ACAMS Practice Questions

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Many financial institutions have ready, standing reports that can be used to possibly find money laundering and terrorist financing. Some of the reports / filtering could include: I Wire transfer reports II Monetary instrument logs III Check kiting / drawing on uncollected funds report IV Statement of changes in financial position V Significant changes report VI Cash activity aggregated over a period of time VII Retained earnings report VIII Daily cash activity just below the country's reporting threshold IX Pro forma cash report X Daily cash activity in excess of the country's reporting threshold 1. All of the above 2. All, but I, II, III and X 3. All, but IV, VII and IX 4. All, but V, VI and VIII

Marie, a compliance of cer at a nancial 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.

Money laundering red flags include: I Unusually high monthly balances in comparison to known sources of income. II Multiple deposits made under reportable thresholds. III Transactions from persons with Arabic names such as "Abu, Abdul, Mohamed, Ali, Ahmed" IV The timing of deposits. V Unusually large deposits, deposits in round numbers, or deposits in repeated amounts that are not attributable to legitimate sources of income. VI A lack of account activity. VII Checks written in unusually large amounts (in relation to the suspect's known practice). VIII Seemingly personal withdrawals made by the sole proprietor from the business account. 1. All of the above 2. All, but III, IV and VII 3. All, but I, II, V and VI 4. All, but III and VIII

Most money laundering activity that takes place utilizing the credit card industry is normally involved with which stages? 1. Placement and Layering 2. Layering and Integration 3. Placement and Integration 4. Placement, Layering and Integration

Robert is a compliance of cer for a nancial 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 lings. 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 lings, 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 lings, percentage of products and services monitored for suspicious activity.

Senior management's commitment to compliance must be shown by... I Conditioning employment for the Designated Compliance Officer to regulation compliance. II Including regulation compliance with the job description and performance evaluation of the Designated Compliance Officer. III Establishing a strong compliance plan that is fully implemented and approved by the Board. IV Insisting it be kept informed of compliance efforts, audit reports and any compliance failures, with corrective measures instituted. 1. All of the above 2. I and II. III and IV are solely the responsibility of the Designated Compliance Officer. 3. III and IV. I and II need to be applied to all of the institution's employees and contractors, not just the Designated Compliance Officer. 4. None of the above.

Some indicators of money laundering using electronic transfers of funds include: I Many small, incoming transfers of funds are received, or deposits are made using checks and money orders. Almost immediately, all or most of the transfers or deposits are wired to another city or country in a manner inconsistent with the customer's business or history. II Funds transfers that occur to or from a financial secrecy haven, or to or from a high-risk geographic location without an apparent business reason or when activity is inconsistent with the customer's business or history. III Payments or receipts with no apparent links to legitimate contracts, goods or services received. IV Large, incoming funds transfers are received on behalf of a foreign client, with little or no explicit reason. V Funds transfers are sent or received from the same person to or from different accounts. VI Funds activity is unexplained, repetitive, or shows unusual patterns. 1. All of the above 2. All, but I and II 3. All, but III and IV 4. All, but V and VI

Of the following scenarios, which two are potential red ags indicating possible suspicious activity that should be investigated further? A. A large family with multiple accounts held in the name of different family members. B. Accounts held for a business in a branch that is located on the other side of town from where the business is located. C. An individual who holds multiple accounts under the same name. D. A company that has multiple accounts, one for each of their various subsidiary businesses.

One of the steps in developing an AML program is the assessing of risk. Regulators in various countries have named which of the following types of customers as having a consideration of high risk for money laundering? I Used car dealers II Telemarketers III Diamond dealers IV Import / export companies V Industrial grade silver dealers VI Parking garage / lot operators 1. All of the above 2. All, but I and VI 3. All, but II 4. All, but V

One of the steps in developing an AML program is the assessing of risk. Which of the following banking functions are considered high risk? I Letters of Credit II Payable-Through Accounts (PTAs) III Official Bank Checks IV Private Banking V Wire Transfer Services VI Check Cashing for Non-Customers 1. All of the above 2. All, but I and III 3. All, but II and IV 4. All, but V and VI

Pete Johnson, a drug dealer, purchased a foreclosed home, in his mother's name, for $9,500 in cash. He hired a number of contractors and laborers, paying them all in cash. He sold the house to one of his front companies - a community redevelopment firm. He made some more renovations - also for cash - and sold it to a real estate investment and management company, of which he is the sole shareholder. He rents the house, along with many others, pays his taxes and draws a salary. In this scenario, Pete Johnson has performed: 1. a needed community service. 2. the placement and layering phases of money laundering. 3. the placement, layering and integration phases of money laundering. 4. the placement and integration phases of money laundering.

Possibly the most key difference between conducting interviews regarding financial crimes versus those for other crimes is the need for: 1. Evidence 2. Rapport 3. Timelines 4. Preparation

Pre-employment background checks: I can reduce turnover by verifying that the candidate has the required skills, certifications, licenses or degrees for the job. II can lower the risk of theft and embezzlement. III can reduce the chance of litigation over hiring practices. IV should not be extended to contractors. V should, at a minimum, reveal information regarding a candidate's criminal convictions. VI should be consistent for all positions within the financial institution. VII should verify the identity of the candidate. VIII can reduce the overall costs associated with recruiting, hiring and training of staff. 1. All of the above 2. All, but IV and VI 3. All, but I, VII and VIII 4. All, but II, III and V

Prepaid payment cards provide access to monetary funds that are paid in advance by the cardholder. They typically operate in the same way as a debit card and ultimately rely on access to an account. In 2006, the FATF published a report that identified which of the following potential risk factors? I Anonymous cardholders. II Cards allow access to large pooled accounts based in secrecy havens. III Anonymous funding and anonymous access to funds. IV High value limits and no limits on the number of cards individuals can acquire. V Global access to cash through ATMs. VI As internationally accepted, they are primarily subject to EU regulations. VII Substitute for bulk cash smuggling. VIII Offshore card issuers may not observe laws in all jurisdictions. 1. All of the above 2. All, but II and VI 3. All, but III and VII 4. All, but IV and VIII

