ACAMS Example Questions
1. Which of the following is the most common method of laundering money through a legal money services business? A. Purchasing structured money instruments. B. Smuggling bulk-cash. C. Transferring funds through Payable Through Accounts (PTAs). D. Exchanging Colombian pesos on the black market.
A
11. 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: A. To over- or under-invoice the goods. B. To sell the exported goods for as much as possible. C. To use goods that do not need to be declared. D. To use high-value assets such as luxury cars or boats.
A
14. The Third EU Money Laundering Directive of 2005 applies to which of the following firms? A. Auditors, estate agents based in the EU. B. U.S. Financial institutions covered by the USA Patriot Act. C. Shell firms inside and outside the EU. D. EU based high value good dealers who deal in cash of 10,000 Euro or more.
A
16. Which of the following is the most difficult regulatory challenge facing a foreign financial institution with a correspondent banking relationship in the U.S.? A. USA Patriot Act. B. Basel Due Diligence Principles for Banks. C. FATF Guidance on Terrorist Financing. D. UN Security Council Resolution on Correspondent Banking.
A
26. In which stage of money laundering would you classify the use of laundered funds to purchase high value assets and luxury items? A. Integration. B. Structuring. C. Placement. D. Construction.
A
3. Which statement is true? A. 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. B. Cuckoo smurfing is a significant money laundering technique identified by the Financial Action Task Force, where a form of structuring uses nested accounts with shell banks in secrecy havens. C. In its 40 Recommendations, the FATF issued a list of "designated categories of offense" that asserts crimes for a money laundering prosecution. D. E-cash is not attractive to the money launderer because it cannot be completely anonymous and does not allow for large amounts to be "transported" quickly and easily.
A
30. As part of their role in fighting money laundering, financial institutions should: A. Designate a compliance officer. B. Depend solely on The State's staff for combating money laundering. C. Refuse small cash deposits under the reporting threshold. D. Not open accounts for people from high risk jurisdictions.
A
33. In anti-money laundering terminology a "red flag" is: A. A warning sign used to bring attention to potentially suspicious, risky transactions or activities. B. A general banking term used once the balance is negative / overdue. C. The standard flag of countries not cooperative in fighting money laundering and terrorist financing. D. An indicator that a customer is listed on an economic sanctions list.
A
36. Why is a Payable Through Account vulnerable to money laundering? A. These are master correspondent accounts that allow the customers of the foreign bank to do a wide range of transactions. B. These are correspondent accounts located in a non- cooperative country or territory. C. These are nested correspondent accounts at a foreign shell bank with customers with whom the domestic bank did not exercise due diligence. D. These are master escrow accounts on which a domestic bank generally does not conduct periodic verification.
A
38. According to the FATF 40 Recommendations,"designated non-financial businesses and professions" include: A. Casinos, real estate agents and dealers in precious stones. B. Money service businesses, gatekeepers, and issuers of electronic money. C. Dealers in precious metals, lawyers, commodity futures traders. D. Life insurance companies, real estate agents and notaries.
A
41. 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 an 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? A. The AML program should be tested by an independent person, not the compliance officer. B. The AML program should be tested more than once per year. C. The board should receive the same training provided to the employees. D. Employees should not be trained via the Internet, because classroom training is better.
A
43. Which of the following best describes the "alternative remittance system"? A. The transfer of values between countries, outside of the legitimate banking system. B. A non-electronic data remittance system used in several NCCT countries to report suspicious activities. C. Old-fashioned reporting requirements commonly used in non-cooperative countries and territories. D. The transfer of funds between two or more financial institutions using concentration accounts.
A
46. What are the three key goals of an anti-money laundering program? A. Prevent and detect money laundering and terrorist financing; report suspicious activity to proper authorities if the laws or regulations require it; train all pertinent employees. B. Satisfy regulatory requirements; report suspicious activity to proper authorities if the laws or regulations require it; train all pertinent employees. C. Train all pertinent employees if the laws require it; prevent money laundering; prevent terrorist financing. D. Reduce regulatory burdens; help the court systems in convicting money launderers; protect the institution.
A
47. 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 four months, leading him to file two 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? A. Terminate the relationship with this account owner if possible. B. Monitor the account for continued suspicious activity. C. Contact the account owner again about the nature of suspicious transactions. D. Seek guidance from regulators regarding a decision to terminate the account.
A
48. The FATF has consistently noted the use of casinos in money laundering schemes in its annual typologies reports. One laundering technique involving casinos is: A. Asking for winners' checks to be made out in the name of third persons or without a payee. B. Abusing casinos by circumventing its gatekeepers. C. Prepaying a casino token or chip by using funds that are already in the casino system, creating a debit balance. D. Extensive gambling via multiple games throughout the casino.
