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

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Question # 1

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

Options:

A.  

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

B.  

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

C.  

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

D.  

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

Discussion 0
Question # 2

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

Could this indicate potential money laundering?

Options:

A.  

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

B.  

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

C.  

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

D.  

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

Discussion 0
Question # 3

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

Options:

A.  

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

B.  

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

C.  

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

D.  

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

Discussion 0
Question # 4

Enhanced due diligence (EDD) may be bypassed for which situation?

Options:

A.  

On-boarding a branch or majority-owned subsidiary of an EU or US FI located in a high-risk third country that fully complies with group-wide policies and procedures.

B.  

On-boarding a subsidiary in a high-risk country with a complex ownership structure of a long-standing and reputable customer based in the EU or US.

C.  

On-boarding a casino headquartered in the EU or US that is part of an international hotel chain, provides less than 50% of overall revenue and that fully complies with group-wide policies and procedures.

D.  

On-boarding a reputable Politically Exposed Person (PEP) from the EU onto the wealth management arm of a US financial institution (FI).

Discussion 0
Question # 5

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

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

Options:

A.  

The client does business in countries with active terrorist organizations.

B.  

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

C.  

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

D.  

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

Discussion 0
Question # 6

Which primary international authoritative body designates sanctions?

Options:

A.  

Organization of Economic Co-operation and Development (OECD)

B.  

Financial Action Task Force (FATF)

C.  

International Monetary Fund (IMF)

D.  

United Nations (UN)

Discussion 0
Question # 7

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

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

Options:

A.  

The payment is received via wire transfer.

B.  

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

C.  

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

D.  

Payment is received from an account in an offshore jurisdiction.

E.  

Lack of beneficial ownership details for the originating account.

Discussion 0
Question # 8

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

Options:

A.  

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

B.  

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

C.  

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

D.  

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

Discussion 0
Question # 9

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

Which new customer warrants enhanced due diligence?

Options:

A.  

A non-profit hospital

B.  

A fundraising organization

C.  

An employee benefit plan trust

D.  

A medical practice limited partnership

Discussion 0
Question # 10

Which three do the Office of Foreign Asset Control regulations cover? Choose 3 answers

Options:

A.  

All persons and entities within the U.S.

B.  

All U.S.-domiciled entities and their foreign branches

C.  

All foreign-based entities that have U.S. customers

D.  

All U.S. citizens

Discussion 0
Question # 11

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

Options:

A.  

An FIU request under the Egmont principles

B.  

An MLAT request

C.  

A supervisory channel request with the Basel Committee

D.  

A FATF request

Discussion 0
Question # 12

Which is a key goal of EU Directives on money laundering?

Options:

A.  

Establish a consistent regulatory environment across the EU to prevent money laundering

B.  

Address control of payments in EU countries to reduce money laundering

C.  

Allow member states to discuss the draft legislation with the cooperation of the EU Financial Intelligence Units (FIUs)

D.  

Build a network of financial institutions (FIs) that work together to prevent money laundering across the EU

Discussion 0
Question # 13

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

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

Options:

A.  

Compare settings to organizations within its peer group

B.  

Flag filters with no history of generating an alert for removal

C.  

Review parameter settings based on the latest risk assessment

D.  

Calibrate parameters based on staffing capabilities to clear alerts

Discussion 0
Question # 14

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

Options:

A.  

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

B.  

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

C.  

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

D.  

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

Discussion 0
Question # 15

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

Options:

A.  

Gather a list of their politically exposed customers

B.  

Identify natural persons who own or control more than 5%

C.  

Obtain senior management approval before establishing the relationship

D.  

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

Discussion 0
Question # 16

A law enforcement agency is reviewing a suspicious transaction report (STR) filed by a financial institution for suspicious activity on a client's account.

Subsequently, the agency requests further information.

Which supporting documentation might the law enforcement agency request from the institution to facilitate its investigation?

Options:

A.  

Previously filed STRs on the same customer

B.  

Account opening documents and account statements

C.  

Copies of promotional materials sent to the customer

D.  

A copy of the institution's STR policy and procedures

Discussion 0
Question # 17

Why do organized crime groups often use front companies? (Choose two).