A "payable-through account" (PTA) is a master correspondent account established at a domestic bank by a foreign bank. The home-country customers of the foreign bank, which is called the "master accountholder," are permitted to conduct a wide range of banking transactions through the PTA. Typically, those customers, called "sub-accountholders," can write checks, make deposits and withdrawals, and wire funds through the PTA almost as if they were direct, local customers of the US bank. The sub-accountholders, who can number in the hundreds and who rarely have direct contact with the domestic US bank, are given checks by which to draw funds on the PTA. In one US case, the regulator found that the domestic bank had failed to adequately supervise the PTAs, to implement effective internal control and operating systems concerning PTAs, to establish "know your customer" procedures for sub-accountholders and to maintain adequate staffing. The regulator ordered the bank to take 15 "affirmative action" steps before it could accept any new PTAs. Among those steps were: I Preparing a "risk assessment" about each PTA. II Obtaining sworn affidavits from each sub-accountholder stating their need and purpose for the PTA services III Obtaining a signed document from each sub-accountholder subjecting the subaccount to state and federal laws and regulations in spite of any banking secrecy laws of any other jurisdiction. IV Preparing a "PTA action plan" that examines the adequacy of its capabilities to monitor PTAs and plans to improve them. V Obtaining basic information from the master accountholder about the way it disperses funds from the PTA. VI Obtaining detailed information from the master accountholder about the way it is supervised by its home country agencies. VII Conducting periodic verification of the information provided by the foreign bank. VIII Developing a policy regarding termination of PTA accounts where information it receives is materially inaccurate or incomplete. 1. All of the above 2. All, but II and V 3. All, but I, IV and VIII 4. All, but III, VI and VII

A 300 square foot (30 square meter) pizza parlor with no delivery service deposits $40,000 to $50,000 in cash every week. In reviewing the customer's banking activity, you see total utility expenses of less than $200 each month. You suspect that this customer could be: 1. involved in trade based money laundering. 2. a front company. 3. a hawala. 4. a check casher.

A Commission Rogatoire (letter of request) will generally include which of the following? I The legal provision under which the request is made. II The information sought. III The criminal charges in the requesting country. IV The nature of the request. 1. All of the above 2. I, II and IV 3. II, III and IV 4. I, II and III

A Somali taxi driver in Minneapolis goes to a local Somali food market, pays the owner $200, and is given a code. The taxi driver later calls his mother in Mogadishu and gives her the code. The next day, she goes to a particular market there, gives the owner the code, and gets her needed supplies and the balance of the money (either left as credit at the market or taken in cash). This is an example of: 1. a front company. 2. a hawala. 3. trade based money laundering. 4. commingling.

A South American (SA) currency exchanger is aligned with the drug trade there. The drug cartel has large amounts of cash in the United States it needs back in South America. The currency exchanger finds local companies that need US dollars to pay US firms for goods that are exported from the US firms to the SA companies. The exchanger receives payment in the local currency from the SA companies, then uses the drug dollars in the exchanger's US dollar account to pay the US firms for the goods ordered by the SA companies. The US firms then ship their products to the SA companies - none the wiser that they were actually paid with drug money. The currency exchanger then takes the local currency received from the SA companies and turns those funds over to the drug cartel. So, the SA companies get their products from the US, usually at an exchange rate better than they would have gotten from their banks and likely have no knowledge that they were involved in money laundering. The US firms have made their sales and they too have no idea of their involvement. The currency exchanger / money launderer has effectively "moved" hundreds of thousands of dollars (if not more) from the US to SA and changed the dollars into the local currency in the process. This is an example of: 1. Trade Price Manipulation 2. Cuckoo Smurfing 3. Black Market Peso Exchange 4. Hawala

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 signi cance 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 nished pieces of jewelry.

A compliance of cer is looking to improve a compliance program for a nancial 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.

A compliance of cer 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 re ect 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 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 of cer do in such a situation? A. Check with the account of cer 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 customer wants to establish a sizable relationship with a nancial institution. The AML of cer 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 of cer 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.

A drug dealer takes his expensive, high-end car to a car dealer and trades it for a number of cheaper cars and a check for the difference. This is an example of what money laundering method? 1. Structuring 2. Refining 3. Placement 4. Trading Down

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 of cer has noticed unusual activity in several accounts at the branch location. What should the AML of cer do? A. Insist that the manager take a vacation, as not taking one is a red ag. 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.

A law enforcement representative calls up the compliance of cer and urgently requests information pertaining to a particular account in connection with an on-going terrorist nancing investigation. What should the compliance of cer do? A. Get permission from the Board of Directors to hand the material over to law enforcement. B. Hand the material over to law enforcement immediately because of the urgent nature of the request. C. Request the law enforcement representative provide a court order or grand jury subpoena unless the bank has already led an STR on the matter. D. Get permission from the bank's legal counsel before handing the material over to law enforcement.

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 of cer 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 ling an STR. D. Make a note of the activity, but do not le a STR in order to not risk losing a longtime customer.

A nancial 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 nancial 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 identi cation to the institution. C. Ensure that the institution has a reliable third party source that will enable veri cation of the customer. D. Allow customers to enter required information, but require all customers to come to the institution in person for veri cation.

A nancial institution's internal audit department has found an issue with an AML process involving the AML compliance of cer's efforts to conduct suf cient account monitoring on certain products offered by the institution. The AML compliance of cer should do which of the following? A. Let the independent audit function remediate the issue, as they have identi ed it and the resolution of the issue needs to be handled independently of the compliance function. B. Dispute the nding with audit, as the compliance of cer should be suf ciently 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.

