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Question 1 Selectable Answer

Which is a FATF characteristic used to assess a country's effectiveness of its AML regime?

A. Funds supporting and proceeding from crime or terrorism are prevented from entering the financial sector.
B. Legal persons are prevented from misuse for money laundering or terrorist financing.
C. Supervisors appropriately supervise, monitor, and regulate financial institutions (Fls).
D. FIs adequately apply preventive measures.

Answer:

Question 2 Selectable Answer

What are two sources for maintaining up-to-date sanctions information? (Choose two.)

A. Federal Bureau of Investigation’s National Security Letters
B. Department of the Treasury Office of Foreign Assets Control
C. Department of the Treasury C Section 311 C Special Measures
D. Financial Action Task Force’s list of High Risk and Non-Cooperative Jurisdictions

Answer:
Explanation:
Reference: https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_lists.aspx#search

Question 3 Selectable Answer

A compliance officer was recently reviewing transactional data for an international charity and foundtransactions that present a higher risk.
Which reason is cause for terminating the banking relationship?

A. The charity has had a high a high turnover rate of official positions
B. The charity has several incoming international funds transfers
C. The flow of funds both in and out are complex and hard to trace
D. The charity is headquartered in a country on the Office of Foreign Assets Control list

Answer:

Question 4 Selectable Answer

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

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.

Answer:
Explanation:
Reference: https://en.wikipedia.org/wiki/Front_organization

Question 5 Selectable Answer

An analyst reviewing trade finance transactions notices an increase in price of 25% over 12 months for commodities with the same specification and quantity.
Which action should the analyst take?

A. Produce an investigation report that finds evidence to substantiate the analyst's suspicion and submit a SAR/ST
B. Produce an investigation report that considers client activity and factors that may have legitimately affected transaction cost.
C. Produce an updated due diligence record for the client so that monitoring can be enhanced.
D. Produce a SAR/STR that describes apparent trade-based money laundering and submit to the Financial Investigation Unit (FIU).

Answer:

Question 6 Selectable Answer

Which method to finance terrorism involves falsifying transaction-related documents?

A. Bribery
B. Black market peso exchange
C. Trade-based money laundering
D. Informal value transfer system

Answer:

Question 7 Selectable Answer

According to the Basel Committee on Banking Supervision, banks should deal with high-risk customers by:

A. maintaining segregated records to enable easy inspection by law enforcement in case of a subpoena.
B. assigning those customers to specified private bankers for better monitoring of their offshore transactions.
C. performing enhanced due diligence including enhanced ongoing monitoring of the account activity.
D. seeking approval from the board of directors before establishing the relationship.

Answer:
Explanation:
Reference: https://www.bis.org/bcbs/basel3.htm

Question 8 Selectable Answer

A bank receives an anonymous tip from an employee about another employee through its confidential hotline.
Which activity warrants further review?

A. A mortgage officer works with home loan applicants to resolve adverse credit issues
B. An employee in bookkeeping accepts funds transfer requests from customers via telephone
C. An employee in accounting works with customers to help understand how to reduce service charges
D. A teller distributes bank brochures to customers who regularly conduct cash transactions below reportinglimits

Answer:

Question 9 Selectable Answer

A compliance officer is reviewing the activity of the wire transfer department for the previous month and identifies an unusual wire transfer from a customer’s account.
Which information should be included in the review of the customer’s activity?

A. Records of the recent deposit activity
B. Wire transfer requests initiated by phone and internet
C. Total number of wires processed each month over the previous year
D. Whether the bank processes wire transfers through a correspondent bank

Answer:

Question 10 Selectable Answer

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?

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

Answer:

Question 11 Selectable Answer

Which method is indicative of potential money laundering and terrorist financing activity?

A. Client converts 500 Euro in mixed denomination notes to small denomination
B. bills in a single transaction
C. A commercial client in the export business regularly receives wire transfers from high risk countries
D. An unknown client purchases multiple monetary instruments for one person during the course of one day
E. An unknown client pays $1,000 in cash for an urgent transfer to a high risk country

Answer:

Question 12 Selectable Answer

The compliance officer for a bank is reviewing on-boarding documents for a new business account for adomestic corporation. The officer is unable to verify the identity of the beneficial owners of the company. Onlyinformation on the nominee owners was provided, and none of the listed addresses are local. The purpose ofthe business and future expected activity were disclosed to include cash letters, money orders andinternational remittance transfers.
Which red flag identifies a heightened money laundering risk?

A. Expected activity was advised to include cash letter and money orders
B. The nature and purpose of the business include international remittance transfers
C. The names provided at account opening are identified as the corporation’srepresentative nominees
D. Account signer’s government issued identification lists addresses outside of where thebranch account wasopened

Answer:

Question 13 Selectable Answer

Which information should be gathered as part of enhanced due diligence (EDD) for a high-risk customer?

A. Explanations for changes in marital status
B. Details on individuals with control over the account
C. Plans for traveling in business trips
D. Personal references

Answer:
Explanation:
Reference: https://sanctionscanner.com/knowledge-base/customer-due-diligence-cdd-15

Question 14 Selectable Answer

Which red flag should a compliance officer prioritize first for investigation?

A. A loan is paid off in full with cash after the sale of the vehicle that was used as collateral for the loan.
B. Several cross-border transfers are received and immediately wired to another beneficiary.
C. A customer has 20 monthly transactions that are repetitive but less than $500 USD per transaction.
D. A convenience store cashes government checks for its customers in amounts less than $1,000 USD per day.

Answer:

Question 15 Selectable Answer

An anti-money laundering specialist working at a bank just received a legal request from alaw enforcement agency mandating the release of all financial transaction records relating to an account at the bank. The specialist immediately recognizes the account as one owned by the bank Chief Executive Officers brother. During research to gather the requested documents, the specialist finds several internal memos he had sent to the bank president with concerns regarding possible suspicious activity relating to this account. The specialist recalls the bank president verbally responded to each memo with an explanation of the activity and indicated there was no cause for concern.
What should the specialist do with respect to these internal memos?

A. Place these memos in his personal files in case they are subsequently requested
B. Ask the bank president to document his instructions to the specialist
C. Call the law enforcement agent and suggest he modify the legal request to include these memos
D. Advise the bank’s senior legal advisor of the situation

Answer:

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