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Question 31 Selectable Answer

A compliance officer identifies a potentially significant risk in a popular financial product. Further investigationreveals there is no mitigating control.
Which course of action should the compliance officer take?

A. Launch a long-term project to remediate the control deficiency
B. Note the risk and address it during the next round of policy and procedure review
C. Immediately cease providing the product and only offer it after effective permanent mitigation is implemented
D. Implement a temporary mitigation that enables effective management of the risk until a permanent plan can be developed

Answer:
Explanation:
as there's NO mitigating control, the temporary control system must be developed and implemented until the permanent mitigating control is developed and implemented.

Question 32 Selectable Answer

Which action should an FIU consider taking when it has information that might be useful to another FIU?

A. In accordance with Wolfsberg guidelines, submit the information to the other FIU in written form
B. Supply the information to the other FIU spontaneously as soon as the relevance of sharing the information is identified
C. Take no action until contacted by the other FIU
D. Request approval from the Egmont Group prior to sharing the information with the otherFIU

Answer:
Explanation:
“ The FIUs, with the task of receiving and analyzing suspicious transaction reports and maintaining close links with police and customs authorities, share information among themselves informally in the context of investigations, usually on the basis of memoranda of understanding (MOU)."

Question 33 Selectable Answer

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

A. To impede kleptocracy
B. To enforce foreign policy objectives
C. To combat an imminent terrorist threat
D. To prevent fraudulent international trade transactions

Answer:
Explanation:
"Increasingly, countries are using economic sanctions instead of military force as an instrument of foreign policy"
Reference: https://en.wikipedia.org/wiki/Economic_sanctions

Question 34 Selectable Answer

In addition to monitoring for suspicious activity, what are electronic monitoring systems also valuable for?

A. Identifying how customers are using products
B. Highlighting the skills of the system analysts
C. Proving to the Board of Directors that the FIU is doing its job
D. Meeting mandatory regulatory requirements for system implementation

Answer:
Explanation:
"Transaction Monitoring Systems and Ongoing Monitoring: Since the transactionalmonitoring system is key to mitigating ML risk within the bank, the Committee recognizes that AML risks require more than just appropriate policies and procedures; banks must have adequate and appropriate monitoring systems. For most banks, this will involve an IT monitoring system. If the bank does not believe it needs an IT monitoring system, it should document the rationale for why it does not need one.

Question 35 Selectable Answer

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.)

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.

Answer:
Explanation:
Reference: https://www.fatf-gafi.org/publications/high-risk-and-other-monitored-jurisdictions/documents/increased-monitoring-june-2021.html

Question 36 Selectable Answer

When should a financial institution (FI) exit a relationship? (Choose two.)

A. The reputational risk to the FI posed by closing the account
B. The request from law enforcement to close the account
C. The FI's requirements for opening an account
D. The suspicious conduct of the account holder
E. The FI's stated policies and procedures for closing an account

Answer:
Explanation:
Reference: https://www.fdic.gov/regulations/laws/rules/8000-1600.html

Question 37 Selectable Answer

The main purpose of the US Treasury Department for OFAC's extraterritorial reach is to:

A. accomplish the foreign policy and national security goals of the U
B. defend the US against questionable trade practices of its economic rivals.
C. protect allied nations of the US from the economic threats of non-allied nations.
D. align OFAC's and other countries' extraterritorial reach requirements.

Answer:
Explanation:
Reference: https://www.natlawreview.com/article/aggressive-extraterritorial-reach-us-economic-sanctions-foreign-company-exposure-to

Question 38 Selectable Answer

A bank maintains a number of United States (U.S.) dollar correspondent accounts for foreign financial institutions. Upon a routine review of a U.S. dollar correspondent account owned by Foreign Bank A, a number of transactions appear to have been originated by Foreign Bank B outside the expected activity for this account. These transactions appear suspicious and a suspicious transaction report was filed by the compliance officer.
Which step should the compliance officer take?

