
C. Deliberate avoidance of knowledge of the facts or ignoring obvious money laundering red ags.
D. Deliberate avoidance of a customer based on the assumption that his or her behavior suggested a potential threat as money launderer and/or terrorist.
A - ANSWER-In anti-money laundering terminology a "red ag" is:
A. A warning sign used to bring attention to potentially suspicious, risky transactions or activities.
B. A general banking term used once the balance is negative / overdue.
C. The standard ag of countries not cooperative in ghting money laundering and terrorist nancing.
D. An indicator that a customer is listed on an economic sanctions list.
C - ANSWER-The Reporting Of cer of a nancial institution should:
A. Report everything that comes his way from anyone in the organization.
B. Report everything that comes his way from senior management or Board of Directors.
C. Review available information related to the customer, transactions, pro le, history and le a Suspicious Transaction Report for only those customers where a suspicion of money laundering exists.
D. Report only what the Reporting Of cer's superior agrees should be reported.
C - ANSWER-Which of the following statements is true?
A. Credit cards are not likely to be used in the layering phase of money laundering because of restrictions in cash payments.
B. Credit cards are effective instruments for laundering money because the transactions do not create an audit trail.
C. A launderer can launder money by prepaying his credit card using funds that are already in the banking system, creating a credit balance on his account, and requesting a credit refund.
D. A launderer can use illicit funds that are already in the banking system to pay his credit card bill for goods purchased, which is an example of placement.
A - ANSWER-Why is a Payable Through Account vulnerable to money laundering?
A. These are master correspondent accounts that allow the customers of the foreign bank to do a wide range of transactions.
B. These are correspondent accounts located in a non- cooperative country or territory.
C. These are nested correspondent accounts at a foreign shell bank with customers with whom the domestic bank did not exercise due diligence.
D. These are master escrow accounts on which a domestic bank generally does not conduct periodic veri cation.
B - ANSWER-What is the reasoning behind implementing a "risk-based anti-money laundering approach"?
A. It will keep the regulators focused on money laundering controls in sectors beyond banks.
B. Institutions can best use their limited resources to focus on matters where the money laundering risks are highest.
C. A quantitative approach will generate better results than a qualitative approach.
D. It allows the institution to focus on selling products that have a better return on investment.
A - ANSWER-According to the FATF 40 Recommendations, "designated non- nancial businesses and professions" include:
A. Casinos, real estate agents and dealers in precious stones.
B. Money service businesses, gatekeepers, and issuers of electronic money.
C. Dealers in precious metals, lawyers, commodity futures traders.
D. Life insurance companies, real estate agents and notaries.
C - ANSWER-According to the FATF 40 Recommendations, the threshold for identifying occasional customers at nancial institutions is:
A. EURO/US$ 5,000.
B. EURO/US$ 10,000.
C. EURO/US$ 15,000.
D. EURO/US$ 20,000.
B - ANSWER-Tom works as a compliance of cer at ABC Bank. He is looking at the transactions of one of the bank's customers, Mr. Brown, the owner of a check cashing company. Over the last six months, Mr. Brown has not made withdrawals of cash against check deposits. He also deposited two checks for US$2,000 each that were issued by a casino. When checking the KYC le, Tom sees that, when opening the account, Mr. Brown had requested detailed information about fees and commission that are charged by the
bank. What should arouse Tom's suspicion the most? Mr. Brown:
A. Deposited checks from casinos.
B. Did not make withdrawals of cash against check deposits.
C. Showed uncommon curiosity about commissions and fees charged.
D. Does not have an escrow account.
A - ANSWER-A small broker-dealer has an AML compliance program that addresses procedures for ling Suspicious Transaction Reports and includes policies, procedures and internal controls for customer identi cation, monitoring accounts and identifying money laundering red ags. Every employee of the broker dealer is trained via the Internet in January and in July on AML issues.
The board does not take the Internet training. Instead,
the compliance of cer organizes a luncheon for them where an outsider comes in and trains them. The program provides for the appointment of a compliance of cer, and once a year the compliance of cer conducts an audit to test the program. In what respect does the program need improvement?