Options:

A.  

Because they are not registered, front companies are not subject to income and other sales taxes.

B.  

Because using multiple front companies can make it easier to control an entire sector of the economy.

C.  

Because they are generally subject to lighter due diligence requirements by banks and other financial services providers.

D.  

Because front companies generally charge higher prices than legitimate companies, so profit margins are higher.

E.  

Because they can use the company's bank accounts to comingle deposits with those of legal businesses.

Discussion 0
Question # 18

The new compliance officer has reviewed the bank’s anti-money laundering training program. The program consists of online training for all new employees within 30 days of hire date and annual refresher training to all employees. In addition, there is specialized training for areas that deal with higher risk products and customers.

Over the last year, there have been no regulatory changes and no new products or services have been introduced. The compliance officer wants to propose to the board of directors that the annual refresher training is still current and can be delivered unchanged to all employees.

Which two critical pieces of information could be missed by taking this approach? (Choose two.)

Options:

A.  

Any new trends, developments, or risks

B.  

Results of the previous year’s risk assessment

C.  

Changes to internal policies, procedures, and processes

D.  

Links to enforcement actions identifying violations in other financial institutions

Discussion 0
Question # 19

In the FATF 40 recommendations, the focus of AML efforts has been expanded beyond Financial Institutions. Which three businesses and/or professions are covered? Choose 3 answers

Options:

A.  

casinos, when customers engage in financial transactions equal to or above a designated Threshold

B.  

Real estate agents when they are involved in transactions for clients concerning buying and selling properties

C.  

Dealers in art, when they engage in any cash transaction with a customer at or above a designated threshold

D.  

Trust and company service providers

Discussion 0
Question # 20

How should a financial institution deter money laundering through new accounts? Choose 3 answers

Options:

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

Discussion 0
Question # 21

Which statement is true about when an institute becomes aware that a particular employee is under investigation by law enforcement as a result of a subpoena or warrant?

Options:

A.  

Under no circumstances can the employee be interviewed by the institution without the consent of law enforcement for fear of tipping the employee off

B.  

If an independent investigation provides grounds to interview the employee, they can be interviewed and, if necessary, terminated buy not advised that they are under investigation

C.  

The employee can and should be interviewed, as well as notified of the investigation to demonstrate the seriousness of the offence and to get the employee’s full attention and cooperation

D.  

The institute has a duty as an employer to inform the employee he or she is under investigation by law enforcement, buy must not inform them that a warrant or subpoena has been received

Discussion 0
Question # 22

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

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

Options:

A.  

Withdrawing cash

B.  

Making payment to various people

C.  

Receiving multiple deposits via wire transfer

D.  

Transferring funds to his law firm’s account online

Discussion 0
Question # 23

What core objective does the Egmont Group suggest would lead to an effective national Financial Intelligence Unit (FIU)?

Options:

A.  

The FIU must operate from physically separated premises from other law enforcement agencies and government offices.

B.  

The FIU meets the Egmont Group assessment criteria.

C.  

The FIU must have absolute trust amongst national and international stakeholders before sensitive information will be exchanged with confidence.

D.  

The FIU must be able to promote the value of the government's commitment to embed a corruption free society within the country.

Discussion 0
Question # 24

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

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

Options:

A.  

Close the account immediately

B.  

File a suspicious transaction report

C.  

Monitor the account for suspicious activity

D.  

Review the money laundering risk posed by the account

Discussion 0
Question # 25

What are two aspects of the Wolfsberg Anti-Money Laundering (AML) Principles for Correspondent Banking? (Choose two.)

Options:

A.  

At least one person, aside from the person sponsoring the relationship, should approve the correspondent relationship.

B.  

Correspondent banking is an inherently high risk business and all correspondent bank relationships should be reviewed on an annual basis.

C.  

Factors such as politically exposed person involvement and downstream (nested) correspondents increase the risk inherent in a correspondent relationship.

D.  

An Institution may assign a low risk rating to a correspondent bank located in a jurisdiction deemed to have an adequate AML environment (e.g., Financial Action Task Force member country) without needing to consider other factors

Discussion 0
Question # 26

What action should a bank CEO's assistant take when the bank CEO expenses large sums of money to a charitable organization run by the bank CEO's direct family member?