A
50. What are the three key criteria in AML risk rating? A. Customer type, geographic location, products and services used. B. Geographic location, customer type, employment status. C. Products and services used, customer type and prior banking relations. D. Employment status, customer type, products and services used.
A
53. When conducting training for AML purposes for account opening staff, which of the following addresses the most important aspects to consider in the training? A. What the employees need to do, the importance of AML efforts and the penalties for non-compliance. B. The governmental AML bodies, what the employees need to do and the importance of AML efforts. C. The penalties for non-compliance, the governmental AML bodies, and what employees need to do. D. The importance of AML efforts, the governmental AML bodies and the penalties for non-compliance.
A
54. When drafting an AML policy, which of the following internal parties is most important to have approve the policy? A. Senior management. B. The audit department. C. The sales team management. D. The operational staff management.
A
56. 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? A. How well can the vendor work with the institution's existing account systems and account opening processes? B. Can the vendor provide training on how to use the new tool? C. Can the tool prevent fraudulent accounts from being opened? D. Can the tool provide alerts to the AML compliance staff when it finds a match with a customer in a jurisdiction with inadequate AML controls?
A
60. A customer at a brokerage firm indicated that he was primarily a conservative, long-range investor. The customer has recently been engaging in day trading in penny stocks. What should an AML compliance officer do in such a situation? A. Check with the account officer to see if the customer has indicated a change in his investment strategy. B. Report the customer as suspicious due to investing in penny stocks. C. Contact the customer and ask why he is engaged in high-risk day-trading activity. D. Refer the customer for senior management for approval.
A
65. Establishing compliance as a key responsibility for every employee of a financial institution is best performed how? A. By having senior management require compliance as a condition of employment. B. By having auditors conduct testing on employee compliance. C. By pointing out the regulatory consequences of non- compliance in training. D. By having the AML officer personally tell associates of their responsibilities.
A
70. When assessing a new product, which of the following should be considered as part of the assessment from an AML perspective? A. The inherent risk of the product, the control environment to mitigate the risks presented by the product, the residual risk of the product in light of the controls. B. The control environment to mitigate the risks presented by the product, the residual risk of the product in light of the controls and the projected profitability of the product. C. The projected profitability of the product, the control environment to mitigate the risks presented by the product and the Inherent risk of the product. D. The residual risk of the product in light of the controls, the inherent risk of the product and the projected profitability of the product.
A
72. A compliance officer is looking to provide some way to report on the effectiveness of the AML program to senior management. Which of the following would be the most appropriate means to keep senior management informed of these efforts? A. Develop a report containing metrics that reflect the effectiveness of various key program elements. B. Rely on the internal audit reporting and regulatory examinations. C. Provide a summary of all reported suspicious activity. D. Provide detailed training to senior management on their AML obligations.
A
74. A financial institution has determined that opening accounts for certain types of customers is not worthwhile, as the cost of implementing controls is too great for the revenue earned from the customers. Which of the following options is the most effective way to enforce such a decision? A. Implement automated account opening controls to prevent the account opening for the prohibited customer types and provide employee training. B. Develop a policy and procedure and implement a post- account opening random testing for compliance. C. Inform senior management of the prohibition and provide employee training. D. Include a notice of the prohibition in customer disclosures.
A
77. After receiving an STR, the relevant law enforcement agency requests permission to interview the bank personnel who are familiar with the underlying transaction. What should the compliance officer recommend? A. The officer should confer with bank counsel as to whether to request subpoenas from law enforcement. B. The officer should deny permission for any such interviews without the creation of a grand jury or a formal court ordered investigation. C. The officer should only allow those employees who are comfortable be interviewed by law enforcement. D. The officer should allow the employees to be interviewed only if they are given immunity by law enforcement.
A
According to the FATF 40 Recommendations, "Designated non- financial businesses and professions" include: A. Internet casinos, real estate agents and dealers in precious stones B. Money service businesses, gatekeepers, and issuers of electronic money C. Dealers in precious metals, lawyers, commodity futures traders D. Life insurance companies, real estate agents and notaries
A
The Third EU Money Laundering Directive of 2005 applies to which of the following firms? A. Auditors, estate agents based in the EU. B. U.S. Financial institutions covered by the USA Patriot Act. C. Shell firms inside and outside the EU. D. EU based high value good dealers who deal in cash of 10,000 Euro or more.
A
Which statement is true? A. 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. B. Cuckoo smurfing is a significant money laundering technique identified by the Financial Action Task Force, where a form of structuring uses nested accounts with shell banks in secrecy havens. C. In its revised 40 Recommendations of 2003, the FATF issued for the second time a list of "designated categories of offense" that asserts crimes for a money laundering prosecution. D. E-cash is not attractive to the money launderer because it cannot be completely anonymous and does not allow for large amounts to be "transported" quickly and easily.