A. The AML program should be tested by an independent person, not the compliance of cer.
B. The AML program should be tested more than once per year.
C. The board should receive the same training provided to the employees.
D. Employees should not be trained via the Internet, because classroom training is better.
D - ANSWER-Susan works as a senior Money Laundering Reporting Of cer at XYZ Bank. She is taking a closer look at the activity of several customers. What would arouse her suspicion the MOST?
A. A customer who owns several check cashing companies in town and rents safe deposit boxes at different branches.
B. A customer who avoids taking vacations.
C. A small business that provides nancial statements which are not prepared by an accountant.
D. A customer involved in investment management who guarantees a very high rate of return, well above what other competitors can offer.
A - ANSWER-Which of the following best describes the "alternative remittance system"?
A. The transfer of values between countries, outside of the legitimate banking system.
B. A non-electronic data remittance system used in several NCCT countries to report suspicious activities.
C. Old-fashioned reporting requirements commonly used in non-cooperative countries and territories.
D. The transfer of funds between two or more nancial institutions using concentration accounts.
D - ANSWER-An AML compliance of cer was reviewing customers at XYZ Bank and one of the customers (Mr. Sam Tropicana) attracted her attention. Through a period of several months, cash deposits and withdrawals were transacted through his account with amounts ranging between
US $7,500 and US $17,000. In addition, Sam deposited two checks, issued by a casino into his account for US $32,000 each. When opening the account, Sam stated that he operated an import/export company. Which of the following additional items should arouse the suspicion of an anti-money laundering compliance of cer the most?
A. Sam maintained a personal account as well as the business account.
B. Sam's home telephone number was disconnected last month.
C. Sam asked for a letter of credit to nance some imports from a new supplier.
D. Sam conducted large cash transactions for his import/ export business.
ABD - ANSWER-Which three of the following statements are true?
A. Online gambling provides an excellent method of laundering because transactions are conducted primarily through credit or debit cards and the sites are typically unregulated offshore rms.
B. An institution can know when a credit card is used for online gambling transactions because the cards rely on codes that illustrate the type of transactions.
C. Online gambling provides an excellent method of laundering because it lends itself to any type of cash movement and there is no face-to-face contact with the customer.
D. Some banks no longer allow the use of credit cards for online gambling transactions.
A - ANSWER-What are the three key goals of an anti-money laundering program?
A. Prevent and detect money laundering and terrorist nancing; report suspicious activity to proper authorities if the laws or regulations require it; train all pertinent employees.
B. Satisfy regulatory requirements; report suspicious activity to proper authorities if the laws or regulations require it; train all pertinent employees.
C. Train all pertinent employees if the laws require it; prevent money laundering; prevent terrorist nancing.
D. Reduce regulatory burdens; help the court systems in convicting money launderers; protect the institution
A - ANSWER-An anti-money laundering specialist is employed by
a large bank. An account owner is well-known to the specialist and the account has been open at the bank
for several years. The specialist noticed that nancial instruments have been deposited in a suspicious
manner over the last four months, leading him to le two Suspicious Transaction Reports (STRs) on the account. Recently, suspicious activity involving high-risk countries has been detected over the last few days.
Various law enforcement agencies have called to discuss the STRs with the specialist. The specialist has asked the agents whether they think the relationship with the customer should be terminated. These agents advised that this a business decision for the bank to make.
The specialist has kept the legal advisors and upper management apprised of the activity and has provided them copies of the STRs.
Which of the following should the specialist recommend?
A. Terminate the relationship with this account owner if possible.
B. Monitor the account for continued suspicious activity.
C. Contact the account owner again about the nature of suspicious transactions.
D. Seek guidance from regulators regarding a decision to terminate the account.
A - ANSWER-The FATF has consistently noted the use of casinos
in money laundering schemes in its annual typologies reports. One laundering technique involving casinos is:
A. Asking for winners' checks to be made out in the name of third persons or without a payee.
B. Abusing casinos by circumventing its gatekeepers.
C. Prepaying a casino token or chip by using funds that are already in the casino system, creating a debit balance.
D. Extensive gambling via multiple games throughout the casino.
C - ANSWER-Which of the following should an anti-money laundering specialist include on an internal investigation log?
A. A government order on a customer that garnishes his wages for failure to pay child support.
B. Supporting documentation and materials for denying service to a client with a bad credit rating.
C. Notes pertaining to activity that is unusual, but for which a Suspicious Transaction Report has not been led.
D. Reference to a memorandum to the company's corporate management relating to budgetary and similar concerns.
A - ANSWER-What are the three key criteria in AML risk rating?