ACD

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 rm 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 proficient independent audit of an institution's AML compliance program should consider, at the very least, which of the following questions? I Is the program being followed? II Is proper identification being requested from customers, and verified? III Are accounts deemed "high risk" being reviewed regularly? IV Is the correct percentage of STRs/SARs being filed? V Are STRs/SARs properly filled out and filed in a timely manner? VI Do all employees understand the program, why it is implemented and how it works? VII Are proper records being maintained by the organization? 1. All of the above 2. All, but II 3. All, but IV 4. All, but VI There is no CORRECT PERCENTAGE of STRs/SARs to be filed.

A small broker-dealer has an AML compliance program that addresses procedures for ling Suspicious Transaction Reports and includes policies, procedures and internal controls for customer identi cation, monitoring accounts and identifying money laundering red ags. 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 of cer organizes a luncheon for them where an outsider comes in and trains them. The program provides for the appointment of a compliance of cer, and once a year the compliance of cer 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 of cer. 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 written Customer Identification Program (CIP) must include all of the following except... 1. procedures for opening new accounts for existing customers. 2. procedures for determining whether and when suspicious transaction reports should be filed. 3. procedures for passing responsibility for verification to third party services, if used. 4. procedures for audit and training programs to ensure the CIP works adequately.

A young adult, who is in the country on a student visa, is depositing between $5,000 and $6,000 each week in cash. Most of the funds are then wired, the same day, to a numbered account at a small bank in Belize. As an investigator, what issues might you have with this relationship? I The funds are being wired to a numbered account. II The funds are being wired to a small bank in Belize. III The level of cash being deposited into the account of a young adult. IV The level of transactions taking place in the account of a foreign student. V The deposits are all cash and are being wired out of the country the same day. 1. All of the above 2. I, II, and V 3. I, III and IV 4. I, II, III and V All are suspicious. With the numbered account, you know nothing about the recipient of the wires. Belize is a bank secrecy haven. $5,000-$6,000 per week in cash exceeds what one would expect for a normal young adult. People on student visas often are not allowed to have a job or run a business - they are in the country solely to study, so any appearance of commerce is an issue. Finally, rapid movement of funds can be a red flag.

Provisions of the PATRIOT ACT include: I US institutions cannot maintain correspondent accounts with foreign shell banks. II Foreign banks file rigorous information disclosure duties to their US correspondents. III US institutions must obtain "certificates" from their foreign bank customers, listing the names and contact information of all of their owners. IV US institutions must review "certificate" information for completeness and accuracy. V US institutions take "reasonable steps" to ensure that correspondent accounts provided to foreign banks are not being used to provide banking services indirectly to foreign shell banks. VI US institutions maintain the name and address of an agent in the US designated to accept service of legal process for the foreign bank's records regarding the correspondent account. VII US Secretary and Attorney General have the authority to issue a summons or subpoena to any foreign bank that maintains a correspondent account in the US and to request records relating to that account - even if maintained outside US borders. VIII Foreign institutions have one year to respond to a written request from a Federal law enforcement official regarding any incomplete or inaccurate information on "certificates" or the accounts are to be terminated. 1. All of the above. 2. All, but II, VI and VIII 3. All, but IV and VII 4. All, but VIII

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 nancial institution's staff. D. The customer is not able to provide a reasonable response as to the source of the funds.

According to Basel's Customer Due Diligence for Banks, in accepting business from a non face-to-face customer, banks should apply equally effective customer identification procedures for non face-to-face customers as for those available for interview; and there must be specific and adequate measures to mitigate the higher risk. Among the examples of measures cited to mitigate risks include: I Certification of documents presented. II Independent contact with the customer by the bank. III Subject to the "fit and proper" criteria, a third party introduction. IV Fingerprints submitted from local law enforcement. V Requisition of additional documents to compliment those which are required for face-to-face customers. VI Requiring the first payment to be carried out through an account in the customer's name with another bank subject to similar customer due diligence standards. 1. All of the above 2. All, but IV 3. All, but IV and VI 4. All, but III, IV and VI

According to FATF Recommendations, countries should: I Prosecute all requests from banks in foreign countries. II Render mutual legal assistance, notwithstanding the absence of dual criminality. III Where dual criminality is required, consider the requirement satisfied for all like categorized and denominated offenses IV Where dual criminality is required, consider the requirement satisfied, regardless of category or denomination, as long as the predicate offenses are criminalized in both jurisdictions V Repatriate all stolen or ill-gained assets 1. II, IV and V 2. II and IV 3. I, III and V 4. None of the above

According to The Wolfsberg Global Anti-Money Laundering Guidelines for Private Banking, it is essential to collect and record information covering which categories in applying due diligence to client acceptance? I Estimated net worth. II Source of funds. III Purpose and reasons for opening the account. IV Level of service expected by the client. V References or other sources to corroborate reputation information where available. VI Anticipated account activity. VII Client's expectation and acceptance of fees. VIII Source of wealth. 1. All of the above 2. All, but I, II and VIII 3. All, but III, V and VI 4. All, but IV and VII

According to The Wolfsberg Trade Finance Principles, it should be recognized that the majority of world trade (approximately 80%) is now carried out under "Open Account" terms. The principles address which of the following finance trade options / products? I Open Account II Documentary Letters of Credit (LCs) III Documentary Bills for Collection (BCs) 1. All of the above 2. I and II 3. I and III 4. II and III

According to the Basel Committee, examples of Politically Exposed Persons include: I Heads of state or of government II Senior politicians, senior government and judicial officials III A-list celebrity actors and superstar athletes IV Senior military officials V Important political party officials VI Senior executives of publicly owned corporations VII Former heads of state or government (12+ years removed from power) 1. All of the above 2. All, but III and VII 3. All, but II and V 4. Only I, II and V

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 nancial or corporate transactions. D. Obtaining information associated with a judicial proceeding.

