Which of the following is the most common method of laundering money through a legal money services business? - ANSWER-Purchasing structured money
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In general, the 3 phases of money laundering are said to be: Placement; - ANSWER-Layering and integration
Which statement is true? - ANSWER-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
Which 3 of the following is an indication of possible money laundering in an insurance industry scenario? - ANSWER--Single-premium insurance bonds, redeemed at a discount
-Policyholders who are unconcerned about penalties for early cancellation
-Policyholders who make full use of the "free look" period
Which 2 activities are typically associated with the black market peso exchange (BMPE) money laundering system? - ANSWER--Converting illicit drug proceeds from dollars or Euros to Colombian pesos
-Facilitating purchases by Colombian importers of goods manufactured in the United States or Europe through peso brokers
What is the Right of Reciprocity in the field of in the field of international cooperation against money laundering? - ANSWER-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
The greatest risk for money laundering is for casinos that - ANSWER-Allow customers with credit balances to withdraw funds by check in another jurisdiction
Which statement is true regarding the risk of Politically Exposed Persons (PEPs)? - ANSWER-PEPs have significantly greater exposure to the politically corrupt funds, including accepting bribes or misappropriating government funds
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? - ANSWER-Loan back
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 broke-dealer. The customer tells the firm 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? - ANSWER-The customer asks many questions about the brokerage account, but none of them are related to investing.
The address of the account holder and the branch where the customer came to open the account are not close to each other.
That the customer appears unconcerned about the fees.
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: - ANSWER-To over-or under-invoice the goods.
Which of the following statements is true? Correspondent banking is MOST vulnerable to money laundering when the correspondent account is: - ANSWER-Maintained for a foreign bank that does not have a physical presence in any country.
Which statement is true? Lawyers: - ANSWER-Can be abused by launderers by using the accounts they set up for them for the placement and layering of funds.
The Third EU Money Laundering Directive of 2005 applies to which of the following firms? - ANSWER-Auditors, estate agents based in the EU.
According to the EU Directives of 2001, an independent legal professional is obligated to report suspicion of money laundering in a client relationship when: - ANSWER-Participating in financial or corporate transactions.
Which of the followings is the most difficult regulatory challenge facing a foreign financial institution with a correspondent banking relationship in the U.S.? - ANSWER-USA Patriot Act
Which were the Basel Committee's 2 main motivations to encourage strong Know Your Customer programs in it's paper "Customer Due Diligence for Banks? - ANSWER--Protect the safety and soundness of banks
-Protect the integrity of banking systems
What is the definition of a predicate offense? - ANSWER-Unlawful activity whose proceeds, if involved in the transaction, can give rise to prosecution for the crime of money laundering
What is considered a beneficial owner of an account? A person or entity: - ANSWER-That is ultimately entitled to the funds in the account, even though his name may not appear on the account
A bank in Italy holds a business account for a 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: - ANSWER-Payments come from third-party accounts
Which of the following should a national legislature consider when criminalizing money laundering in like with the CFATF 19 Recommendation (choose 3)? - ANSWER--Do not limit the number of specific predicate offenses for money laundering
-Criminalize conspiracy or association to engage in money laundering
-Indicate whether it is relevant that a predicate offense may have been committed outside the local jurisdiction
Which 3 statements are true about the 3rd EU Directive on Money Laundering of 2005? it: - ANSWER--A Was proposed in order to update European Community legislation in line with the Financial Action Task Force (FATF) 40 recommendation
-Repeats the main customer due diligence requirements of the first and second directives, but adds more detail to the requirements by, for example, including a specific requirement to identify the beneficial owner if one exists and includes ongoing monitoring requirements
-Requires firms to apply the customer due diligence requirements to existing customers at appropriate times on a risk sensitive basis
The FATF 40 Recommendations say that countries should: - ANSWER-Not approve the establishment or accept the continued operation of shell banks
Among the Principles for information Exchange Between Financial Intelligence Units for Money Laundering cases, issued by the Egmont Group on June 13, 2001, we find which of the following? - ANSWER-Information exchanged between FIUs may be used only for the specific purpose for which the information was sought or provided
In which stage of money laundering would you classify depositing small amounts of cash into several related accounts? - ANSWER-Placement
In which stage of money laundering would you classify the use of laundered funds to purchase high value assets and luxury items? - ANSWER-Integration
In most laws criminalizing money laundering, it is stated that: - ANSWER-Employees of financial institution who intentionally ignore clear signs of money laundering may be punished with imprisonment an/or fines
The tactic in which individuals make multiple deposits in small quantities to avoid detection is called: - ANSWER-Structuring
In which case might a Suspicious Transaction Report NOT be necessary? - ANSWER-A customer who owns a large supermarket and deposits large amounts of cash several times a day
As part of their role in fighting money laundering, financial institutions should: - ANSWER-Designate a compliance officer
What could happen to compliance officers if they do not comply with the anti-money laundering laws and regulations? - ANSWER-Loss of job, prison penalties and fines, negative reputation to their employer
What is willful blindness defined as? - ANSWER-Deliberate avoidance of knowledge of the facts or ignoring obvious money laundering red flags
In anti-money laundering terminology a "red flag" is: - ANSWER-A warning sign used to bring attention to potentially suspicious, risky transactions or activities