A
Why is a Payable Through Account vulnerable to money laundering? A. These are master correspondent accounts established at a domestic bank by a foreign bank that allow the customers of the foreign bank to do a wide range of transactions. B. These are correspondent accounts located in a non-cooperative country or territory. C. These are nested correspondent accounts at a foreign shell bank with customers with whom the domestic bank did not exercise due diligence. D. These are master escrow accounts on which a domestic bank generally does not conduct periodic verification.
A
21. Which of the following should a national legislature consider when criminalizing money laundering in line with the CFATF 19 Recommendations (choose three)? A. Do not limit the number of specific predicate offenses for money laundering. B. Criminalize conspiracy or association to engage in money laundering. C. Indicate whether it is relevant that a predicate offense may have been committed outside the local jurisdiction. D. Require money laundering offenses to prove that the offender has actual knowledge of a criminal connection to the funds.
A,B,C
78. What are three factors a prosecutor should take into consideration in deciding whether to bring criminal charges against a financial institution? A. Whether the institution has a criminal history. B. Whether the institution cooperated with the law enforcement investigation. C. Whether the institution discovered and self-reported the potential criminal violation. D. Whether the institution is a very large institution and its prosecution will make good headlines for the law enforcement agency.
A,B,C
Which three are principles of the Egmont Group? A. Expanding and systematizing cooperation B. Increasing the effectiveness of FIUs C. Promoting the operational autonomy of FIUs D. Establishing rules as to what type of information can be shared.
A,B,C
45. Which three of the following statements are true? A. Online gambling provides an excellent method of laundering because transactions are conducted primarily through credit or debit cards and the sites are typically unregulated offshore firms. B. 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. C. Online gambling provides an excellent method of laundering because it lends itself to any type of cash movement and there is no face-to-face contact with the customer. D. Some banks no longer allow the use of credit cards for online gambling transactions.
A,B,D
5. Which two activities are typically associated with the black market peso exchange (BMPE) money laundering system? A. Converting illicit drug proceeds from dollars or Euros to Colombian pesos. B. Converting illicit drug proceeds from Colombian pesos to dollars or Euros. C. Facilitating purchases by Colombian importers of goods manufactured in the United States or Europe through peso brokers. D. Facilitating purchases by European or U.S. importers of goods manufactured in Colombia through peso brokers.
A,C
Which two of the following activities are typically associated with the Black Market Peso Exchange (BMPE) money laundering system? A. Converting illicit drug proceeds from dollars or Euros to Colombian pesos B. Converting illicit drug proceeds from Colombian pesos to dollars or Euros C. Facilitating purchases by Colombian importers of goods manufactured in the United States or Europe through peso brokers D. Facilitating purchases by European or U.S. importers of goods manufactured in Colombia through peso brokers
A,C
10. 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 broker-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? A. The customer asks many questions about the brokerage account, but none of them are related to investing. B. The customer is opening a commercial account and at the same time a personal investment account. C. The address of the account holder and the branch where the customer came to open the account are not close to each other. D. That the customer appears unconcerned about the fees.
A,C,D
22. Which three statements are true about the 3rd EU Directive on Money Laundering of 2005? It: A. A.Was proposed in order to update European Community legislation in line with the Financial Action Task Force (FATF) 40 Recommendations. B. Largely replicates the definitions included in the Second Directive, including the definition of a politically exposed person. C. 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. D. Requires firms to apply the customer due diligence requirements to existing customers at appropriate times on a risk sensitive basis.
A,C,D
Which three statements are true about the 3rd EU Directive on Money Laundering of 2005? A. Was proposed in order to update European Community legislation in line with all of the revised Financial Action Task Force (FATF) 40 Recommendations. B. Expands on some of the definitions included in the Second Directive, including the definition of a politically exposed person. C. 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. D. Requires firms to apply the customer due diligence requirements to existing customers at appropriate times on a risk sensitive basis
A,C,D
18. What is the definition of a predicate offense? A. Lawful or unlawful activity that involves willful blindness, and if there is an international element to the crime, can lead to a suspicious activity report. B. Unlawful activity whose proceeds, if involved in the transaction, can give rise to prosecution for the crime of money laundering. C. An interface which is the underlying segment of a suspicious transaction monitoring system. D. A specified unlawful activity that is committed through concentration accounts deceiving customers that are not directly related to the account.
