CFE EXAM- LAW

Restitution

(pay money) to crime victims for the money or property they lost. Example: a defendant who is convicted of embezzling $10,000 from their employer might be sentenced to 5 years in prison and also ordered to make restitution to the employer in the amount of $10,000.

Exceptions that allow law enforcement officials to make arrests without warrants:

-An offense that occurred in the presence of an officer -The discovery of contraband in the suspect's possession -Emergency situations

Rights of United Nations' (UN) International Covenant on Civil and Political Rights (ICCPR):

-all people accused of crimes are entitled to a fair hearing before a court or other tribunal and that the results of the trial should be made public to protect the criminal justice system's transparency. -Adequate time to prepare a defense -The ability to be represented by legal counsel of the defendant's choosing and to freely communicate with counsel -The right to have accusations and the procedures explained through a translator for free, if necessary -The right to be tried for charges without undue delay -The right to examine or have examined the witnesses against the accused -Freedom from testifying against oneself or compelled confessions

Which of the following acts would constitute violations under the U.S. Foreign Corrupt Practices Act's (FCPA) anti-bribery provisions?

A U.S. company transfers $45,000 to a foreign official to influence the official to award it a public construction contract B. A German company that is publicly traded on the New York Stock Exchange transfers $45,000 to a foreign official to influence the official to award it a public construction contract C. To induce a public construction contract award, a U.S. company promises to pay a foreign official $45,000 upon securing the contract

Angela and Michael live in two different countries. Angela believes that she has been financially harmed by Michael and wants to bring a lawsuit against him. Which of the following courts would be the MOST LIKELY to have jurisdiction to hear the case?

A court in the country where the harm was done Being a plaintiff or defendant does not automatically entitle either party to choose any court to hear the case; a case may only be heard before a court that has proper jurisdiction.

Which of the following situations BEST illustrates parallel proceedings?

A criminal defendant who is also subject to a civil suit regarding the same conduct alleged in the criminal action

Which of the following crimes would BEST be described as money laundering?

A criminal engages in a process to disguise the criminal nature of stolen funds to make it seem as though they earned the funds legitimately.

BEST describes when a custodial arrest occurs?

A custodial arrest occurs when a law enforcement officer indicates that the suspect is no longer free to leave.

The Financial Action Task Force (FATF) Recommendations state that countries should require certain organizations to monitor suspicious activity and file a report to disclose known or suspected criminal offenses or transactions that involve money laundering or terrorist financing. Which of the following scenarios would NOT require such a report to be filed under the FATF Recommendations?

A customer who is shopping in a jewelry store purchases an expensive ring using cash. The transactions in all but one of the choices are suspected of stemming from money laundering or the proceeds of predicate illegal conduct, while the correct answer is not necessarily suspicious. It is not unusual for a customer to purchase jewelry using cash.

In common law jurisdictions, which of the following parties typically serves as the fact finder in criminal trials?

A jury

Which of the following financial institutions is NOT considered a money services business (MSB)?

Although an MSB has particular meanings in different jurisdictions, it generally includes any business that operates in one or more of the following capacities: Currency exchangers Check cashers Issuers, sellers, or redeemers of traveler's checks, money orders, or stored value Money transmitters Prepaid access providers or sellers

The civil wrong regarding intrusion into an individual's private matters (often referred to as intrusion upon seclusion) occurs when an individual intentionally intrudes into another individual's private matters and the intrusion would be highly offensive or objectionable to a reasonable person. The elements of this civil wrong include:

An intentional intrusion Into an area where an individual has a reasonable expectation of privacy The intrusion would be highly offensive or objectionable to a reasonable person

Which of the following statements concerning appellate procedure in criminal cases is MOST ACCURATE?

Appellate courts in civil law jurisdictions are generally permitted to make their own FACTUAL determinations AND LEGAL conclusions when reviewing a case.

Which of the following statements concerning criminal bargaining agreements is MOST ACCURATE?

Bargaining agreements are more commonly accepted in common law jurisdictions than in civil law jurisdictions.

In most common law jurisdictions, to prevail in a criminal case, the prosecution must prove its case

Beyond a reasonable doubt

Which of the following is an example of the use of a digital currency?

Bitcoin transactions

Which of the following terms refers to the inappropriate practice of an investment professional who engages in the excessive trading of a customer account to generate commissions while disregarding the customer's interests?

CHURNING

Nearly every country prohibits ________ employee monitoring, unless a specific criminal activity has been identified.

COVERT

A criminal is attempting to launder stolen funds. To confuse the money trail for the funds, the criminal purchases an expensive insurance contract with the illicit funds, cancels the policy shortly after, and receives a refund in a foreign bank account. Which of the following BEST describes the criminal's money laundering scheme?

Canceled policy scheme Launderers do not always need to keep or redeem the insurance policies they purchase. Many policies have cancellation provisions that, for a certain amount of time, allow the launderer to cancel the policy and have any unused premiums returned. This technique can be used to temporarily store illicit assets and confuse the money trail by having the cancellation paid out to a different account.

Note that the recommended reporting requirement does not apply to everyone; it only applies to financial institutions and DNFBPs. DNFBPs include:

Casinos (including internet- and ship-based casinos) Real estate agents Dealers in precious metals and stones Legal professionals at professional firms (not internal legal professionals) Trust and company service providers

Walters is the mayor of a mid-size town. Because he is well-known and liked in the town, the prosecutor wants to move the trial to another town in which Walters is not known. The prosecution believes that such a move will ensure a more unbiased verdict. If the prosecution wishes to move the trial to a different city, it must request which of the following?