According to the FATF 40 Recommendations, "designated non- nancial 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.

According to the FATF 40 Recommendations, the threshold for identifying occasional customers at nancial institutions is: A. EURO/US$ 5,000. B. EURO/US$ 10,000. C. EURO/US$ 15,000. D. EURO/US$ 20,000.

According to the FATF Recommendations, countries should: I not refuse to execute a request for mutual legal assistance on the grounds that laws require financial institutions to maintain secrecy or confidentiality. II in an effort to avoid conflicts of jurisdictions, consider devising and applying mechanisms for determining the best venue for prosecution of defendants in the interests of justice in cases that are subject to prosecution in more than one country. III not refuse to execute a request for mutual legal assistance on the sole ground that the offense is also considered to involve fiscal matters. IV ensure that they have clear and efficient processes for the execution of mutual legal assistance requests. V not prohibit or place unreasonable or unduly restrictive conditions on the provision of mutual legal assistance. 1. All of the above 2. All, but I and II 3. All, but I and III 4. All, but IV and V

According to the Wolfsberg Anti-Money Laundering Principles for Correspondent Banking, which of the following risk indicators will an institution consider when applying risk-based due diligence to new and existing correspondent banking customers? I The Correspondent Banking Client's Business and Customer Base II The Correspondent Banking Client's Domicile III The Correspondent Banking Client's Ownership and Management Base 1. All of the above 2. I and II 3. I and III 4. II and III

After collecting and reviewing all of the appropriate documentation in preparation for the ling of an STR, what should the compliance of cer do with the documentation? A. The of cer should organize the documentation and attach it to the led STR. B. The of cer should maintain the documentation in a separate le in case law enforcement asks for the supporting documentation for the STR. C. The of cer should hand the documentation over to the outside counsel of the bank in order to bring a civil suit against the customer. D. The of cer should use the documentation as a basis for closing the account.

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 of cer recommend? A. The of cer should confer with bank counsel as to whether to request subpoenas from law enforcement. B. The of cer should deny permission for any such interviews without the creation of a grand jury or a formal court ordered investigation. C. The of cer should only allow those employees who are comfortable be interviewed by law enforcement. D. The of cer should allow the employees to be interviewed only if they are given immunity by law enforcement.

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 of cer 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 ful lled 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.

Among the Principles for Information Exchange Between Financial Intelligence Units for Money Laundering Cases, issued by the Egmont Group on June 13, 2001, we nd 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 speci c problems in case of NCCT countries. C. Information exchanged between FIUs may be used only for the speci c 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.

Among the warning signs that employees of a financial institution should watch for when pinpointing suspicious activity with an individual customer are... I Does the customer shy away from offering personal information on applications? II Does the customer provide identification that cannot be easily verified? III Does the customer appear unkempt? IV Does the customer cancel or alter the transaction when told a report needs to be filed on it? V Is the customer of an ethnicity not normally seen in that branch? VI Is the customer wary of providing identification? VII Does the customer make transactions just below reporting thresholds? 1. All of the above 2. All, but I, IV and VII 3. All, but III and V 4. All, but II and VI

An AML compliance of cer 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 le 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.

An AML compliance of cer 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 of cer 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 nance some imports from a new supplier. D. Sam conducted large cash transactions for his import/ export business.

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 of cer 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.

An adequate AML compliance manual should contain which of these basic elements? I Overview of laws and regulations that the program is based upon. II How to deal with suspicious activity. III Procedures to follow when reporting suspicious activity. IV The endorsement of management. V How to deal with regulatory and law enforcement requests. VI What constitutes reportable or suspicious activity. 1. All of the above 2. All, but I and II 3. All, but III and IV 4. All, but V and VI

An alternative remittance system (ARS) operator in the Middle East buys private or commercial transfers to Europe. The launderer, having large amounts of cash from the sale of drugs in Europe, gets the names, account numbers and amounts of those expecting payment via the ARS. He has the dirty cash deposited into these accounts - in smaller amounts and at multiple branches if needed to prevent any government reporting. The legitimate funds, originally introduced into the system for transfer to Europe, are instead sent onto the drug cartel. This is an example of: 1. "Bank account" smurfing 2. Black Market Peso Exchange 3. Hawala 4. Cuckoo smurfing

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 nancial instruments have been deposited in a suspicious manner over the last four months, leading him to le 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.

An institution should follow which steps in conducting an internal investigation? I Seek information, finding out everything possible about an outside investigation. II Structure internal management and reporting of the investigation, using as few non-legal personnel as possible and trying to make only oral reports. III Inform the target of the investigation that they will need to retain independent counsel of their own. IV Inform your regulator. V Select outside counsel and determine their role in the investigation, should inside counsel not be adequate. 1. All of the above 2. All, but II and IV 3. All, but III 4. All, but I and V

An institution that offers mortgages notices the national nancial intelligence unit has issued several advisories about reporting mortgage fraud. A compliance of cer has noticed that the level of mortgage fraud reporting has increased as a result of conducting post-account opening source of funds veri cation. The FIU has noted that loans with unveri ed income have been noted as a signi cant concern. What should the AML compliance of cer do? A. Pass along the FIU advisories to the mortgage unit and let them address the issue as they see t. 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 veri cation 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.