The Reporting Officer of a financial institution should: - ANSWER-Review available information related to the customer, transactions, profile, history and file a Suspicious Transaction Report for only those customers where a suspicion of money laundering exists
Which of the following statements is true? - ANSWER-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
Why is a Payable Through Account vulnerable to money laundering? - ANSWER-These are master correspondent accounts that allow the customers of the foreign bank to do a wide range of transactions
What is the reasoning behind implementing a "risk-based anti-money laundering approach? - ANSWER-Institutions can best use their limited resources to focus on matters where the money laundering risks are highest
According to the FATF 40 Recommendations, "designated non-financial businesses and professions" Include: - ANSWER-Casinos, real estate agents and dealers in precious stones
According to the FATF 40 Recommendation, the threshold for identifying occasional customers at financial institutions is: - ANSWER-EURO/US $15,000
Tom works as a compliance officer at ABC Bank, he is looking at the transactions of one of the bank's customers, Me. Brown, the owner of a check cashing company. Over the last 6 months, Me. Brown has not made withdrawals of cash against check deposits. He also deposited two checks for US$2000 each that were issued by a casino. When checking the KYC file, 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: - ANSWER-Did not make withdrawals of cash against check deposits
A small broker-dealer has an AML compliance program that addresses procedures for filing Suspicious Transaction Reports and includes policies, procedures and internal controls for customer identification, monitoring accounts and identifying money laundering red flags. 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 officer organizes a luncheon for them where and outsider comes in and trains them. The Program provides for the appointment of a compliance officer, and once a year the compliance officer conducts an audit to test the program. In what respect does the program need improvement? - ANSWER-The AML program should be tested by an independent person, not the compliance officer
Susan works as a senior Money Laundering Reporting Officer at XYZ Bank. She is taking a closer look at the activity of several customers. What would arouse her suspicion the MOST? - ANSWER-A customer involved in investment management who guarantees a very high rate of return, will above what other competitors can offer
Which of the following best describes the "alternative remittance system"? - ANSWER-The transfer of values between countries, outside of the legitimate banking system
An AML compliance officer 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 2 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 officer the most? - ANSWER-Sam conducted large cash transactions for his import/export business
Which 3 of the following statements are true? - ANSWER--Online gambling provides and excellent method of laundering because transactions are conducted primarily through credit or debit cards and the sites are typically unregulated offshore firms
-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
-Some banks no longer allow the use of credit cards for online gambling
What are the 3 key goals of an anti-money laundering program? - ANSWER-Prevent and detect money laundering and terrorist financing; report suspicious activity to proper authorities if the laws or regulations require; train all pertinent employees
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 financial instruments have been deposited in a suspicious manner over the last 4 months, leading him to file 2 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? - ANSWER-Terminate the relationship with this account owner if possible
The FATF has consistently noted the use of casinos in money laundering schemes in its annual typologies reports. One laundering technique involving casinos is: - ANSWER-Asking for winners' checks to be made out in the name of third persons or without a payee
Which of the following should an anti-money laundering specialist include on a internal investigation log? - ANSWER-Notes pertaining to activity that is unusual, but for which a Suspicious Transaction Report has not been filed
What are 3 key criteria in AML risk rating? - ANSWER-Customer type, geographic location, products and services used
A financial 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 identify? - ANSWER-Ensure that the institution has a reliable third party source that will enable verification of the customer
Which of the following controls would most effectively minimize the need to correct failures to collect required customer information in the account opening process? - ANSWER-An automated account opening platform that requires data entry prior to allowing the account to be opened
When conduction training for AML purposes for account opening staff, which of the following addresses the most important aspects to consider in the training? - ANSWER-What the employees need to do, the importance of AML efforts and the penalties for non-compliance
When drafting an AML policy, which of the following internal parties is most important to have approve the policy? - ANSWER-Senior Management
Suzy is an AML compliance officer at an institution that is looking to open treasury management services (e.g., wires, checks 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? - ANSWER-Whether the correspondent accounts will be able to be monitored by the institution's monitoring systems
John is an AML compliance officer at a financial 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? - ANSWER-How well can the vendor work with the institution's existing account systems and account opening processes?
A customer wants to establish a sizable relationship with a financial institution. The AML officer is not comfortable with the client's explanation for the source of the fund, but the client manager is vouching for the client and is eager to open the relationship quickly. What should the AML officer do to validate the client's sources of funds? - ANSWER-Perform background investigation to determine whether the client's source of funds is credible
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 officer believes the customer may be embezzling funds form his business. Which is the best path for her to follow up on her suspicions? - ANSWER-Look at the movement of funds in all the accounts, as the customer may be using all ofthem to launder money
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? - ANSWER-The customer is not able to provide a reasonable response as to the source of the funds [Show Less]