Change of venue

In a particular country, the judicial system involves courts applying laws from codified statutes to each case. The court is not required to consider previous similar court decisions when deciding legal issues. Which of the following best describes this judicial system?

Civil law system

Cross Examination

Counterclaim: Company XYZ sues A in a civil proceeding. A sues XYZ for something else in the same case. What is this called? Counterclaim. After a bank has sued a customer for an unpaid debt, the customer counterclaims (sues back) against the bank for fraud in procuring the debt. The court will sort out the different claims in one lawsuit

SROs can perform various regulatory functions in securities markets, but, in basic terms, they oversee the markets in which they operate and police the members and member firms participating in those markets. More specifically, the regulatory responsibilities of SROs might include matters such as:

Creating rules to protect the integrity of the market in which they operate (e.g., rules that govern market conduct and that regulate exchange trading) Establishing the standards and rules under which their members operate (e.g., regulating their members' trading practices, member qualifications, and how members should relate to their clients) Offering professional training, testing, and licensing to individuals in their industry Monitoring compliance with and enforcing the rules of the markets in which they operate through market surveillance programs, trading analyses, and examinations of member firms' trading operations

Which of the following is one of the areas of primary concern in which the Organisation for Economic Co-operation and Development's (OECD) Recommendation on Combating Bribery in International Business (Recommendation) urges member states to take steps to combat the bribery of foreign public officials?

Criminal, civil, commercial, and administrative laws Tax systems and regulations Banking and accounting requirements and practices Laws and regulations related to public subsidies, licenses, and contract procurement

Imprisonment: Determinate Sentence & Indeterminate Sentence

DS: 5 years IDS 5-10 years

Which type of administrative penalty excludes an individual or business from participating in a government program?

Debarment ex: a contractor who engages in procurement fraud might be prohibited from bidding on government contracts in the future. Debarment can be temporary or permanent, and debarred parties are often added to a list that is maintained by the government agency and viewable by the public.

Criminal Forfeiture

Defendants can be ordered to TRANSFER specific PROPERTY to the government as part of their sentence. It generally involves property that was USED TO COMMIT A CRIME.

Which of the following outcomes to criminal allegations of fraud against an organization occurs when PROSECUTORS agree not to prosecute claims as long as the organization reforms its practices and reduces the risk of illegal activities?

Deferred prosecution agreement These requirements typically focus on getting the business to reform its policies and reduce the risk of illegal practices. help companies avoid indictment, trial, and conviction while providing a jurisdiction's justice system with another channel for resolving a corporate case that punishes malfeasance and effectuates changes in a company's culture. deferred prosecution agreements can result in no conviction if the agreement is fulfilled.

The FATF Recommendations define financial institutions to include:

Depository and lending institutions (i.e., traditional banks) Money services businesses (MSBs) Financial guarantors Securities brokers or traders Security issuing services Investment portfolio managers Parties that invest, administer, or manage funds or assets on behalf of others Insurance companies servicing life insurance and other investment-related insurance

Which of the following statements concerning digital currencies, such as bitcoin, is INCORRECT?

Digital currencies are attractive to money launderers because they rely on payment systems that are untraceable. digital currencies generally face less strict regulations than payments made through traditional financial institutions. However, many jurisdictions now require service providers who exchange or otherwise deal with digital currencies to have effective customer identification or recordkeeping practices. Therefore, digital currencies do not provide complete anonymity, so very few service providers actively promote anonymous digital currency ownership and payments.

Which of the following BEST describes the reporting requirement regarding large cash transactions with customers for financial institutions and designated nonfinancial businesses and professions (DNFBPs) under the Financial Action Task Force (FATF) Recommendations?

Domestic and international transactions over the designated threshold should require a report to the government.

Which of the following can affect the rights that employees may have during an internal investigation?

Existence of a union contract Existence of an employment contract Existence of a collective bargaining agreement

Debarment is an administrative penalty that temporarily suspends an individual's professional license. T OR F

FALSE

In most jurisdictions, police must always have a warrant to arrest a person for investigative purposes. T OR F

FALSE

Transactions involving money services businesses (MSBs) generally have a lower money laundering risk than those at other financial institutions because MSBs have more stringent regulatory requirements. T OR F

FALSE

If a party obtains a domestic judgment against a foreign defendant in a fraud case, the party will automatically be able to enforce that judgment in any jurisdiction where the defendant resides. T OR F

FALSE A domestic judgment against a foreign defendant is usually helpful for recovering the defendant's assets located in the domestic country, but it might be worthless for obtaining the defendant's assets in a foreign country. foreign judgments concerning parties or assets within their jurisdiction.

In criminal trials in common law jurisdictions, a jury must serve as the fact finder. T OR F

FALSE Additionally, many common law jurisdictions allow the defendant to waive the right to trial by jury. When no jury is present, the judge serves as the fact finder.

To establish that a defendant violated a law criminalizing false statements to government agencies, the government must prove that the defendant made a false statement regarding a matter within the jurisdiction of a government agency, and the agency relied on the false statement to its detriment. T OR F

FALSE An individual can be found guilty for making a false claim or statement even if the government did not rely on the falsity.

Unlike the U.S. Foreign Corrupt Practices Act (FCPA), the UK Bribery Act makes it a crime to bribe a foreign public official in connection with international business transactions. T OR F

FALSE Both the UK Bribery Act and the U.S. Foreign Corrupt Practices Act (FCPA) make it a crime to offer foreign public officials bribes or to accept bribes from them in connection with international business transactions, and their prohibitions on bribing foreign government officials are broadly comparable. ****UK Bribery Act has an even broader application than the FCPA. One way in which the UK Bribery Act has a broader application than the FCPA is that it makes commercial bribery—bribes paid to people working in the private sector—a crime, whereas the FCPA only prohibits bribes involving foreign government officials.