Options:

A.  

Report the actions to the Executive Board of the bank.

B.  

Meet with the bank CEO to learn why the donations are being made.

C.  

Investigate the charitable organization's relationship with the bank CEO.

D.  

Submit the concern anonymously to the bank's internal Compliance Hotline.

Discussion 0
Question # 27

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

File the suspicious transaction immediately to the financial intelligence unit.

Options:

A.  

Discard the alert as a false positive hit

B.  

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

C.  

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

D.  

Review the alert if the deposit is made in cash.

E.  

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

Discussion 0
Question # 28

Which assessments are involved in the processes of mutual evaluation and follow-up by the FATF?

Options:

A.  

Risk assessments and technical standards assessments

B.  

Technical compliance assessments and effectiveness assessment

C.  

Sanction risk assessments and the country's National Risk Assessment

D.  

Country audit assessments and transaction monitoring assessments

Discussion 0
Question # 29

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

Options:

A.  

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

B.  

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

C.  

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

D.  

Examining Human Resources processes for conducting criminal background checks on executives

Discussion 0
Question # 30

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

Options:

A.  

Foreign correspondents could terminate their relationships with the sanctioned bank.

B.  

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

C.  

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

D.  

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

Discussion 0
Question # 31

Which risks are involved in a correspondent banking client's ownership and management structure? (Select Two.)

Options:

A.  

Regularity of board meetings

B.  

Size of the management structure

C.  

Status as a state, publicly, or privately held entity

D.  

Length of time since the last Wolfsberg Group review

E.  

Transparency of the ownership structure

Discussion 0
Question # 32

How does the Egmont Group assist financial intelligence unit members to accomplish their goals? (Select Three.)

Options:

A.  

Provides support to expand and systematize cooperation related to the reciprocal exchange of information

B.  

Fosters better and secure communication through the application of technology

C.  

Develops official lists of suspected terrorists on a globally coordinated basis by relevant authorities

D.  

Encourages operational autonomy of financial intelligence units

E.  

Maintains uniform global formats for funds transfers that assist in the detection of money laundering

F.  

Supplies information on the common money laundering tactics used by terrorists and financial supporters of terrorism

Discussion 0
Question # 33

Which transaction should result in a SAR/STR filing?

Options:

A.  

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

B.  

A small business owner deposits $25,000 USD in cash proceeds with a business equipment bill of sale.

C.  

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

D.  

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

Discussion 0
Question # 34

Cybersecurity risk can result in identity theft by:

Options:

A.  

executing false transactions.

B.  

compromising individual's personal data.

C.  

issuing false passwords.

D.  

identifying bugs in personal data processors.

Discussion 0
Question # 35

Which is true about Financial Action Task Force (FATF)-Style Regional Bodies (FSRBs)?

Options:

A.  

FSRBs set standards for their member countries that supplement FATF's standards.

B.  

Tools used by FRSBs include training measures and mutual evaluations of its members.

C.  

AFATF-member country cannot also be a member of an FSR

B.  

D.  

To be a member of an FSRB, a country must have enacted AML and Anti-Terrorist Financing laws.

Discussion 0
Question # 36

The owner of a real estate investment company deposits multiple cashier's checks that were bought using cash over a three-month period, from the sale of two apartments. This account also receives several electronic transfers from other financial institutions for 10.000 USD each. What activity is considered suspicious of money laundering?

Options:

A.  

Using cash to buy multiple cashier's checks over a period of time

B.  

Using cashier's checks in the transactions with the real estate investment company's account

C.  

Performing operations with real estate investment companies

D.  

Receiving electronic transfers for 10.000 USD amounts from other financial institutions

Discussion 0
Question # 37

How does the Asian/Pacific Financial Action Task Force -Style Regional Body help its members implement recommendations from the FATF? (Select Two.)

Options:

A.  

Promotes laws that allow judicial challenges to seizure orders by an administrative body

B.  

Endorses regulations that define money laundering based on the model laws issued by the respective member states

C.  