B
19. What is considered a beneficial owner of an account? A person or entity: A. That has direct signatory authority over an account, and whose name appears on the account. B. That is ultimately entitled to the funds in the account, even though his name may not appear on the account. C. That is the originator and the destination of most (but not all) transactions conducted within the account, but who does not ultimately control such funds. D. That is a gatekeeper, has the legal title to the account, and typically transfers the funds to a trust.
B
2. In general, the three phases of money laundering are said to be: Placement: A. Structuring and manipulation. B. Layering and integration. C. Layering and smurfing. D. Integration and infiltration.
B
20. A bank in Italy holds a business account for an 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: A. Customer sells gold in regions where it carries an important or religious significance that adds to the high intrinsic value. B. Payments come from third-party accounts. C. Payments received are in the form of wire transfers instead of cash. D. Account holder maintains gold bullion rather than finished pieces of jewelry.
B
31. What could happen to compliance officers if they do not comply with the anti-money laundering laws and regulations? A. Their employers could face reputation damage, but the employee is immune from penalty. B. Loss of job, prison penalties and fines, negative reputation to their employer. C. Nothing. Only the financial institution's legal counsel will be responsible for complying with laws. D. Nothing. Only the staff directly handling transactions have to worry.
B
37. What is the reasoning behind implementing a "risk-based anti-money laundering approach"? A. It will keep the regulators focused on money laundering controls in sectors beyond banks. B. Institutions can best use their limited resources to focus on matters where the money laundering risks are highest. C. A quantitative approach will generate better results than a qualitative approach. D. It allows the institution to focus on selling products that have a better return on investment.
B
40. Tom works as acompliance officer at ABC Bank. He is looking at the transactions of one of the bank's customers, Mr. Brown, the owner of a check cashing company. Over the last six months, Mr. Brown has not made withdrawals of cash against check deposits. He also deposited two checks for US$2,000 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: A. Deposited checks from casinos. B. Did not make withdrawals of cash against check deposits. C. Showed uncommon curiosity about commissions and fees charged. D. Does not have an escrow account.
B
52. Which of the following controls would most effectively minimize the need to correct failures to collect required customer information in the account opening process? A. A quality review staff that checks paper applications to ensure all fields are complete. B. An automated account opening platform that requires data entry prior to allowing the account to be opened. C. Requiring that a manager review and approve all new account applications. D. Documenting a procedure that sets forth the steps required to open an account.
B
64. A compliance officer is looking to improve a compliance program for a financial institution that operates in several countries. The institution has developed a consistent customer due diligence (CDD) requirement for all customers of the institution that exceed each of the individual countries' requirements. When looking to provide management reporting on the CDD compliance efforts of the institution, which of the following would make most sense? A. Report by each country's compliance with the legal requirements within their country. B. Report on compliance with the company's stated requirements. C. Report on compliance with each country's requirements only for those customers that are serviced by branches in multiple countries; all others should be reported on the company's stated requirements. D. Report on the level of monitoring performed on the activity in the accounts.
B
68. Joe, the compliance officer for a small bank, has noticed that new regulations now require reporting on cross- border transactions that exceed a certain threshold. What is appropriate set of next steps for Joe to take to prepare his bank for the new requirements? A. Consult with the regulators, provide training to impacted associates and work with the technology partners to capture all cross-border transactions for reporting. B. Provide training to impacted associates, work with technology partners to capture all cross-borders transaction for reporting and implement a testing plan to be sure appropriate transactions are captured and reported. C. Work with technology partners to capture all cross- border transactions for reporting, implement a testing plan to be sure appropriate transactions are captured and consult with the regulators. D. Implement a testing plan to be sure appropriate transactions are captured and reported, provide training to impacted associates and consult with the regulators.
B
76. After collecting and reviewing all of the appropriate documentation in preparation for the filing of an STR, what should the compliance officer do with the documentation? A. The officer should organize the documentation and attach it to the filed STR. B. The officer should maintain the documentation in a separate file in case law enforcement asks for the supporting documentation for the STR. C. The officer should hand the documentation over to the outside counsel of the bank in order to bring a civil suit against the customer. D. The officer should use the documentation as a basis for closing the account.
B
79. The compliance officer is trying to put together a set of procedures for handling the documentation that supports the filing of an STR. What should the compliance officer recommend to be part of these procedures? A. Make a list of all relevant documents available to all bank officers and employees. B. Segregate the documents that support each STR and ensure that they are available for inspection at the request of law enforcement. C. Attach the documents to the filed STR to ensure that law enforcement has ready access to the documents. D. Rely on the five year record retention policy that the bank has to be able to retrieve all relevant documents when requested.