A. Customer type, geographic location, products and services used.
B. Geographic location, customer type, employment status.
C. Products and services used, customer type and prior banking relations.
D. Employment status, customer type, products and services used.
C - ANSWER-A nancial institution is looking to establish an online account opening service. The institution plans to offer this product to new and existing customers within the country. Which of the following would be the best plan of action for an AML specialist to recommend enabling the institution to verify the customer's identity?
A. Do not offer the product, as it is too high risk as the customer cannot be seen to verify their identity.
B. Require all customers to send a copy of valid photo identi cation to the institution.
C. Ensure that the institution has a reliable third party source that will enable veri cation of the customer.
D. Allow customers to enter required information, but require all customers to come to the institution in person for veri cation.
B - ANSWER-Which of the following controls would most effectively minimize the need to correct failures to collect required customer information in the account opening process?
A. A quality review staff that checks paper applications to ensure all elds are complete.
B. An automated account opening platform that requires data entry prior to allowing the account to be opened.
C. Requiring that a manager review and approve all new account applications.
D. Documenting a procedure that sets forth the steps required to open an account.
A - ANSWER-When conducting training for AML purposes for account opening staff, which of the following addresses the most important aspects to consider in the training?
A. What the employees need to do, the importance of AML efforts and the penalties for non-compliance.
B. The governmental AML bodies, what the employees need to do and the importance of AML efforts.
C. The penalties for non-compliance, the governmental AML bodies, and what employees need to do.
D. The importance of AML efforts, the governmental AML bodies and the penalties for non-compliance.
A - ANSWER-When drafting an AML policy, which of the following internal parties is most important to have approve the policy?
A. Senior management.
B. The audit department.
C. The sales team management.
D. The operational staff management.
D - ANSWER-Suzy is an AML compliance of cer at an institution
that is looking to open treasury management services (e.g., wires, check clearing, foreign draft issuance) for correspondent banking customers. Which of the following should Suzy be most concerned about regarding the institution's capabilities regarding these customers?
A. Whether the new account systems will be able to handle customers with foreign names.
B. Whether the correspondent accounts will be approved by government regulators.
C. Whether the correspondent accounts will be able to provide evidence of their customers' identities at account opening
D. Whether the correspondent accounts will be able to be monitored by the institution's monitoring systems.
A - ANSWER-John is an AML compliance of cer at a nancial institution that is looking at an electronic KYC tool to facilitate
the account opening process. Which of the following aspects would be most useful for John to consider when assessing vendors providing the tools?
A. How well can the vendor work with the institution's existing account systems and account opening processes?
B. Can the vendor provide training on how to use the new tool?
C. Can the tool prevent fraudulent accounts from being opened?
D. Can the tool provide alerts to the AML compliance staff when it nds a match with a customer in a jurisdiction with inadequate AML controls?
C - ANSWER-A customer wants to establish a sizable relationship with a nancial institution. The AML of cer is not comfortable with the client's explanation for the source of the funds, but the client manager is vouching for the client and is eager to open the relationship quickly. What should the AML of cer do to validate the client's sources of funds?
A. Accept the client manager's approval of the client.
B. Allow the account to be opened but be sure to monitor the account activity.
C. Perform a background investigation to determine whether the client's source of funds is credible.
D. Decline the account.
C - ANSWER-An AML compliance officer is investigating unusual activity that she has noticed in a customer's accounts. The customer has a retirement account, a savings account in trust for his son, a joint checking account with his wife, a company checking account and an individual brokerage account. The compliance of cer believes the customer may be embezzling funds from his business. Which is the best path for her to follow up on her suspicions?
A. Focus on the checking accounts, as the checking accounts allow the fastest movement of funds.
B. Ignore the savings and brokerage accounts, as these are not used in the placement stage of money laundering.
C. Look at the movement of funds in all the accounts, as the customer may be using all of them to launder money.
D. Focus on the business account, as the customer is embezzling money from the company.
D - ANSWER-About an hour before closing time, a construction worker comes to a financial institution and wants to provide cash in exchange for sending money abroad. It is the middle of summer and the customer indicates that he's been outside for the bulk of the day and needs to send money to a family member who is in another country. Which of the following would be considered the biggest concern with the customer and his request?