Facilitates the adoption and implementation of internationally accepted AMI measures by member jurisdictions

D.  

Encourages cooperative AML efforts in the region

E.  

Requires members to maintain lists of regional money laundering and terrorists financing issues relevant to their region

Discussion 0
Question # 38

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

Options:

A.  

If the activity is materially different from related businesses

B.  

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

C.  

If there is negative media associated with counterparties

D.  

If the account is mostly dormant or has little activity

Discussion 0
Question # 39

An oil exploration company based in France does business with oil refineries in Iran, which is subject to comprehensive Office of Foreign Assets Control (OFAC) sanctions. What type of OFAC sanctions should be imposed against the French company?

Options:

A.  

Sectoral

B.  

Country-based

C.  

Secondary

D.  

List-based

Discussion 0
Question # 40

According to the Financial Crimes Enforcement Network, after an initial suspicious activity report has been filed for a customer, a financial institution must perform a continuing review of the account for a period of how many days?

Options:

A.  

30 days

B.  

60 days

C.  

90 days

D.  

120 days

Discussion 0
Question # 41

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

Options:

A.  

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

B.  

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

C.  

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

D.  

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

Discussion 0
Question # 42

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

Options:

A.  

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

B.  

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

C.  

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

D.  

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

E.  

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

Discussion 0
Question # 43

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

Options:

A.  

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

B.  

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

C.  

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

D.  

Maintain a record of the transaction activity that generated the alert

Discussion 0
Question # 44

The compliance department receives an internal referral that appears to indicate terrorist financing. What is the first step that should be taken in the investigation process?

Options:

A.  

Notify the Board of Directors.

B.  

Immediately file a suspicious activity report.

C.  

Gather background and transaction information.

D.  

Exit the relationship.

Discussion 0
Question # 45

What is a primary responsibility of a financial intelligence unit?

Options:

A.  

Provide expertise to Egmont working groups including the development of new techniques to launder money.

B.  

Publish suspicious activity reports so that entities subject to money laundering obligations are aware of the identities of criminals.

C.  

Act as an intermediary between the entities subject to money laundering obligations and law enforcement agencies.

D.  

Legislate regulations that enhance the effectiveness of AML and sanctions compliance.

Discussion 0
Question # 46

Which scenario should be escalated as potentially suspicious activity?

Options:

A.  

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

B.  

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

C.  

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

D.  

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

Discussion 0
Question # 47

Which transaction should result in a suspicious activity report filing?

Options:

A.  

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

B.  

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

C.  

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

D.  

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

Discussion 0
Question # 48

Which is the main objective when a financial institution (FI) conducts an investigation?

Options:

A.  

Keep policies and procedures updated

B.  

Keep all the documentation

C.  

Know the customer

D.  

Track the movement of the money

Discussion 0
Question # 49

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

Options:

A.  

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

B.  

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

C.  

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

D.  

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

Discussion 0
Question # 50

Money laundering can cause which consequences for a financial institution? (Select Two.)

Options:

A.  

Increases in corporate taxes

B.  

Increases in investigation costs and fines

C.  

Reduction in number of employees

D.  

Reduction or loss of profitable business

E.  

Increases in correspondent banking facilities

Discussion 0
Question # 51

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

Options:

A.  

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

B.  

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

C.  

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

D.  

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

Discussion 0
Question # 52

What does the Financial Action Task Force (FATF) urge its members and all other jurisdictions to do when a jurisdiction is identified as having lax anti-money laundering / counter financing of terrorism controls?

Options:

A.  

Apply counter-measures to that jurisdiction

B.  

Consider customers from that jurisdiction as high risk

C.  

Cease doing business with that jurisdiction immediately

D.  

Apply economic sanctions until otherwise notified by FATF

Discussion 0
Question # 53

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

Options:

A.  

The jurisdiction is a known tax haven.

B.  

The company has bearer shares.

C.  

The corporation director is a European citizen.

D.  

No financial statements have been filed for 3 years.