B
8. Which statement is true regarding the risk of Politically Exposed Persons (PEPs)? A. PEPs provide access to third parties on whom the financial institution has not conducted sufficient due diligence. B. PEPs have significantly greater exposure to the politically corrupt funds, including accepting bribes or misappropriating government funds. C. PEPs are foreign customers who inherently present additional risk as they are engaged in cross-border transactions. D. PEPs generally do not pose enhanced risks to an institution due to their political standing; rather, PEPs increase the prestige of an institution.
B
80. The compliance officer is trying to put together a set of procedures for handling the review of potentially suspicious transactions. What should the compliance officer recommend be part of these procedures? A. That the institution rely primarily on the back office to identify suspicious trends in account activity. B. That the institution make it the responsibility of all employees to identify suspicious activity. C. That the institution rely primarily on the account relationship managers of accounts to identify suspicious activity. D. That the institution rely on the dissemination of red flags in each area of the bank to cover all possible suspicious activity.
B
9. 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? A. Offsetting real estate transactions. B. Loan back. C. Cuckoo smurfing. D. Loan manipulation.
B
A bank in Italy holds a business account for an 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: A. Customer sells gold in regions where it carries an important or religious significance that adds to the high intrinsic value. B. Payments come from third-party accounts. C. Payments received are in the form of wire transfers instead of cash. D. Account holder maintains gold bullion rather than finished pieces of jewelry.
B
Tom works as a compliance officer at ABC bank. He is looking at the transactions of one of the bank's customers, Mr. Brown. Mr. Brown is the owner of a check cashing company which performs only check cashing services. Over the last six months, Mr. Brown has not made withdrawals of cash against check deposits. He also deposited two checks for US$2,000 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 commissions that are charged by the bank. What would arouse your suspicion the most? That Mr. Brown: A. Deposited checks from casinos B. Did not make withdrawals of cash against check deposits C. Showed uncommon curiosity about commissions and fees charged D. Does not have an escrow account
B
Tom works as a compliance officer at ABC bank. He is looking at the transactions of one of the bank's customers, Mr. Brown. Mr. Brown is the owner of a check cashing company which performs only check cashing services. Over the last six months, Mr. Brown has not made withdrawals of cash against check deposits. He also deposited two checks for US$2,000 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 commissions that are charged by the bank. What would arouse your suspicion the most? That Mr. Brown: A- Deposited checks from casinos B- Did not make withdrawals of cash against check deposits C- Showed uncommon curiosity about commissions and fees charged D- Does not have an escrow account
B
What is the definition of a predicate offense? A. Lawful or unlawful activity that involves willful blindness, and if there is an international element to the crime, can lead to a suspicious activity report. B. Unlawful activity whose proceeds, if involved in the transaction, can give rise to prosecution for the crime of money laundering. C. An interface which is the underlying segment of a suspicious transaction monitoring system. D. A specified unlawful activity that is committed through concentration accounts deceiving customers that are not directly related to the account.
B
What is the reasoning behind implementing a "risk-based" anti- money laundering approach? A. It will keep the regulators focused on money laundering controls in sectors beyond banks. B. No institution can hope to detect all instances of wrongdoing by customers, including money laundering. C. A quantitative approach will generate better results than a qualitative approach. D. It allows the institution to focus on selling products that have a better return on investment.
B
4. Which three of the following is an indication of possible money laundering in an insurance industry scenario? A. Insurance products sold through intermediaries, agents or brokers. B. Single-premium insurance bonds, redeemed at a discount. C. Policyholders who are unconcerned about penalties for early cancellation. D. Policyholders who make full use of the "free look" period.
B,C,D
12. Which of the following statements is true?Correspondent banking is MOST vulnerable to money laundering when the correspondent account is: A. Maintained for foreign financial institutions that are banks. B. Not used to provide services directly to third parties. C. Maintained for a foreign bank that does not have a physical presence in any country. D. Maintained for a foreign private bank that is publicly traded and is a qualified intermediary.
C
15. According to the EU Directives of 2001, an independent legal professional is obligated to report suspicion of money laundering in a client relationship when: A. Representing a client in a legal matter. B. Ascertaining the legal position for a client. C. Participating in financial or corporate transactions. D. Obtaining information associated with a judicial proceeding.
C
24. 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? A. Information-sharing agreements must be drafted according to a model issued by the Egmont Group. B. Information-sharing agreements should not allow room for case-by-case solutions to specific problems in case of NCCT countries. C. Information exchanged between FIUs may be used only for the specific purpose for which the information was sought or provided. D. The requesting FIU may make use of the information shared by a disclosing FIU for administrative purposes without the prior consent of the disclosing FIU.
C
25. In which stage of money laundering would you classify depositing small amounts of cash into several related accounts? A. Integration. B. Structuring. C. Placement. D. Construction.