A. The customer is sweating; probably because he is nervous due to the fact he's trying to launder narcotics proceeds.
B. The customer is sending money to a relative in a high- risk foreign location.
C. The customer seems slightly distracted when asked questions by the nancial institution's staff.
D. The customer is not able to provide a reasonable response as to the source of the funds.
A - ANSWER-A customer at a brokerage firm indicated that he was primarily a conservative, long-range investor. The customer has recently been engaging in day trading in penny stocks. What should an AML compliance of cer do in such a situation?
A. Check with the account of cer to see if the customer has indicated a change in his investment strategy.
B. Report the customer as suspicious due to investing in penny stocks.
C. Contact the customer and ask why he is engaged in high-risk day-trading activity.
D. Refer the customer for senior management for approval.
C - ANSWER-A financial institution branch manager who has been
in place for over ten years has not taken a vacation
for almost four years. The company does not allow employees to roll vacation over from year to year. An AML compliance of cer has noticed unusual activity in several accounts at the branch location. What should the AML of cer do?
A. Insist that the manager take a vacation, as not taking one is a red ag.
B. Report the manager to authorities for engaging in suspicious activity.
C. Determine whether the manager has engaged in transactions in the accounts where the unusual activity has occurred.
D. Conduct a background check to see if the manager has been convicted of criminal activity.
D - ANSWER-An AML compliance of cer is looking to establish
a suspicious activity reporting process at her small institution. Which of the following would be the best course of action?
A. Allow employees to refer suspicious activity directly to the government authorities to le as quickly as possible.
B. Have employees refer all unusual activity to the internal independent audit department to assess whether the activity should be reported.
C. Have employees refer all unusual activity to senior management to ensure they are aware of all unusual activity within the organization.
D. Have employees refer all unusual activity to her so that she may conduct an investigation into what needs to be reported to authorities.
B - ANSWER-In general, the three phases of money laundering are said to be: Placement:
A. Structuring and manipulation.
B. Layering and integration.
C. Layering and smur ng.
D. Integration and in ltration.
A - ANSWER-Which of the following is the most common method of laundering money through a legal money services business?
A. Purchasing structured money instruments.
B. Smuggling bulk-cash.
C. Transferring funds through Payable Through Accounts (PTAs).
D. Exchanging Colombian pesos on the black market.
A - ANSWER-Which statement is true?
A. Bust-out schemes are popular in creating large bankruptcy frauds where businesses secure increasing loans in excess of the actual value of the company or property and then run with the money, leaving the lender to foreclose and take a substantial loss.
B. Cuckoo smur ng is a signi cant money laundering technique identi ed by the Financial Action Task Force, where a form of structuring uses nested accounts with shell banks in secrecy havens.
C. In its 40 Recommendations, the FATF issued a list of "designated categories of offense" that asserts crimes for a money laundering prosecution.
D. E-cash is not attractive to the money launderer because it cannot be completely anonymous and does not allow for large amounts to be "transported" quickly and easily.
BCD - ANSWER-Which three of the following is an indication of possible money laundering in an insurance industry scenario?
A. Insurance products sold through intermediaries, agents or brokers.
B. Single-premium insurance bonds, redeemed at a discount.
C. Policyholders who are unconcerned about penalties for early cancellation.
D. Policyholders who make full use of the "free look" period.
AC - ANSWER-Which two activities are typically associated with the black market peso exchange (BMPE) money laundering system?
A. Converting illicit drug proceeds from dollars or Euros to Colombian pesos.
B. Converting illicit drug proceeds from Colombian pesos to dollars or Euros.
C. Facilitating purchases by Colombian importers of goods manufactured in the United States or Europe through peso brokers.
D. Facilitating purchases by European or U.S. importers of goods manufactured in Colombia through peso brokers.
D - ANSWER-What is the Right of Reciprocity in the eld of international cooperation against money laundering?
A. The legal principle that nancial institutions that have referred customers to other nancial institutions can share information about these customers with the other institutions.
B. A rule of the Basel Committee allowing properly regulated nancial institutes of another member state of the Basel Committee to do business without additional supervision to the degree that the other state grants the same right.
C. The right of each FATF member country t [Show Less]