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QUESTION 61
Pursuant to the Third European Union Money Laundering Directive, how long after being out of prominent office should a person NOT be considered to be a Politically Exposed Person (PEP)?
| A. | 1 year |
| B. | 2 years |
| C. | 3 years |
| D. | 4 years |
Correct Answer: A
QUESTION 62
Which method most likely indicates the placement stage of laundering dirty money in a land based casino?
| A. | Transferring substantial amounts of money from a client’s credit card to a client’s casino’s VIP account |
| B. | Buying casino chips against a bank draft |
| C. | Redeeming smaller denomination casino chips for largest denomination chips |
| D. | Using cash to buy casino winnings from legitimate winners at a premium |
Correct Answer: D
QUESTION 63
A compliance officer at a small local bank reads in the newspaper that a high ranking local public official, who is a long-standing account holder, is being investigated by the competent authorities for accepting bribes. The compliance officer immediately checks the official’s account and new account the official opened at the bank a few weeks ago. The compliance officer’s investigation of these accounts discloses that the official’s long-standing account had no unusual activity and that the recently opened had no activity since it was opened. What should the compliance officer do next?
| A. | Wait until the new account receives funds and confirm their source |
| B. | Call the competent authorities to assess the need to file a suspicious transaction report |
| C. | Meet with staff who opened the account to understand its nature and purpose |
| D. | Call the office to confirm the need for multiple accounts |
Correct Answer: B
QUESTION 64
What is a key element required to ensure an anti-money laundering compliance program is effectively embedded into an institution’s culture?
| A. | An internal audit |
| B. | Ongoing training |
| C. | Peer review |
| D. | A record retention policy |
Correct Answer: B
QUESTION 65
In 2004, Consolidated KYC Risk Management was issued by the Basel Committee on Banking Supervision (BCBS). What is a key message in this document?
| A. | KYC Risk Management required a yearly consolidation effort |
| B. | KYC Risk Management means as established decentralized process for promulgating policies and procedures |
| C. | Policies and procedures should be designed not merely to comply strictly with all relevant laws and regulations |
| D. | Consolidated KYC risk management for a group is critical and trumps jurisdictional rules hat limit information sharing |
Correct Answer: D
QUESTION 66
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________?
| 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 or opposing attorneys to seize those files |
Correct Answer: A
QUESTION 67
Which situation is the highest risk for money laundering and terrorist financing activity?
| A. | A customer purchases casino chips, using small denomination bank notes, but does not engage in game play before redeeming the chips for a casino check |
| B. | A customer purchases casino chips and engages in significant game play before requesting a casino check for the remainder |
| C. | A customer purchases casino chips using a credit card and engages in minimal game play before redeeming the chips for a casino check |
| D. | A customer purchases casino chips using credit from an account at an affiliated casino and engages in significant game play before redeeming the chips for a casino check |
Correct Answer: C
QUESTION 68
The marketing department presents a business plan targeting individuals holding important public positions. What are some steps the financial institution should implement as part of the plan to target such individuals?
| A. | Investigate the source of funds |
| B. | Determine the purpose of the account |
| C. | Determine if the client appears on the Basel Committee on Banking Supervision’s list of public officials |
| D. | Take all reasonable steps to check the background of the individual based on public information |
Correct Answer: ABD
QUESTION 69
The Board of Directors and the senior management of a financial institution should ensure that which three are established and followed with regard to an effective AML program?
| A. | There is a strong compliance program |
| B. | International guidance is followed and understood |
| C. | They are kept informed of all major AML issues |
| D. | Regulatory compliance is made part of all relevant job descriptions |
Correct Answer: ACD
QUESTION 70
What is operational risk?
| A. | The potential for loss of public confidence in an organization’s integrity |
| B. | The potential for loss resulting from too much credit or loan exposure to one borrower |
| C. | The potential for loss due to inadequate processes, people, systems, or external events |
| D. | The potential for lawsuits, fines, and penalties increasing an organization’s expenses |
Correct Answer: C
QUESTION 71
How should a financial institution deter money laundering through new accounts? Choose 3 answers
| 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 |
Correct Answer: ACD
QUESTION 72
What are the European Union Directives on Money Laundering?
| A. | They are voluntary codes of best practice for the financial sector |
| B. | They are written by the Wolfsberg Group |
| C. | They require members to implement certain laws of prevent money laundering |
| D. | They require financial institutions to report suspicious activity to the Egmont Group in Brussels |
Correct Answer: C
QUESTION 73
Why do government entities around the world believe that a risk-based approach to AML/CFT compliance is a preferable prescriptive measure?
| A. | It is easier for examiners to make subjective criticisms |
| B. | It is more flexible, effective and proportionate |
| C. | It allows institutions to focus their attention on only high risk customers |
| D. | It allows the creation of hard and fast rules that must be followed |
Correct Answer: B
QUESTION 74
When providing reporting of STRs to the board, which of the following should be provided?
| A. | A numerical summary of all the STRs |
| B. | A numerical summary of all the STRs and a summary of key STRs, including PEPs, key employees |
| C. | A summary of all key STRs, including PEPs and key employees |
| D. | All the STRs filed with the national FIU |
Correct Answer: C
QUESTION 75
Why do trusts established in certain offshore jurisdictions make good vehicles to launder money?
| A. | Names of the settlor and beneficiaries are not publicly available |
| B. | Trust are typically set up to minimize taxes |
| C. | Offshore jurisdictions are unfamiliar with trusts |
| D. | Trusts may hold assets of significant size |
Correct Answer: D
QUESTION 76
What are some of the methods for sharing information and cooperating on an international basis? Choose 3 answers
| A. | Mutual Assistance Legal Treaties |
| B. | International Money Laundering Information Network |
| C. | Regulatory sharing through Supervisory Channels |
| D. | Issuant subpoenas |
Correct Answer: ABC
QUESTION 77
What are three indicators of money laundering associated with using electronic funds transfers? Choose 3 answers
| A. | Funds transfers to or from a financial secrecy haven without an apparent business reason |
| B. | Regular and frequent transfers from the account of a large company said to be payment for goods bought on credit |
| C. | Funds transfers are received or sent from the same person to or from different accounts |
| D. | Payment or receipts with no apparent link to legitimate contracts, goods or services |
Correct Answer: ACD
QUESTION 78
A quarterly review is conducted on a retail customer’s account at a bank located in a jurisdiction with currency reporting thresholds. A number of large deposits of financial instruments drawn on other institutions in amounts under thresholds were noted. This activity did not fit the account’s historical profile. A suspicious transaction report will most likely be filed if what also occurred?
| A. | The customer has defaulted on a large loan with the bank |
| B. | The deposited financial instruments were sequentially numbered |
| C. | Four deposits were made during this period that exceeded the thresholds |
| D. | The customer purchased financial instruments exceeding the threshold on three occasions |
Correct Answer: B
QUESTION 79
What kind of person should perform the independent testing of an institution’s anti-money laundering program?
| A. | A certified specialist in the anti-money laundering field |
| B. | A former anti-money laundering officer from a similar institution |
| C. | A person who reports directly to the Board of Directors or a Board Committee |
| D. | A retired government regulator or federal law enforcement officer |
Correct Answer: A
QUESTION 80
What is suspicious activity or red flag with regard to a customer’s activity? Choose 3 answers
| A. | Paying the tellers he deals with a regular gratuity |
| B. | Exchanging small denomination bills for large ones |
| C. | Engaging in wire transactions with an offshore account |
| D. | Asking about the bank’s fee schedule for a series of transactions |
Correct Answer: ABC