In addition to prohibiting bribes to foreign officials for business purposes, the U.S. Foreign Corrupt Practices Act (FCPA) prohibits facilitating payments, or grease payments, made to foreign officials to facilitate the officials' ability to perform their duties. T OR F

FALSE FCPA permits it does not prohibit all payments to foreign officials. It contains an explicit exception for certain types of payments, known as facilitating payments, or grease payments,

In general, for a contract, transaction, or scheme to be classified as an investment contract, the instrument must be purchased by investors who display management activity in the instrument's enterprise and have expectations of making profits that are to be derived from their own efforts. T OR F

FALSE In many countries, the term security includes investment contracts. The leading global definition of investment contract provides that a contract, transaction, or scheme is an investment contract if all of the following four elements are met: There is an investment of money or other asset. The investment is in a common enterprise. The investment was made with expectations of making a profit. The profits are to come solely from the efforts of people other than the investor. To qualify as a security under this definition of investment contract, the essential managerial efforts, which affect the success or failure of the enterprise, must come from someone other than the investor. As a general rule, the more actively involved an investor is in the enterprise, the less likely it is that an investment contract will be found to exist.

In adversarial jurisdictions, the parties involved in litigation typically cannot request evidence from each other until after the trial begins. T OR F

FALSE Most discovery between the parties is conducted in the pretrial stage

To prove that a defendant committed criminal perjury, the government prosecutor must show that the defendant, while in a court of law, knowingly made a false statement that influenced the jury's decision. T OR F PERURY AND ELEMENTS:

FALSE Perjury is an intentional false statement given under oath on a material point at issue. The basic elements for the crime of perjury are as follows: The defendant made a false statement. The defendant made the false statement while under oath. The false statement was material or relevant to the proceeding. The defendant made the statement with knowledge of its falsity. Laws that criminalize perjury, however, do not require that the false statement be given in a court of law or that the false statement influence a jury's decision. Generally, the forum for a perjurious statement includes any court proceeding, depositions in connection with litigation, bail hearings, venue hearings, suppression hearings, and so on. Thus, an individual can commit perjury for false statements made somewhere other than a court of law.

In both adversarial and inquisitorial jurisdictions, most criminal discovery occurs during the trial stage. T OR F

FALSE The adversarial process can be divided into the pretrial and trial stages. Most discovery between the parties is conducted in the pretrial stage. Criminal proceedings in inquisitorial jurisdictions are typically divided into three phases: the investigative phase, the examining phase, and the trial. The discovery process occurs primarily in the first two of these three phases.

To recover for a claim of false imprisonment, a plaintiff must show that the defendant knew they had no legal right to restrain the plaintiff's physical liberty. T OR F

FALSE The defendant used words or actions intended to restrain the plaintiff. The defendant's words or actions resulted in the restraint of the plaintiff without the plaintiff's consent (i.e., against the plaintiff's will) and without legal justification. The plaintiff was aware that they were being restrained.

Black, a Certified Fraud Examiner (CFE), interviews Green, a fraud suspect. No one else is present at the interview. During the interview, Black accuses Green of committing fraud. Later, it turns out that Green is innocent. Green can sue and recover damages from Black on a claim of defamation if Green can show that Black knowingly made the false statement on an unprivileged occasion and that the statement caused economic harm. T OR F

FALSE Though innocent, Green generally will not be able to recover under a defamation theory because Black's statement was not "published" to a third party. Generally speaking, defamation refers to the unprivileged publication of false statements about a person that causes harm to that person's reputation. To recover for defamation, the plaintiff must generally prove all of the following elements: The defendant made an untrue statement of fact. The statement was communicated (published) to third parties. The statement was made on an unprivileged occasion. The statement damaged the subject's reputation.

Under a common law legal system, judges are not bound by precedent and are free to decide cases based on their interpretation of the matters at issue. T OR F

FALSE To decide disputes in common law systems, judges analyze prior cases with similar circumstances and apply the basic principles set forth in those cases to the problem at hand.

In a jurisdiction that features an inquisitorial judicial process, the parties primarily drive the evidence-gathering portion of judicial proceedings and conduct the questioning of witnesses. T OR F

FALSE adversarial processes

Prosecutorial bargaining does not occur in civil law systems. T OR F

FALSE some civil law countries dont have pleas but still have bargaining agreements

The U.S. Foreign Corrupt Practices Act (FCPA) has two major parts. The first part criminalizes the bribery of a foreign public official to obtain or retain business. The second part pertains to money laundering, requiring publicly traded companies to adopt policies, procedures, and internal controls reasonably designed to prevent money laundering. T OR F

FALSE The U.S. Foreign Corrupt Practices Act (FCPA) has two principal components: the anti-bribery provisions and the accounting provisions. In short, the anti-bribery provisions make it unlawful to bribe foreign government officials to obtain or retain business, and the accounting provisions require publicly traded companies subject to the FCPA's jurisdiction to keep accurate books and records and adopt internal controls to prevent improper use of corporate funds.

Officers and directors of a corporation have a fiduciary duty to act solely in the best interest of non-shareholder constituencies. T OR F

FALSE The duty of loyalty requires that the employee/agent act solely in the best interest of the employer/principal, In general, officers and directors do not owe fiduciary duties to other constituencies, such as creditors, whose rights are purely contractual.