An internal investigation might be appropriate... I When an institution suspects, prior to a government investigation, that wrongdoing might have occurred. II When the government has commenced an investigation. 1. I and II 2. I only (it is too late for II) 3. I (but only if one employee has accused another of malfeasance) and II 4. II only (but only on advise of legal counsel)

As an investigator in a bank's Investigation's Unit, you review the following transactions within the accounts of your customer - a single store front, registered Money Services Business (MSB) located in the Pacific Northwest. They offer all of the services that MSBs do - check cashing, money transmission, selling money orders, etc. Which observations, if any, would require inclusion in a Suspicious Activity Report? I On seven sequential days, you see a check from one individual to another. These checks are consecutively numbered and for the same dollar amount - $9,642.86. It would appear that the payee brought these checks to the MSB for cashing. II There is a $10,000 check from a business to a publicly-traded corporate entity. The check has been endorsed as "John Smith, Corporate Counsel for XYZ Corporation, in collection of an outstanding debt." The check appears to have then been endorsed by John Smith. XYZ Corporation's main offices are in Los Angeles. It would seem that the check was cashed at the MSB. III Each day you observe a number of money orders, some sequential, some not. In each case, they bear issuance dates on the day before they are in the MSB's deposit. They all appear to have very similar handwriting and possibly made out to the same person (names are relatively illegible). All of the money orders have one of two addresses in New York City for the purchaser and your investigation does show that they were all issued in New York City. Each money order is for $500 or $1,000 and total $9,500-$10,000 each day. You do not know whether the money orders were cashed or whether the funds were transmitted elsewhere. 1. All of the above 2. I and II 3. I and III 4. None of the above. It is the MSB's responsibility to report the actions of their customers.

As part of their role in ghting money laundering, nancial institutions should: A. Designate a compliance of cer. 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.

At a minimum, what information should be obtained at account opening for Customer Identification relating to business entities such as corporations and partnerships? I The original or certified copy of the Certificate of Incorporation and Memorandum and Articles of Association. II The nature and purpose of the business, and its legitimacy. III The resolution of the Board of Directors to open an account and identification of those who have authority to operate the account. IV The name of the business entity. V Some form of official identification number, if available (such as a tax identification number). VI The business entity's principal place of operation. VII The contact people's telephone and fax numbers. VIII The business entity's mailing address. 1. All of the above 2. All, but I and III 3. All, but II, IV and V 4. All, but VI, VII and VIII

Based on the Financial Action Task Force's "working definition" of money laundering, which of the following would be a good example of it? I Robert Jones, a dentist who is going through a nasty divorce, continues to sell off the couple's assets and is putting the cash into safe deposit boxes, is buying diamonds with proceeds from his practice (for easy transport), and has opened an account in an offshore bank secrecy haven. II William Smith, a notary, has assisted an individual, who told him his millions were of "dubious origin," purchase several large pieces of property using several shelf corporations to hide the true ownership and obscure the trail of the money. III Mohamed al-Mohammed, a Muslim cleric, has raised a lot of money in contributions from his followers and has sent these funds, some by wire and some by hawala, to several humanitarian organizations in several Middle Eastern countries. 1. I and III 2. Only II 3. Only III 4. None of the above Explanation: I - This would be a civil issue, dealing with the divorce, but it is NOT money laundering. II - Since the notary knows the funds are of "dubious origin" - which could / should be interpreted as illicit - and he has assisted in hiding the trail of funds and the beneficial owner of the funds, this would be an example of money laundering. III - There is no money laundering involved in this scenario. However, if the humanitarian organizations were fronts for terrorist activities - NOT a fact presented here - then this would be an example of terrorist financing.

Based on the section as it originally appears in the USA PATRIOT ACT, the purpose of Section 314(a) is to... 1. encourage financial institutions to share, more openly, information relating to criminal behavior with regulatory authorities and law enforcement. 2. encourage law enforcement to seek more information from regulatory authorities and financial institutions based on credible evidence which leads to knowledge or reasonable suspicion of engagement in illicit activities. 3. encourage regulatory and law enforcement authorities to share with and inquire of financial institutions information regarding individuals, entities, and organizations engaged in, or reasonably suspected based on credible evidence, of engaging in terrorist acts or money laundering activities. 4. encourage financial institutions to share with regulatory and law enforcement authorities information regarding individuals, entities, and organizations engaged in, or reasonably suspected based on credible evidence, of engaging in terrorist acts or money laundering activities.

Converting the proceeds of crime into another form. Conducting transactions designed to disguise the origins and ownership of the funds. Can involve numerous transfers. Probably the heart of the money laundering process. These statements best describe: 1. Placement 2. Layering 3. Integration 4. Refining

Cuckoo smurfing is, characteristically, most similar to: 1. the Black Market Peso Exchange. 2. a hawala. 3. commingling. 4. "bank account" smurfing.

Dealers and auctioneers in art and antiques can reduce their money laundering risks by: I Being aware of money laundering regulations. II Appointing a senior staff member to whom employees can address suspicious activities. III Requiring all art and antique vendors to provide names and addresses. IV Forbidding acceptance of cash payments unless there is a strong and reputable reason to do so. V Being suspicious of any item whose asking price is significantly lower than its market price. VI Requiring vendors to sign and date a form stating that they are authorized to sell the item and that it is not stolen or otherwise illegally obtained. VII Looking critically when a customer asks to pay in cash. VIII If there is reason to believe an item might be stolen, immediately contacting The Art Loss Register (www.artloss.com). IX Verifying the identities and addresses of new vendors and customers. 1. All of the above. 2. All, but IV, VI and VIII 3. All, but II, III and IX 4. All, but I, V and VII

Directive 2001/97/EC broadened the... I definition of prohibited transactions to include those using numbered accounts. II definition of financial institutions to include insurance companies, money transmitters, currency exchangers and investment firms. III definition of money laundering and the associated predicate offenses. IV coverage of the Directive to include real estate agents, external auditors, accountants and tax advisors, and lawyers when planning or executing real estate transactions or money movement on behalf of their clients. V coverage of the Directive to include art dealers, auctioneers and other dealers in high-value goods when payment in cash exceeds 5,000 Euros. 1. All, but V 2. All, but II 3. All, but IV 4. All, but I

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 smur ng. D. Loan manipulation.