A. File a report with the appropriate tax authorities in the jurisdictions of Foreign Bank A and Foreign Bank B
B. Notify senior management of the money laundering risks by allowing Foreign Bank A to maintain its
C. dollar correspondent account
D. Notify Foreign Bank A of the discovery and seek documentation supporting Foreign Bank A was collusive and a willing partner with Foreign Bank B in the activity
E. Notify other
F. financial institutions who maintain
G. dollar correspondent accounts for Foreign Bank A and Foreign Bank B in an effort to shut down the activity

Answer:

Question 39 Selectable Answer

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.)

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

Answer:
Explanation:
Reference: https://www.lexology.com/library/detail.aspx?g=79732c5e-b4bf-456a-9604-712f44f5a930

Question 40 Selectable Answer

What should countries do to help prevent non-profit organizations from being abused for the financing of terrorism according to the Financial Action Task Force 40 Recommendations?

A. Allow for freezing assets of non-profit organizations
B. Require all non-profit organizations to register with the country’s financial intelligence unit
C. Ensure non-profit organizations cannot be used to conceal or obscure the diversion of funds intended forlegitimate purposes to terrorists’ organizations
D. Create laws that forbid non-profit organizations from completing cross-border transactions without firstrunning them through known terrorist data bases

Answer:
Explanation:
Reference: http://www.fatf-gafi.org/media/fatf/documents/reports/BPP-combating-abuse-non-profitorganisations.pdf (p.9)

Question 41 Selectable Answer

Financial Intelligence Units (FIUs) are responsible for:

A. the timely dissemination of cases to law enforcement agencies.
B. responding to requests from law enforcement agencies for information contained in regulatory reports.
C. sharing evidence with other FIUs.
D. receiving confirmed reports about committed crimes from accountable and reporting institutions.

Answer:
Explanation:
Reference: https://knowledgehub.transparency.org/assets/uploads/helpdesk/Financial-Intelligence-Units_Design-Mandate-Powers_2019_PR.pdf

Question 42 Selectable Answer

What is a key risk associated with Correspondent Accounts according to the BaselCustomer Due Diligence paper?

A. It is not used on a daily basis
B. The service fees are insufficient to cover the cost of managing the account
C. The respondent bank’s customer acceptance and know your customer policies are ineffective
D. The volume and value of transactions passing through the account may not be in linewith the originalcorrespondent agreement

Answer:
Explanation:
https://www.bis.org/publ/bcbs85.pdf - page 12
Banks should gather sufficient information about their respondent banks to understand fully the nature of the respondent’s business. Factors to consider include: information about the respondent bank’s management, major business activities, where they are located and its money-laundering prevention and detection efforts; the purpose of the account; the identity of any third party entities that will use the correspondent banking services; and the condition of bank regulation and supervision in the respondent’s country. Banks should only establish correspondent relationships with foreign banks that are effectively supervised by the relevant authorities. For their part, respondent banks should have effective customer acceptance and KYC policies.

Question 43 Selectable Answer

All security trading activities for that individual since 2004.

A. 1, 2, and 3 only
B. 1, 2, and 4 only
C. 1, 3, and 4 only
D. 2, 3, and 4 only

Answer:

Question 44 Selectable Answer

Which practices are dealers in antiques, precious metals, precious stones, jewelry, and art advised to follow to reduce the element of money laundering risk? Choose 3 answers

A. Insist on all vendors signing a declaration that the item placed by them for sale was not stolen or acquired through illegitimate means
B. Verify the identities of all new vendors and customers and conduct due diligence on them
C. Avoid accepting cash payment from the buyers
D. Insist all vendors submit an appropriate license issued by enforcement agencies authorizing the sale

Answer:

Question 45 Selectable Answer

According to the 5th EU Money Laundering Directive, member states require entities to apply enhanced customer due diligence measures with respect to business relationships or transactions involving high-risk third country nationals.
Which are included in these requirements? (Choose three.)

A. Obtaining the approval of senior management for establishing or continuing the business relationship
B. Obtaining copies of passports for all authorized persons
C. Establishing and verifying the address of the client
D. Obtaining information on the reasons for intended or performed transactions
E. Obtaining tax reference details for the client
F. Obtaining information on the source of funds and source of wealth of the customer and of the beneficial owner(s)

Answer:

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