Discussion 0
Question # 54

A bank customer operates a fuel station as a sole proprietorship. The customer places deposits and other credits in a business account. The customer routinely transfers money from the business account to a brokerage account where he invests in money market securities. The customer also routinely makes monthly transfers to a credit card and line of credit to pay off balances. The volume of activity flowing through the business account has doubled in the past 3 months. An internal investigator reviews business account statements and credit card activity for the past 3 months, scans media articles about the customer, and interviews the account officer about the customer and account activity. This internal investigation did not provide an explanation for the increased activity1. Which of the following should the anti-money laundering specialist recommend to the internal investigator?

Options:

A.  

Concentrate on trades made in the brokerage account.

B.  

Review activity in all related customer accounts in the past year.

C.  

Analyze account activity for selected accounts since the accounts were opened.

D.  

No additional steps are necessary because this was a thorough review of the activity.

Discussion 0
Question # 55

Which of the following competent authorities should directly receive suspicious or unusual transaction reports?

Options:

A.  

law enforcement

B.  

an independent judge

C.  

financial intelligence unit

D.  

central bank

Discussion 0
Question # 56

A junior account manager within an international private bank in Country A was asked by one of his valued customers, who has held an account for several years in the institution, about depositing a large sum of cash into her account. The junior account manager informed his customer that his bank does not accept cash. The junior account manager later reviewed a customer activity report and noticed a number of smaller dollar wires from banks in neighboring Country B, which has lax currency controls, that totaled about as much as the customer intended to deposit.

What should the junior account manager do?

Options:

A.  

Close the account

B.  

File a suspicious transaction report with the Financial Intelligence Unit

C.  

Notify the anti-money laundering specialist of his bank, but do not call the customer

D.  

Offer the customer a more secure method of depositing in the hope of learning something more during the conversation

Discussion 0
Question # 57

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

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

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

What is the issue with this situation?

Options:

A.  

Independent reviews must be performed annually

B.  

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

C.  

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

D.  

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

Discussion 0
Question # 58

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

laundering program.

Which action should the board of directors take?

Options:

A.  

Terminate the compliance officer and staff

B.  

Purchase and install a new suspicious activity monitoring system

C.  

Hire an attorney with instructions to protest the enforcement action

D.  

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

program

Discussion 0
Question # 59

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

Options:

A.  

Financial impact on the institution if the account is closed.

B.  

Procedures to ascertain the potential risk to the organization.

C.  

Additional Administrative costs of monitoring the account.

D.  

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

Discussion 0
Question # 60

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

Options:

A.  

Representing a client court

B.  

Understanding income to take a tax loss

C.  

Overstating income to hide excess cash

D.  

Acting as a conduit for transferring cash between accounts

E.  

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

Discussion 0
Question # 61

A bank maintains a relationship with a customer who owns a small bakery business.

Which customer action indicates potential money laundering?

Options:

A.  

The customer continually makes regular cash deposits

B.  

The customer has multiple bank accounts at several locations

C.  

The customer purchased property insurance that is twice the value of the business

D.  

The customer recently wired a large amount to a foreign jurisdiction where family is located

Discussion 0
Question # 62

Which red flag indicates high potential for money laundering in a real estate purchase?

Options:

A.  

The purchaser is a nominee

B.  

The purchaser had a previous bankruptcy

C.  

The purchaser owns a cash intensive business

D.  

The purchaser is not a resident where the property is located

Discussion 0
Question # 63

An anti-money laundering specialist has been asked to establish a compliance program to detect and prevent money laundering and terrorist financing. Which of the following should the anti-money laundering specialist consider in developing the program?

1. Funds for money laundering and terrorist financing are derived from illegal sources.

2. Related practices are used to conceal the nature of the funds.

3. The source and disposition of funds are similar.

4. Similar techniques are used to move funds.

Options:

A.  

1 and 2 only

B.  

1 and 3 only

C.  

2 and 4 only

D.  

3 and 4 only

Discussion 0
Question # 64

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

Options:

A.  

account holder presents proof the funds are legal.

B.  

beneficiaries of transfers are not on a terrorist watch list.

C.  

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

D.  

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

Discussion 0
Question # 65

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

Options:

A.  

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

B.  

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

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

C.  

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

D.  

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

authorities as being used for the financing of terrorism.