C
29. In which case might a Suspicious Transaction Report NOT be necessary? A. A customer who deposits money of suspicious origins and refuses to answer questions from the financial institution's staff. B. A customer who tries to move money that is suspected of being derived from criminal activity. C. A customer who owns a large supermarket and deposits large amounts of cash several times a day. D. A customer whose account is showing transaction activities which are beyond his known financial capability.
C
32. What is willful blindness defined as? A. Failing to file a Suspicious Transaction Report for dealing with companies or financial institutions from offshore tax havens. B. Not following customer identification procedures as set out in the institution's procedures. C. Deliberate avoidance of knowledge of the facts or ignoring obvious money laundering red flags. D. Deliberate avoidance of a customer based on the assumption that his or her behavior suggested a potential threat as money launderer and/or terrorist.
C
34. The Reporting Officer of a financial institution should: A. Report everything that comes his way from anyone in the organization. B. Report everything that comes his way from senior management or Board of Directors. C. 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. D. Report only what the Reporting Officer's superior agrees should be reported.
C
35. Which of the following statements is true? A. Credit cards are not likely to be used in the layering phase of money laundering because of restrictions in cash payments. B. Credit cards are effective instruments for laundering money because the transactions do not create an audit trail. C. 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. D. A launderer can use illicit funds that are already in the banking system to pay his credit card bill for goods purchased, which is an example of placement.
C
39. According to the FATF 40 Recommendations, the threshold for identifying occasional customers at financial institutions is: A. EURO/US$ 5,000. B. EURO/US$ 10,000. C. EURO/US$ 15,000. D. EURO/US$ 20,000.
C
49. Which of the following should an anti-money laundering specialist include on an internal investigation log? A. A government order on a customer that garnishes his wages for failure to pay child support. B. Supporting documentation and materials for denying service to a client with a bad credit rating. C. Notes pertaining to activity that is unusual, but for which a Suspicious Transaction Report has not been filed. D. Reference to a memorandum to the company's corporate management relating to budgetary and similar concerns.
C
51. 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 identity? A. Do not offer the product, as it is too high risk as the customer cannot be seen to verify their identity. B. Require all customers to send a copy of valid photo identification to the institution. C. Ensure that the institution has a reliable third party source that will enable verification of the customer. D. Allow customers to enter required information, but require all customers to come to the institution in person for verification.
C
57. 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 funds, 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? A. Accept the client manager's approval of the client. B. Allow the account to be opened but be sure to monitor the account activity. C. Perform a background investigation to determine whether the client's source of funds is credible. D. Decline the account.
C
58. 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 from his business. Which is the best path for her to follow up on her suspicions? A. Focus on the checking accounts, as the checking accounts allow the fastest movement of funds. B. Ignore the savings and brokerage accounts, as these are not used in the placement stage of money laundering. C. Look at the movement of funds in all the accounts, as the customer may be using all of them to launder money. D. Focus on the business account, as the customer is embezzling money from the company.
C
61. A financial institution branch manager who has been in place for over ten years has not taken a vacation for almost four years. The company does not allow employees to roll vacation over from year to year. An AML compliance officer has noticed unusual activity in several accounts at the branch location. What should the AML officer do? A. Insist that the manager take a vacation, as not taking one is a red flag. B. Report the manager to authorities for engaging in suspicious activity. C. Determine whether the manager has engaged in transactions in the accounts where the unusual activity has occurred. D. Conduct a background check to see if the manager has been convicted of criminal activity.
C
66. An institution that offers mortgages notices the national financial intelligence unit has issued several advisories about reporting mortgage fraud. A compliance officer has noticed that the level of mortgage fraud reporting has increased as a result of conducting post-account opening source of funds verification. The FIU has noted that loans with unverified income have been noted as a significant concern. What should the AML compliance officer do? A. Pass along the FIU advisories to the mortgage unit and let them address the issue as they see fit. B. Refer the increased reporting of unusual activity to the regulators for them to address. C. Speak to the mortgage unit about revising the income verification process to do this earlier in the process, as suggested by the FIU. D. Refer the matter promptly to the board of directors to let them address the issue promptly.
C
69. When documenting ongoing training efforts, which of the following should be documented to demonstrate the distribution of the training to appropriate employees? A. Whether the training was provided to the board of directors. B. The topics the training addressed. C. The names and areas of the employees who took the training. D. Whether the employees who took the training passed the post-training assessment.
C
7. The greatest risk for money laundering is for casinos that A. Provide their customers with a wide array of gambling services. B. Operate in a non-Egmont member country. C. Allow customers with credit balances to withdraw funds by check in another jurisdiction. D. Only send suspicious transaction reports to the financial intelligence unit of the country it operates in.