To be effective, securities regulation must balance the legitimate needs of businesses to raise capital against the NEED TO REDUCE MARKET RISK. T OR F

FALSE To be effective, securities regulation must balance the legitimate needs of businesses to raise capital against the NEED TO PROTECT INVESTORS. In addition to protecting investors, securities regulation serves other purposes, including: Fostering an active and competitive market Maintaining market confidence Reducing financial crime Discouraging behavior that might harm the market

If, in a country with comprehensive whistleblower protection laws, an employee qualifies as a whistleblower for reporting unlawful conduct by their employer, the employer cannot fire the whistleblowing employee for any reason, including their engagement in an unrelated fraud. T OR F

False Whistleblower laws do not, however, prevent individuals from being fired for engaging in unrelated fraudulent behavior.

To be effective, securities regulation must balance the legitimate needs of businesses to raise capital against the need to protect investors. In addition to protecting investors, securities regulation serves other purposes, including:

Fostering an active and competitive market Maintaining market confidence Reducing financial crime Discouraging behavior that might harm the market

Among the rights most relevant to fraud examiners, the ICCPR entitles the criminally accused to the following:

Freedom from arbitrary arrest or detention Right of the accused to be informed of criminal charges Right to a fair hearing Presumption of innocence until proven guilty according to law Right to appeal a criminal conviction and sentence Right to privacy and protection from privacy violations

Paige, a Certified Fraud Examiner (CFE), is investigating a suspect's sources of income. Paige notices that funds available to the suspect include the suspect's interest in a restaurant/bar. Paige has surveilled the establishment several times and notices that the business has very few customers, even during peak times. Yet the income reported from this restaurant/bar is substantial. Of the following list, in which money laundering scheme might the suspect be involved?

Front business scheme As a result, a red flag of front businesses is observing a low amount of business, despite the business's books showing a relatively high income for that period.

One of the most common methods of laundering funds is to filter the money through a front business. A front business can be useful to a criminal for which of the following reasons?

I. It provides a safe place for organizing and managing criminal activity. II. It provides a base of operations where the comings and goings of large numbers of people will not arouse undue suspicion. III. It is an easy way for the criminal to avoid paying taxes on illegal sources of revenue.IV. The front that does the legitimate business provides cover for delivery and transportation related to illegal activity. I.II.IV

Which of the following statements about the UK Bribery Act is NOT correct? aka false

If an organization's anti-corruption program complies with the FCPA, it will be sufficient for the purpose of complying with the UK Bribery Act.

The judge is the primary driver of the criminal discovery process in both adversarial and inquisitorial jurisdictions. T OR F

In adversarial jurisdictions, the parties involved in litigation primarily drive the discovery process, while the judge ensures that discovery procedures are followed correctly. Criminal discovery in inquisitorial jurisdictions is driven by a judge

Appeals Process

In most jurisdictions, in an appeal, the APPEALING party petitions an APPELLATE court to overturn or modify the LOWER court's decision. appellate courts will not accept an appeal unless the petition is filed in a timely manner(no later than 30 days) an appellate court will reverse a conviction only if it finds an error that likely affected the trial's outcome and denied the defendant a fair trial.

Which of the following statements concerning judges and juries is MOST ACCURATE?

In serious cases, some inquisitorial jurisdictions use juries that include both judges and laypersons. The judge in an inquisitorial process both serves as the traditional fact finder and makes determinations on issues of law. most adversarial jurisdictions actively use juries as the fact-finding body, while the judge decides issues of law. adversarial jurisdictions (often called bench trials) are decided factually and legally by a judge.

Which of the following is considered obstruction of justice?

Influencing a witness with bribes Influencing or injuring any officer of the court or juror by force, threats of force, intimidating communications, or corrupt influence Influencing a juror through a writing Stealing or altering records or processes by parties that are not privy to the records Using force or threats of force to obstruct or interfere with a court order Destroying documents related to a future proceeding Tampering with a witness, victim, or an informant (e.g., killing or attempting to kill, using force or threats of force, intimidating, influencing with bribes or other corrupt means, misleading, or harassing the protected parties) Influencing, obstructing, or impeding a government auditor in the performance of their official duties Obstructing the examination of a financial institution

Which of the following BEST describes the government's burden of proof in criminal cases in civil law jurisdictions that use an inquisitorial court process?

Inner conviction of the judge

Which of the following is a common law invasion of privacy civil wrong that occurs when an individual intentionally encroaches into an area where another individual has a reasonable expectation of privacy and the encroachment would be highly offensive or objectionable to a reasonable person?

Intrusion into an individual's private matters

Which of the following statements concerning the United Nations' (UN) International Covenant on Civil and Political Rights (ICCPR) is FALSE?

It states that the right of the accused to a fair hearing includes the right to trial by jury.

Which of the following refers to a court's power to hear and decide a given case?

Jurisdiction

Which of the following is an element the government must prove to establish that an individual violated a law criminalizing false statements to government agencies?

Knowingly and willfully (or with reckless disregard for truth or falsity) Made a false claim or statement (or used a false document) That was material (i.e., sufficiently important or relevant to influence decision-making) Regarding a matter within the jurisdiction of a government agency With knowledge of its falsity

In most countries, which of the following is something that a government prosecutor must prove in order to convict someone of the crime of making a false statement to the government?

Knowingly and willfully (or with reckless disregard for truth or falsity) Made a false claim or statement (or used a false document) That was material (i.e., sufficiently important or relevant to influence decision-making) Regarding a matter within the jurisdiction of a government agency With knowledge of its falsity

The Organisation for Economic Co-operation and Development's (OECD) Recommendation on Combating Bribery in International Business (Recommendation) urges member states to combat the bribery of foreign public officials by taking steps to improve certain areas within their respective infrastructures. Which of the following is NOT one of those primary areas?