Due to hard lessons learned in recent years, which of the following would be appropriate in guarding against "the enemy within?" I Periodic fingerprint checks for employees in sensitive positions. II Extensive background check when an employee is being considered for promotion to a high-level position. III Background screenings for prospective hires, especially criminal checks. IV Quarterly urine / drug screens. V Credit checks VI Checking against terrorist "watch lists." VII Verification of Social Security Number, education and employment. 1. All of the above 2. All, but I 3. All, but IV 4. All, but II and VI Correct

During the investigation of a case, we often turn to the resources of the Internet. Sometimes a company's website is no longer available, or there may be some question about the company's evolution. To find older versions of the company's website, we go to http://www.archive.org, which is more commonly known as the... 1. Time Tunnel 2. Internet Microscope 3. Time Portal 4. Wayback Machine

Elements of a sound KYC program include: I Staff training. II Investigation and examination of unusual customer or account activity. III Definition and acceptance of customer in context of institution's products and services. IV Customer education. V Assessment and grading of risks that the customer or account presents. VI Full identification and verification of the destination of funds. VII Appropriate internal and external reporting. VIII Documentation of findings. IX Appropriate refining of all cash transactions. X Full identification and verification of customer and business entities. XI Development of transaction and activity profiles of the customer's anticipated activity. XII Account and transaction monitoring based on the risks presented. XIII Auditing of the KYC program. XIV Full identification and verification of sources of funds and wealth. 1. All, but III, VIII and XIII 2. All, but IV, VI and IX 3. All, but I, X and XIV 4. All, but V, VII and XI

Establishing compliance as a key responsibility for every employee of a nancial 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 of cer personally tell associates of their responsibilities.

Examples of Ponzi schemes include: I The prime bank guaranty program. II The Amway program. III High yield promises. IV Bank debenture program. V Multi-level marketing program. VI Roll program. 1. All of the above 2. All, but II and V 3. All, but I and VI 4. All, but III and IV

IBC stands for "International Business Company" - a term used to define a variety of offshore corporate structures, also called exempt companies. Which of the following are common characteristics of IBCs? I Dedication to business use outside the incorporating jurisdiction. II Rapid formation and low cost. III Moderate to medium taxation. IV Limited powers. V Minimal filing and reporting requirements. 1. All of the above 2. I, III and V 3. II, III and IV 4. I, II and V

Illicit profits are effectively laundered overseas and are then moved to the accounts of a seemingly clean foreign corporation. The funds are then loaned to a domestic firm, covertly controlled by the criminal enterprise. The domestic company uses the funds to purchase domestic commercial properties. This is an example of: 1. a violation of the Foreign Corrupt Practices Act. 2. trade-based money laundering. 3. the loanback method of money laundering. 4. a hawala.

In 1999, a US Senate report noted which of the following as vulnerabilities of the private banking sector? I Secrecy jurisdictions - many private banking departments conducted business in secrecy jurisdictions, some which imposed such rigorous criminal sanctions they even restricted internal bank oversight. II Culture of lax AML controls - corporate cultures were indifferent or resistant to due diligence and account monitoring. III Complicity - many private bankers knowingly participated or aided and abetted their clients in illicit money movement and tax evasion. IV Powerful clients - many clients could exert substantial political or economic clout, sometimes directly influencing a bank's operations. V Culture of secrecy - private banks routinely created shell companies and trusts to hide the true identity of the beneficial owner, even using code names for the clients. VI Private bankers as client advocates - private bankers were encouraged to develop such close personal ties that warning signs would be missed or dismissed. 1. All of the above 2. All, but I 3. All, but III 4. All, but IV and V

In anti-money laundering terminology a "red ag" 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 ag of countries not cooperative in ghting money laundering and terrorist nancing. D. An indicator that a customer is listed on an economic sanctions list.

ABC

In conducting a criminal investigation, what are three things that the law enforcement investigator should do? A. The criminal investigator should make every effort to "follow the money" in the transaction to determine where it came from and where it went. B. The criminal investigator should identify the potential unlawful activity involved, referred in some countries as the "speci ed unlawful activity." C. The criminal investigator should document the underlying activity and transactions potentially involved in the transaction. D. The criminal investigator should research all similar cases that have occurred in recent history in the immediate area.

ABC

In conducting a criminal investigation, what are three things that the law enforcement investigators should do? A. Conduct computer-based searches on the individuals and entities involved. B. Review any previously led STRs on the individuals and entities involved. C. Analyze the nancial transactions and activity of the subject and try to determine if there is anything that is high-risk or is out of the ordinary. D. Perform a review of the individual's or entity's credit history and borrowing record.

In considering the best representation in a money laundering matter, which of the following are minimum qualification considerations? I Credibility and experience with prosecutors and other government officials. II Substantial corporate and governmental representation, including State and Federal Supreme Court appearances. III Comprehensive understanding of domestic and international legal and banking requirements and business practices. IV Substantial and successful criminal representation. V Substantial experience trying and defending complex corporate cases involving money laundering. 1. All of the above 2. II, III and IV 3. I, III and V 4. II, IV and V

In determining what risks a customer poses, which consideration should NOT be a major factor? A) Where the customer resides or where the business is headquartered. B) What is the size of your financial institution. C) What occupation or type of business does the customer derive their income from. D) What are the customer's ethnic heritage, sexual orientation and political beliefs. The correct answer would be "D." The customer's ethnic heritage, sexual orientation and political beliefs are more discriminatory factors, and while they may help frame the context of certain transactions, they should not be a major factor in assessing risk. The size of your financial institution is a critical element in determining the level of sensitivity to risks for certain customers. Analysis questions require one to synthesize information, arrive at solutions and/or evaluate the usefulness of solutions. One needs to distinguish between facts and assumptions and to put various knowledge parts together to form a new knowledge component or solution to a problem. While this is also an important part of being a professional, it comprises only about 23% of the exam.