C
71. Marie, a compliance officer at a financial institution, attends an annual AML-industry conference and learns of a new regulation that will impact her current AML processes. The regulatory environment has been relatively stable within the industry for several years, but Marie is glad she attended this conference to get news of the new requirements. What should Marie do to stay abreast of future changes in requirements? A. Request permission to attend future annual AML- industry conferences. B. Ask internal auditors to provide her with notice of changes needed to the program. C. Implement a process to determine when new regulations are published and assess them for impacts to the AML program. D. Conduct a risk assessment to determine if the regulations change frequently enough to implement a process to check for changes.
C
73. A financial institution's internal audit department has found an issue with an AML process involving the AML compliance officer's efforts to conduct sufficient account monitoring on certain products offered by the institution. The AML compliance officer should do which of the following? A. Let the independent audit function remediate the issue, as they have identified it and the resolution of the issue needs to be handled independently of the compliance function. B. Dispute the finding with audit, as the compliance officer should be sufficiently empowered to make all AML-related decisions for the institution. C. Develop and follow an action plan to remediate the issue and report to audit on the progress made on the issue. D. Escalate the matter to the account opening team and have them make the appropriate business decision.
C
75. A longtime customer of the bank comes into the bank a number of times over a series of weeks and deposits a large amount of money and, the next day, asks for the money to be wired to a third world country. This behavior is not in keeping with his normal business practices. What should the compliance officer recommend? A. Contact the Board of Directors as soon as possible and inform them of this activity. B. Immediately contact law enforcement by phone and tell them of the potential money laundering activity. C. Collect the appropriate documentation and review it with the purpose of filing an STR. D. Make a note of the activity, but do not file a STR in order to not risk losing a longtime customer.
C
According to the 3rd EU Directive, a lawyer is obligated to report a suspicion of money laundering in a client relationship when: A. Representing a client in a legal matter. B. Ascertaining the legal position for a client. C. Participating in financial or corporate transactions. D. Obtaining information associated with a judicial proceeding.
C
According to the FATF 40 Recommendations, the financial institutions should apply due diligence to: A. Domestic PEPs only B. International PEPs only C. International and domestic PEPs D. None of the above
C
Which of the following should an anti-money laundering specialist include on an internal investigation log? A. Notes relating to a background check of a prospective employee of the company. B. Supporting documentation and materials for denying service to a client with a bad credit rating. C. Notes pertaining to activity that is unusual, but for which a Suspicious Transaction Report has not been filed. D. Reference to a memorandum to the company's corporate management relating to budgetary and similar concerns.
C
Which of the following statements is true? A- Credit cards are not likely to be used in the layering phase of money laundering because of restrictions in cash payments. B- Credit cards are effective instruments for laundering money because the transactions do not create a paper trail. C- 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. D- A launderer can use illicit funds that are already in the banking system to pay his credit card bill for goods purchased, which is an example of placement.
C
Which of the following statements is true? Correspondent banking is MOST vulnerable to money laundering when the correspondent account is: A. Maintained for foreign financial institutions that are banks. B. Not used to provide services directly to third parties. C. Maintained for a foreign bank that does not have a physical presence in any country. D. Maintained for a foreign private bank that is publicly traded and is a qualified intermediary.
C
17. Which were the Basel Committee's two main motivations to encourage strong Know Your Customer programs in its paper "Customer Due Diligence for Banks?" A. A.Mirror FATF's KYC Recommendations. B. Meet European Union guidelines. C. Protect the safety and soundness of banks. D. Protect the integrity of banking systems.
C,D
13. Which statement is true?Lawyers: A. In FATF member countries can generally not be used to serve as formation agents to set up trusts, front companies or shell companies. B. And similar professional "gatekeepers" are called money services businesses. C. Can generally not be used to act as a nominee shareholder for a beneficial owner. D. Can be abused by launderers by using the accounts they set up for them for the placement and layering of funds.
D
23. The FATF 40 Recommendations say that countries should: A. Not allow bearer shares and legal persons that are able to issue bearer shares. B. Gather statistics on STRs; prosecutions and convictions; on property frozen, seized and confiscated; and on mutual legal assistance, but not necessarily on other international requests for co- operation. C. Consider the feasibility of a system where banks and other financial institutions and intermediaries would report currency transactions without indicating a minimum fixed amount. D. Not approve the establishment or accept the continued operation of shell banks.
D
27. In most laws criminalizing money laundering, it is stated that: A. Financial institutions are not responsible for money laundering or suspicious transactions taking place within their accounts until the government places the customer on a watch list. B. Tipping off (telling customers that their accounts/ transactions are under investigation because of suspicion) is not punishable. C. The dirty money undergoing money laundering will not be confiscated because of privacy laws. D. Employees of financial institution who intentionally ignore clear signs of money laundering may be punished with imprisonment and/or fines.