Laws and regulations covering the handling of sensitive protected data to improve the following areas within their respective infrastructures: Criminal, civil, commercial, and administrative laws Tax systems and regulations Banking and accounting requirements and practices Laws and regulations related to public subsidies, licenses, and contract procurement

Which of the following statements about an employee monitoring program is MOST ACCURATE?

Most countries require employers to give employees notice before implementing an employee monitoring program.

Which of the following is NOT one of the three basic options by which organizations can legitimize cross-border transfers of personal information?

Obtain a warrant granting permission to transfer the data.

Nevertheless, there are three basic options by which organizations can legitimize cross-border transfers of personal information:

Obtain the consent of the data subject. Establish a contract between the entities exchanging the information (i.e., between the transmitting entity and the receiving entity). If transmitting from the European Union (EU) to non-EU countries, rely on adequacy decisions by the European Commission. That is, limit the transfer of data to countries that offer an adequate level of protection, as determined by the European Commission.

Which of the following is the MOST ACCURATE description of the civil wrong of public disclosure of private facts?

One party makes public statements about another party's private life that are not of public concern.

Which type of trade-based money laundering scheme involves understating the quantity of goods in a shipment?

Over-shipment scheme

Ted defrauded a credit card company, so the government filed criminal charges against him for credit card fraud. In addition, the credit card company filed a civil suit against Ted to recover the stolen funds. Which of the following is MOST LIKELY taking place if these two proceedings occur at the same time?

Parallel proceedings simultaneous criminal and civil actions against the same defendant that are based upon a single set of facts.

When a defendant is found guilty of a crime, there are a variety of sanctions available to the judge or the jury. Depending on the jurisdiction and the crime, available SANCTIONS may include:

Probation Imprisonment Fines Restitution Criminal Forfeiture

In jurisdictions that allow criminal bargaining agreements, which of the following parties generally has/have the discretion to decide whether to settle charges with a bargaining agreement?

Prosecutorial Discretion: The prosecution

In common law jurisdictions with civil laws for defamation and invasion of privacy, under which cause of action can an investigator be held liable for a TRUE statement made about a suspect?

Public disclosure of private facts

United Nations' (UN) International Covenant on Civil and Political Rights (ICCPR)

Recognizing various rights of citizens. Part III of the ICCPR includes the rights of those accused of crimes.

Redemption Scheme

Redemption scheme. A person can redeem some insurance policies, such as life insurance, before the event that triggers the insurance occurs. In other words, the insurer agrees to pay the beneficiary of the policy an amount less than what the payout on a claim occurrence (in the case of life insurance, the death of the insured) would be. Using illicit assets, launderers can purchase life insurance or other redeemable contracts for themselves or their associates. If the investigator did not know that the launderer bought the insurance policy with illicit assets, the redemption payout would appear legitimate.

Which of the following is a criminal sanction that requires defendants to pay back victims for the money or property that they lost?

Restitution

Bars, restaurants, and nightclubs are favorite businesses through which to launder funds because:

Sales are generally in cash. These businesses charge relatively high prices, and customers vary widely in their purchases. Sales are generally in cash, and it is difficult to match the cost of providing food, liquor, and entertainment with the revenues they produce.

Which of the following types of law is/are created by legislatures?

Statutory law

_______________ is comprised of the basic laws of rights and duties. When people refer to something that is "against the law," they are usually referring to this type of law.

Substantive law

Probation

Suspension of an offender's sentence in return for a promise of good behavior. but the offender is generally placed under the control and guidance of a government agent (e.g., probation officer), who ensures that the conditions of probation are met. Unlike parole, probation is typically a sentence imposed prior to (and instead of) imprisonment. parole, which involves a supervised release from prison after part of a sentence has been served

If a broker who is subject to rules prohibiting securities broker-dealers from making unsuitable recommendations on investments or investment strategies recommends an investment to a client without ascertaining relevant personal and financial information about the client, the broker has violated the rules prohibiting unsuitable recommendations. T OR F

TRUE

If a person consents to a search by a government officer, but the consent is obtained by force, duress, or bribery, the consent will not constitute a valid waiver of the person's right to be free from unreasonable searches. T OR F

TRUE

If employees have a duty to cooperate during an internal investigation as part of the employer-employee relationship, the duty exists as long as what is requested from them is reasonable. T OR F

TRUE

Self-regulatory organizations (SROs) are nongovernmental entities that exercise some level of regulatory authority over the operations, standards of practice, and business conduct of an industry or profession. T OR F

TRUE

The European Union's (EU) General Data Protection Regulation (GDPR) generally requires an organization to notify all affected data subjects without undue delay if a data breach is likely to result in a high risk to their rights and freedoms. T OR F

TRUE

The UK Bribery Act has a broader application than the U.S. Foreign Corrupt Practices Act (FCPA) because, unlike the FCPA, it makes commercial bribery a crime. T OR F

TRUE

Whether a jurisdiction will enforce a foreign judgment usually depends on the laws of the two jurisdictions and whether they have an enforcement treaty. T OR F

TRUE

For a false statement to violate a law criminalizing false statements to government agencies, it need not be made directly to the government; it can be made to a third party as long as it involves a matter within the jurisdiction of a governmental department or agency. T OR F

TRUE Also, the following are general rules with regard to laws criminalizing false claims and statements to government agencies: An individual can be found guilty for making a false claim or statement even if the claim or statement is not made directly to a governmental department or agency. That is, a false claim or statement need not be made directly to the government; it can be made to a third party as long as it involves a matter within the jurisdiction of a governmental department or agency. An individual can be found guilty for making a false claim or statement even if the government was not deceived by the falsity. An individual can be found guilty for making a false claim or statement even if the government did not rely on the falsity. An individual can be found guilty for making a false claim or statement even if the government did not suffer a loss in reliance on the falsity. For an individual to be found guilty of making a false claim or statement, the claim or statement at issue must have been capable of influencing the government entity involved.