In determining what risks your customers pose, which consideration should NOT be a major factor? 1. Where the customer resides or where the business is headquartered. 2. What is the size of your financial institution. 3. What occupation or type of business does the customer derive their income from. 4. What are the customer's ethnic heritage, sexual orientation and political beliefs. The customer's ethnic heritage, sexual orientation and political beliefs are more discriminatory factors, and while they may help frame the context of certain transactions, they should not be a major factor in assessing risk. The size of your financial institution is a critical element in determining the level of sensitivity to risks for certain customers.

In general, the three phases of money laundering are said to be: Placement: A. Structuring and manipulation. B. Layering and integration. C. Layering and smur ng. D. Integration and in ltration.

In maintaining and auditing your compliance program, each formal assessment should consider which of the following? I Are employees being trained adequately? II Are you finding a sufficient number of criminals and money launderers? III Do the internal compliance procedures match those required in your jurisdiction? IV Are employees using the procedures as required? V Are you streamlining your functions? VI Are the proper procedures in place? 1. All of the above 2. All, but I and IV 3. All, but II and V 4. All, but III and VI

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 con scated because of privacy laws. D. Employees of nancial institution who intentionally ignore clear signs of money laundering may be punished with imprisonment and/or nes.

In the running of a compliance program, governments around the world believe that the risk-based approach is preferable to a more prescriptive approach in the area of anti-money laundering and terrorist financing because: I It is more flexible. Money laundering and terrorist financing risk varies across jurisdictions, customers, products and delivery channels, and over time. II It is more effective. Companies are better equipped than legislators to effectively assess and mitigate the particular money laundering and terrorist financing risks they face. III It costs less and the major international banks pushed the US and EU governments for it. IV It is more proportionate. A risk-based approach promotes a common sense and intelligent approach to fighting money laundering and terrorist financing, rather than a "check the box" approach. V It allows firms to minimize the adverse impact of anti-money laundering procedures on their legitimate customers. 1. All of the above. 2. All, but I and II 3. All, but III 4. All, but IV and V

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 nancial 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 nancial capability.

In which of the following manners are many financial institutions presently using technology to assist in achieving their money laundering goals? I Large transaction cash reporting II Background checks III Incident reporting databases IV Case management tracking systems V Record-keeping VI Profiling system VII Corporate "hot file" 1. All of the above 2. All, but III, V and VI 3. All, but I, IV and VII 4. All, but II, VI and VII

In which of the following ways can money laundering occur in travel agencies? I Sending a tour group to a country and making an offsetting payment into a foreign entity's US or other account while instructing the accountholder to cover the cost of the group's trip. II Arranging complex payment or invoicing for customers, thereby structuring cash payments to avoid currency reporting. III Purchasing an expensive airline ticket for another person, who then asks for a refund. 1. All of the above 2. I and II 3. I and III 4. II and III

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.

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.

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.

Joe, the compliance of cer 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.

John is an AML compliance of cer at a nancial 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 nds a match with a customer in a jurisdiction with inadequate AML controls?

Law enforcement agencies may request information from financial institutions to obtain evidence. These requests can come in what forms and for what purposes? I Summons II Writ of habeas corpus III Subpoena IV Search warrant V To determine the ultimate beneficial owner VI To apply for a court order to freeze an account VII To support prosecution 1. All of the above 2. All, but VI 3. All, but IV 4. All, but II

Some money launderers use the "Sell Something for Nothing" version of Trade Price Manipulation. For example, a US front company has $1 million to move to a South American cartel front company. The US firm buys 200 Rolex watches at $5,000 each (paying $1,000,000). They export the 200 watches to the South American company, selling them for $5 each ($1,000 total). Upon receipt, the South American firm sells the watches for $5,000 each - effectively moving $1,000,000 to the cartel for $1,000. If the US front company banked with your financial institution, which of the following financial observations might lead you to believe there is suspicious activity in the account? I The balance in the account regularly builds to over $1 million, then a large purchase depletes the account, starting the cycle all over again. II Despite seeing a check to a firm for exporting documentation and freight, there is not a subsequent large deposit, which one might expect after an export shipment. III If your institution had the account from near the inception of the business, where was the purchase of the initial inventory that lead to the first $1 million in deposits? IV Deposits to the account are always made in cash, normally in the $6,000-$9,000 range and at a variety of your financial institution's branches. V If the large purchases are for about $1 million, and the total deposits made before the next purchase is about $1 million, then sales approximate the cost of goods sold. This would not allow for any operating expenses, taxes, or profits - something virtually every company must have. 1. All of the above 2. All, but I and V 3. All, but II and III 4. All, but IV

Stored-value products may have which of the following money laundering vulnerabilities? I Absence of ownership records II The lack of reasonable transaction value caps. III Ease with which the card can be destroyed and / or its magnetically stored data can be erased. IV The lack of reasonable transactional time period limits. V There is a cash card issued with the Marine Corps emblem. 1. All of the above 2. All, but I and III 3. All, but III and V 4. All, but II and IV

Supplying apparent legitimacy to illicit wealth by the re-entry into the economy of what appear to be normal business funds. This is best a definition of: 1. Placement 2. Layering 3. Integration 4. Refining

Susan works as a senior Money Laundering Reporting Of cer 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 nancial 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.

Suzy is an AML compliance of cer 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 systems.