D
28. The tactic in which individuals make multiple deposits in small quantities to avoid detection is called: A. Paralleling. B. Integration. C. Investing. D. Structuring.
D
42. 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? A. A customer who owns several check cashing companies in town and rents safe deposit boxes at different branches. B. A customer who avoids taking vacations. C. A small business that provides financial statements which are not prepared by an accountant. D. A customer involved in investment management who guarantees a very high rate of return, well above what other competitors can offer.
D
44. 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 two 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? A. Sam maintained a personal account as well as the business account. B. Sam's home telephone number was disconnected last month. C. Sam asked for a letter of credit to finance some imports from a new supplier. D. Sam conducted large cash transactions for his import/ export business.
D
55. Suzy is an AML compliance officer at an institution that is looking to open treasury management services (e.g., wires, check 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? A. Whether the new account systems will be able to handle customers with foreign names. B. Whether the correspondent accounts will be approved by government regulators. C. Whether the correspondent accounts will be able to provide evidence of their customers' identities at account opening D. Whether the correspondent accounts will be able to be monitored by the institution's monitoring system
D
59. 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? A. The customer is sweating; probably because he is nervous due to the fact he's trying to launder narcotics proceeds. B. The customer is sending money to a relative in a high- risk foreign location. C. The customer seems slightly distracted when asked questions by the financial institution's staff. D. The customer is not able to provide a reasonable response as to the source of the funds.
D
6. What is the Right of Reciprocity in the field of international cooperation against money laundering? A. The legal principle that financial institutions that have referred customers to other financial institutions can share information about these customers with the other institutions. B. A rule of the Basel Committee allowing properly regulated financial institutes of another member state of the Basel Committee to do business without additional supervision to the degree that the other state grants the same right. C. The right of each FATF member country to delegate prosecution of a case of money laundering to another member that is already investigating the same case. D. 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.
D
62. An AML compliance officer is looking to establish a suspicious activity reporting process at her small institution. Which of the following would be the best course of action? A. Allow employees to refer suspicious activity directly to the government authorities to file as quickly as possible. B. Have employees refer all unusual activity to the internal independent audit department to assess whether the activity should be reported. C. Have employees refer all unusual activity to senior management to ensure they are aware of all unusual activity within the organization. D. Have employees refer all unusual activity to her so that she may conduct an investigation into what needs to be reported to authorities.
D
63. After reporting suspicious activity to the appropriate authorities and they request additional follow up on the reports, which of the following actions should an AML compliance officer do? A. Inform the customer that his/her activity has been reported as suspicious and the authorities are asking about him/her. B. Indicate to the authorities that you have fulfilled your regulatory duty by referring the matter to them. C. Give the authorities everything they request. D. Cooperate fully with the authorities, as permitted by law.
D
67. Robert is acompliance officer for a financial institution. Robert is looking to assess the effectiveness of the current AML program. Which of the following should Robert consider in his assessment of the program's effectiveness? A. Sales staff surveys on AML efforts, customer due diligence error rates, quality assurance testing on STR filings. B. Customer due diligence error rates, sales staff surveys on AML efforts, percent of products and services monitored for suspicious activity. C. Quality assurance testing on STR filings, sales staff surveys on AML efforts, percentage of products and services monitored for suspicious activity. D. Customer due diligence error rates, quality assurance testing on STR filings, percentage of products and services monitored for suspicious activity.
D
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? A. A customer who owns several check cashing companies in town and rents a safe deposit box. B. A customer who avoids taking vacations. C. A small business that provides financial statements which are not prepared by an accountant. D. A customer involved in credit transactions often uses impressive- sounding but nonsensical terms such as emission rate, standby commitment, etc.
D
What is the Right of Reciprocity in the field of international cooperation against money laundering? A. The legal principle that financial institutions that have referred customers to other financial institutions can share information about these customers with the other institutions. B. A rule of the Basel Committee allowing properly regulated financial institutions of another member state of the Basel Committee to do business without additional supervision to the degree that the other state grants the same right. | C. The right of each FATF member country to delegate prosecution of a case of money laundering to another member that is already investigating the same case. D. 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.
D
Which statement is true? A. Lawyers/attorneys can generally not be used to serve as formation agents to set up trusts, front companies or shell corporations. B. Lawyers, accountants, notaries and other similar professionals are called money services providers. C. Lawyers can generally not be used to act as a nominee shareholder for another person. D. Launderers can abuse gatekeepers by using their accounts for the placement and the layering of funds.
D