In most common law countries, a CRIMINAL APPELLATE court is generally permitted to make its own LEGAL conclusions but NOT its own FACTUAL determinations when reviewing a case. T OR F

TRUE CIVIL LAW SYSTEMS: COURTS CAN REVIEW BOTH FACT AND LAW

During the examining phase of a criminal proceeding in inquisitorial jurisdictions, a judge or magistrate reviews evidence from the investigation, collects further evidence, and creates the written evidentiary record to be used at trial. T OR F

TRUE Criminal proceedings in inquisitorial jurisdictions are typically divided into three phases: the investigative phase, the examining phase, and the trial. the case moves on to the examining phase, which is mostly conducted in writing. The judge completes a written record of the evidence and may also collect testimony and additional evidence. If the judge certifies that there is a valid case against the accused, the matter moves forward to trial.

In civil law jurisdictions, judges typically serve as the fact finder in criminal proceedings. T OR F

TRUE In civil law systems, the judge typically serves as the fact finder. Juries are less frequently used in civil law systems; they are usually reserved for serious crimes,Several civil law systems feature a mixture of judges and laypersons when juries are used. some countries (those following the German model) feature criminal trials with a panel of both professional and lay judges

The U.S. Foreign Corrupt Practices Act (FCPA) not only prohibits bribes to foreign officials, it also requires publicly traded companies subject to the FCPA's jurisdiction to keep accurate books and records and adopt internal controls to prevent improper use of corporate funds. T OR F

TRUE of the two principals of the FCPA: antibribery and accounting provisions, this is the accounting provision

In some jurisdictions, self-regulatory organizations (SROs) play an important role in the resolution of disputes arising from securities transactions. T OR F

TRUE Many SROs play an important role in the resolution of disputes arising from market transactions. For instance, SROs might provide venues for hearing customer disputes.

The ABC Company, a UK company with securities that are registered in the United States, transferred $40,000 to a Japanese public official to influence the award of lucrative overseas contracts. This act would constitute a violation of the U.S. Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act. T OR F

TRUE The U.S. Foreign Corrupt Practices Act's (FCPA) anti-bribery provisions make it unlawful for regulated parties (such as issuers, domestic concerns, and foreign nationals or businesses) to bribe foreign government officials to obtain or retain business.

Which of the following entities is recognized as the international standard-setter for securities markets?

The International Organization of Securities Commissions (IOSCO) is an international organization comprised of securities commissioners and administrators responsible for securities regulation and the administration of securities laws in their respective countries. IOSCO is recognized as the international standard-setter for securities markets, and the organization's members regulate more than 95% of the world's securities markets.

In alternative remittance systems, which of the following types of information are typically found in the ledgers that the brokers use to keep track of amounts owed to each other?

The bank account numbers of the senders and receivers The names of the receivers The names of the senders answer: NONE OF THE ABOVE

Which of the following does NOT accurately reflect the customer due diligence (CDD) procedures for financial institutions under the Financial Action Task Force (FATF) Recommendations?

The customer's business relationships and transactions should be checked ONCE to ensure that they are consistent with the customer's profile. subject to ongoing monitoring Identifying the customer and verifying the customer's identity through reliable, independent source documents or data Identifying the beneficial owner of the account or service, including the ownership and control structure of organizations Obtaining information and understanding the purpose and intended nature of the business relationships involved in the account or service Conducting ongoing due diligence on the business relationship and transactions of the customer to ensure that they are consistent with the customer's profile

To recover for intentional infliction of emotional distress, the plaintiff must prove all of the following elements:

The defendant engaged in extreme and outrageous conduct. The defendant acted intentionally or recklessly (i.e., the defendant intended that their conduct would cause severe emotional distress, or they acted recklessly with regard to whether their actions would cause severe emotional distress). The victim actually did suffer emotional or mental distress as a result of the defendant's conduct.

An action for fraud may be based on the concealment of material facts, but only if:

The defendant had a duty in the circumstances to disclose.

Which of the following is an element that must be established to prove fraud based on the concealment of material facts?

The defendant had knowledge of a material fact. The defendant had a duty to disclose the material fact. The defendant failed to disclose the material fact. The defendant acted with intent to mislead or deceive the victim(s).

Which of the following is a legal element that must be shown to prove a claim for fraudulent misrepresentation of material facts?

The defendant made a false statement (i.e., a misrepresentation of fact). The false statement was material (i.e., the statement was sufficiently important or relevant to influence decision-making). The defendant knew the representation was false. The victim relied on the misrepresentation. The victim suffered damages as a result of the misrepresentation.

Which of the following must a plaintiff show to recover for a claim of false imprisonment?

The defendant restrained the plaintiff without consent or legal justification.

Which of the following MOST ACCURATELY describes the legal elements that must be shown to prove a claim for commercial bribery?

The defendant, while acting with corrupt intent and without the victim's knowledge or consent, gave or received a thing of value that was intended to influence the recipient's action in a business decision.

Which of the following MOST ACCURATELY describes the legal elements that must be shown to prove a claim for official bribery?

The defendant, while acting with corrupt intent, gave or received a thing of value that was intended to influence an act or duty of the recipient who was (or was selected to be) a public official.

According to the FATF Recommendations, these programs should include:

The development of internal procedures and controls, including adequate screening procedures to ensure high standards in employee hiring Ongoing employee training programs on money laundering risks An independent audit function to test the effectiveness of the programs The designation of a compliance officer at the management level

Which of the following is NOT a legal element that must be shown to prove a claim for official bribery?