Discussion 0
Question # 66

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

Options:

A.  

The 40 Recommendations on Money Laundering

B.  

The Report on Non-Cooperative Countries and Territories

C.  

The Report on Money Laundering Typologies

D.  

The Special Recommendations on Terrorist Financing

Discussion 0
Question # 67

A customer brings $15,000 worth of chips into a casino and plays various games. The customer redeems all

the remaining chips and requests a wire transfer of the proceeds to an unrelated third party.

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

Options:

A.  

Customer redeeming all remaining chips

B.  

Playing various games before cashing out

C.  

Bringing $15,000 worth of chips into the casino

D.  

Requesting a wire transfer to an unrelated third party

Discussion 0
Question # 68

What is the intentional evasion of a reporting or recordkeeping requirement?

Options:

A.  

Money laundering

B.  

Layering

C.  

Placement

D.  

Structuring

Discussion 0
Question # 69

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

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

reasonably designed to ensure compliance with applicable regulations?

Options:

A.  

Senior management

B.  

Board of directors

C.  

Business line managers

D.  

BSA/AML compliance officer

Discussion 0
Question # 70

On who does the ultimate responsibility for an institution’s anti-money laundering program rest?

Options:

A.  

The designated AML Compliance Officer

B.  

The institution’s Board of Directors

C.  

All employees with customer contact

D.  

The government regulator examining the AML program

Discussion 0
Question # 71

What is the goal of the Egmont Group in providing a forum for Financial Intelligence Units (FIUs) around the

world?

Options:

A.  

To improve international laws to combat money laundering and the financing of terrorism and foster the

implementation of domestic programs.

B.  

To provide a forum for FIUs to improve cooperation in the fight against money laundering and the financing

of terrorism and to foster the implementation of domestic programs in this field.

C.  

To improve communication with law enforcement in the fight against money laundering and the financing of

terrorism and to foster the implementation of domestic programs in this field.

D.  

To improve cooperation with state and federal governments in the fight against money laundering and the

financing of terrorism and to foster the implementation of domestic programs in this field.

Discussion 0
Question # 72

A bank employee reviews wire transactions looking for indications of wire stripping.

Which two actions should the employee take to complete appropriate bank procedures? (Choose two.)

Options:

A.  

Compare the wire transaction as it enters and after it leaves the bank

B.  

Check for suspicious phrases usually used to conceal originator or beneficiary identity

C.  

Identify large incoming wire transactions received on behalf of a foreign client with no explicit reason

D.  

Identify wire transaction activity to or from a financial institution located in a higher risk jurisdiction

Discussion 0
Question # 73

A client opens a bank account for a multi-level marketing company. The debits and credits of the account are

numerous and very involved. Further, there are a lot of international transactions. Also, funds are being tunneled from the company to the client’s personal account in another jurisdiction.

Which two steps should law enforcement take in investigating this matter? (Choose two.)

Options:

A.  

Determine who are the signatories on the account

B.  

Ask the bank for the history of this multi-level marketing company

C.  

Examine the flow of money from the company to the individual in an effort to determine if it is legitimate

D.  

Examine possible Suspicious Activity Report information received from the local Financial Intelligence

Units

Discussion 0
Question # 74

Which three elements should be considered in an institution’s enhanced due diligence process to assure itself that it has secured sufficient understanding of its higher risk respondent bank customers according to the Wolfsberg Principles on Correspondent Banking?

Options:

A.  

The quality of the respondent’s AML and client identification controls

B.  

A risk-based determination as to whether or not the respondent is a shell bank

C.  

Whether a Politically Exposed Person (PEP) has an interest or management role in the respondent

D.  

The sources of wealth for all significant ownership interests

Discussion 0
Question # 75

Why do governments and multi-national bodies impose economic sanctions?

Options:

A.  

To impede kleptocracy

B.  

To enforce foreign policy objectives

C.  

To combat an imminent terrorist threat

D.  

To prevent fraudulent international trade transactions

Discussion 0
Question # 76

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

Options:

A.  

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

B.  

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

C.  

A large number of predicate crimes for money laundering

D.  

Absence of an effective FIU

Discussion 0
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