The government suffered damages as a result. The elements of official bribery vary by jurisdiction, but they generally include: The defendant gave or received (offered or solicited) a thing of value. The recipient was (or was selected to be) a public official. The defendant acted with corrupt intent. The defendant's scheme was designed to influence an official act or duty of the recipient.

Suppose that a party obtains a judgment against a foreign defendant in a domestic court. Which of the following accurately describes the effect of that judgment?

The judgment might be used to seize the defendant's assets in a foreign jurisdiction whose internal laws recognize the judgment The judgment might be used to seize the defendant's assets in a foreign jurisdiction that has a treaty with the domestic jurisdiction for the enforcement of judgments The judgment might be used to seize the defendant's assets located in the domestic country

Which of the following is NOT one of the three stages of a criminal proceeding in an inquisitorial jurisdiction?

The pretrial stage The pretrial phase is one of the two stages that take place in adversarial jurisdictions. Adversarial jurisdictions also have a trial phase.

Which of the following is NOT a legal element that must be shown to prove a claim for commercial bribery? AND LIST THE ELEMENTS:

The principal suffered damages as a result of the bribe. The elements of commercial bribery vary by jurisdiction, but they typically include: The defendant gave or received a thing of value. The defendant acted with corrupt intent. The defendant's scheme was designed to influence the recipient's action in a business decision. The defendant acted without the victim's knowledge or consent.

The International Organization of Securities Commissions Objectives and Principles of Securities Regulation (IOSCO Principles) is based on the following three objectives:

The protection of investors Ensuring that markets are fair, efficient, and transparent The reduction of systemic risk

Smith, a Certified Fraud Examiner (CFE), works for ABC Company, a private company. One day, a manager at ABC asks Smith to search the personal belongings of Green, an employee of ABC Company, for evidence of securities fraud. Smith seizes and searches Green's personal tablet computer. Assuming that these facts occur in a jurisdiction in which the public has the constitutional right to be free from unreasonable search and seizure by government authorities, which of the following is the MOST ACCURATE statement regarding Green's rights?

The search did not violate Green's right to be free from unreasonable search and seizure by government authorities because ABC Company is not a government authority.

Placement stage

The stage in which money laundering schemes are most often detected. first stage of the money laundering process. In this stage, the launderer introduces their illegal profits into the financial system.

Generally, for a contract, transaction, or scheme to qualify as an investment contract, four elements must be met. Which of the following is one of those four elements?

There is an investment of money or other asset. The investment is in a common enterprise. The investment was made with expectations of making a profit. The profits are to come solely from the efforts of people other than the investor.

Placement Layering Integration

Three stages of money laundering. Placement: first stage, introduces their illegal profits into the financial system. they can physically move the money to a foreign location of carry it out of the country in a suitcase and deposit it in a offshore bank. Layering: can design numerous financial transactions in a complex pattern to prevent detection. can move funds between bank accounts, transfer funds from one currency to another, or transfer between businesses or transported out the country Integration: integrated back into the economy that makes it appear to be a part of a legit bus. transaction.

The operation of alternative remittance systems involves inherently illegal activities. T OR F

Transferring funds in this manner is not necessarily illegal (although some jurisdictions require brokers to register with the government). If available, using such systems can be beneficial because the commission that the networked brokers take might be lower than a banking fee for international transactions. Additionally, the payers and payees do not need to have bank accounts to perform the transactions.

In most common law jurisdictions, courts are bound by two sources of substantive law—law from statutes (including codes or other laws passed by legislatures) and judge-made law based on previous court decisions.

True

Which of the following is a basic exception for the requirement that a police officer must obtain a search warrant before conducting a search of a person, location, or vehicle for evidence of a crime? Even if a warrant is technically required, there are a number of recognized exceptions to the warrant requirement. Two key exceptions are consent searches and evidence in plain view.

Two key exceptions are consent searches and evidence in plain view.

In collusion with an importer, an exporter bills the importer for goods at a price below their market value. The importer then sells the goods to a third party at market value. Which of the following trade-based money laundering schemes does this scenario MOST ACCURATELY describe?

Under-invoicing scheme n an under-invoicing scheme, the exporter invoices goods or services to the importer at a price below their market value. This scheme transfers value to the importer because the amount the importer pays for the goods or services is less than the amount they can be sold for on the open market. For example, Company A sends a shipment of widgets worth $200,000 to Company B but only invoices Company B for $100,000. Company B then sells the widgets on the open market for $200,000 and deposits the extra $100,000 into an account controlled by Company A.

Some of the key measures in the FATF Recommendations provide that countries should:

Use a risk-based approach when setting AML policies. Create policies that increase cooperation and coordination with other countries. Specifically criminalize money laundering and terrorist financing. Enable authorities to trace, freeze, and confiscate assets suspected in laundering and terrorist financing. Require financial institutions to keep certain records and establish AML policies, avoid correspondent banking with shell banks, and continuously monitor wire transfers.

Craig and Donna each own 40% of the shares of Indiewealth and serve on its board of directors. Georgia is also a shareholder, but she is not a member of the board of directors. Donna dies, and her son, Steven, inherits her shares of Indiewealth and replaces her on the board. Steven, however, is inattentive to Indiewealth's corporate affairs. During this time, Craig diverts corporate funds for personal use, and consequently, Indiewealth becomes insolvent. If Georgia decides to sue Steven for violating his fiduciary duties, under what theory is she likely to file the suit?

Violating the duty of care Steven failed to act as a reasonably prudent director would under similar circumstances; t

Parallel Proceedings

When both civil and criminal proceedings are instituted against a violator.

To determine if a misrepresentation in the offer or sale of any securities is material, a fraud examiner should consider which of the following?

Whether a reasonable investor would wish to know the information to make an informed decision

The civil wrong regarding intrusion into an individual's private matters (often referred to as intrusion upon seclusion) occurs when

an individual intentionally intrudes into another individual's private matters and the intrusion would be highly offensive or objectionable to a reasonable person.

Alternative remittance systems(parallel banking systems)

are methods of transferring funds from a party at one location to another party (whether domestic or foreign) without the use of formal banking institutions. These systems are characterized by the lack of direct physical or digital transfer of currency from the sender to the receiver. Instead, in the typical alternative remittance system, the payer transfers funds to a local broker who has a connection to another broker in the region where the payee is located. The latter broker then distributes the funds to the payee.

The body of judge-made law that developed from England and is still used today in many jurisdictions is called:

common law

Bargaining Agreements

defendant makes an agreement with prosecutors to plead guilty or submit a recorded confession in exchange for lesser charges or a reduced sentence. It is usually within the prosecutor's discretion as to whether to offer a bargain.

Plea bargaining agreement

defendant pleads guilty to a violation in exchange for some sort of leniency;

sentencing agreements

defendant submits a confession or pleads guilty in exchange for a reduced sentence or other lenient treatment.

Which of the following accurately describes a benefit of deferred prosecution agreements?

getting the business to reform its policies reduce the risk of illegal practices. help companies avoid indictment, trial, and conviction while providing a jurisdiction's justice system with another channel for resolving a corporate case that punishes malfeasance and effectuates changes in a company's culture.

over-invoicing scheme

he exporter invoices goods or services to the importer at a price above their market value. This scheme transfers value to the exporter because the exporter collects the amount of the higher price that was invoiced, which is more than the goods or services can be sold for on the open market. For example, Company A sends a shipment of widgets worth $100,000 to Company B but invoices Company B for $200,000. Company A then deposits the extra $100,000 into an account controlled by Company B.

Perjury is an intentional false statement given under oath on a material point at issue. The basic elements for the crime of perjury are as follows:

its int he definition- the defendant made a false statement. The defendant made the false statement while under oath. The false statement was material or relevant to the proceeding. The defendant made the statement with knowledge of its falsity.

over-shipment scheme

money launderers understate the quantity of goods that are shipped. More goods are shipped than the company invoices for. For example, Company A invoices 100,000 widgets to Company B at a price of one dollar per widget. However, Company A ships 200,000 widgets to Company B. Company B then sells the widgets on the open market for $200,000 and deposits the extra $100,000 into an account controlled by Company A. In contrast, the quantity of goods that are shipped is overstated in an under-shipment scheme. The company invoices for more goods than it actually ships.

business entity is liable for the acts of its employees if:

occur within the SCOPE of employment the employee committed each element of criminal violation with some INTENT to benefit the corporation even if those in MGMT had NO KNOWLEDGE participation in the underlying events

Digital currencies

often vulnerable to money laundering because many of them function as international person-to-person (P2P) payment systems that cross jurisdictional boundaries, creating difficulties for authorities pursuing enforcement or legal actions. Money launderers can complicate fund-tracing efforts by distributing digital currencies among many addresses—unique identifiers that represent the destination where cryptocurrency can be sent—or digital wallets in complex transactions.

Public disclosure of private facts occurs when

one party makes public statements about another party's private life that are not of public concern.

In adversarial jurisdictions, the __________ involved in litigation primarily drive the discovery process, while the _________ ensures that discovery procedures are followed correctly.

parties; judge

The adversarial process can be divided into

pretrial and trial stages

Financial Action Task Force (FATF)

releases various model policies and data to help countries combat money laundering,

a government medical board might revoke a doctor's license to practice medicine after determining that the doctor engaged in health care fraud.

suspension or revocation of a professional license

vicarious liability

the absolute liability of one party for the misconduct of another party very broad and imposes liability on a corporation even if those in management had no knowledge or participation in the underlying events.

duplicate invoicing scheme

the exporter issues more than one invoice for the same trade transaction. By issuing duplicate invoices, a money launderer can justify multiple payments for the same goods or services.

Criminal proceedings in inquisitorial jurisdictions are typically divided into three phases:

the investigative phase, the examining phase, and the trial. In the investigative stage, the public prosecutor, judge, or both (depending on the jurisdiction's process) collect documentary and tangible evidence regarding the case. The investigating party then decides whether there is sufficient evidence to submit the case for prosecution. If there is sufficient evidence, the case moves on to the examining phase, which is mostly conducted in writing. The judge completes a written record of the evidence and may also collect testimony and additional evidence. If the judge certifies that there is a valid case against the accused, the matter moves forward to trial. The discovery process occurs primarily in the first two of these three phases. The trial commences with the exhibition of the examining record before the parties and the trial judge, jury, or panel. The parties argue their case before the trial judge (or jury, if applicable).

Insurance Prepayment Scheme

the launderer makes advance payments on insurance premiums. For instance, if a health insurer allowed $10,000 in advance premium payments, then the launderer could use the illicit assets to "store" those funds. Perhaps the launderer was going to buy that health insurance anyway; now illicit assets have taken care of that bill.

to impose liability against a company for fraud:

the moving party must prove that an agent of the company made the alleged false statements with specific intent to defraud

Conspiracy & elements

two or more people agree to commit an illegal act. The essential elements that must be shown to prove a conspiracy are as follows: -The defendant entered into an agreement with at least one other person to commit an illegal act. -The defendant knew the purpose of the agreement and intentionally joined in the agreement. -At least one of the conspirators knowingly committed at least one overt act in furtherance of the conspiracy.