The "Kingston Declaration on Money Laundering" recommended that nations enact laws... I defining money laundering based on the model laws issued by the Financial Action Task Force (FATF). II permitting forfeiture in all cases following conviction. III permitting courts to decide that "all property obtained during a prescribed period of time by a person convicted of drug trafficking has been derived from such criminal activity." IV enabling the identification, tracing and evaluation of property subject to seizure. V defining money laundering based on the model laws of the Organization of American States (OAS). VI defining "criminal proceeds" to include "all funds, directly generated or derived from the criminal enterprise and any associated front companies." VII permitting the freezing of assets by the appropriate administrative body without the allowance for judicial challenges. 1. II, III, IV and V 2. I, III, VI and VII 3. II, IV, V and VI 4. I, IV, VI and VII

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 con scated; 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 nancial institutions and intermediaries would report currency transactions without indicating a minimum xed amount. D. Not approve the establishment or accept the continued operation of shell banks.

The FATF Recommendations state that countries should... I recognize money laundering as an extraditable offense. II view money laundering extradition requests on the same magnitude as other serious crimes in their country. III consider simplifying the extradition process. IV criminalize money laundering and, in substantial enough cases, consider making it a capital offense. V cooperate with each other to ensure the efficiency of prosecutorial actions in money laundering cases. 1. All of the above 2. All, but IV 3. All, but I and III 4. All, but II and V

The FATF Recommendations state that, related to Politically Exposed Persons (PEPs), financial institutions should, in addition to performing normal due diligence measures, do which of the following? I Conduct enhanced ongoing monitoring of the business relationship. II Obtain senior management approval for establishing business relationships with such customers. III Take reasonable measures to establish the source of wealth and sources of funds. IV Have appropriate risk management systems to determine if the customer is a Politically Exposed Person (PEP). 1. All of the above 2. All, but II 3. All, but I 4. All, but IV

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.

The Internet provides tremendous opportunities for the criminal element. Which of the following have been identified as such uses? I To operate legitimate businesses, by selling merchandise, art work and publications to fund their operations and spread their influence. II To set-up accounts using online businesses. III To invest in securities and utilize online trading. IV To show their successes and highlight the failures of law enforcement. V To provide local and long distance links amongst particular clubs and individual members. VI To communicate and forward e-mails. VII To gather intelligence for operations. VIII To get their message out IX To use as a tool against authorities - posting photos of investigators / undercover operators, publishing informants' names, identifying information and police techniques. X To move funds and acquire assets. XI To gain widespread acceptance through charity work. XII To arrange for suppliers and logistics for legal and illegal operations. 1. All of the above 2. All, but IV, V, VII and VIII 3. All, but VI, IX, X and XII 4. All, but I, II, III and XI

The Internet-based information network IMoLIN serves as a clearinghouse of money laundering information for the benefit of national and international anti-money laundering agencies. Which of the following are features of IMoLIN? I Reference data - research and analysis, bibliography, conventions, legal instruments and model laws. II Current events - current news of recent AML initiatives. III AMLID - the Anti-Money Laundering International Database, which is a restricted access compendium and analysis of national AML laws and regulations, as well as information on national contact and authorities. IV Calendar of events - chronological listing of training events, conferences, seminars, workshops, and other meetings in the AML field. V Country page - including full text of anti-money laundering legislation where available, and links to national FIUs. 1. All of the above 2. All, but I and V 3. All, but III 4. All, but II and IV

The Invisible Web is basically any information on the Internet that cannot be found directly using a general web search engine, such as Google or Yahoo. It is still out there, it might just be part of a searchable database. Which of the following would most likely be a record on the Invisible Web? 1. An article on the Invisible Web 2. A parking ticket for Cynthia Jenkins in New Mexico 3. Results of the 1920 World Series 4. Recent obituaries of noteworthy people

The Organization for Economic Cooperation and Development (OECD) maintains three lists indicating the level of commitment jurisdictions have in relation to implementing the internationally agreed to tax standard (IATS). While there are no longer any jurisdictions that have not committed to the IATS, there are a number on the "gray list" - committed to the IATS but have not substantially implemented. At 20 October 2009, which jurisdictions were on the gray list, but had made no agreements? Belize Chile Costa Rica Guatemala Liberia Montserrat Nauru Niue Panama Philippines St Lucia Vanuatu 1. All of the above 2. All, but Chile and Montserrat 3. All, but Liberia and Niue 4. All, but Panama and Vanuatu Correct Web address for the Progress Report was: http://www.oecd.org/dataoecd/50/0/43606256.pdf

The Reporting Of cer of a nancial 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, pro le, history and le a Suspicious Transaction Report for only those customers where a suspicion of money laundering exists. D. Report only what the Reporting Of cer's superior agrees should be reported.

The Third EU Money Laundering Directive of 2005 applies to which of the following rms? A. Auditors, estate agents based in the EU. B. U.S. Financial institutions covered by the USA Patriot Act. C. Shell rms inside and outside the EU. D. EU based high value good dealers who deal in cash of 10,000 Euro or more.

The US Treasury Department of Foreign Asset Control... 1. does not have the power to impose penalties. 2. issues a series of periodically updated lists which prohibit transactions and require the blocking of assets of persons and organizations that are found on those lists. 3. can seize any assets, anywhere, based on general suspicion. 4. updates their Specially Designated and blocked list semi-annually which leads to the blocking and seizing of assets of those entities identified on the list.

The USA PATRIOT Act was passed in: A) 1970 B) 1985 C) 2001 D) 2007

The act of introducing illicit proceeds into the financial system is called: 1. Placement 2. Layering 3. Integration 4. Refining

The compliance of cer is trying to put together a set of procedures for handling the decision of whether or not to le an STR. What should the compliance of cer recommend to be part of these procedures? A. The of cer should recommend that the decision as to whether or not to le an STR be centralized to ensure uniformity. B. The of cer should recommend de-centralizing the decision in order to speed up the process and to ensure that the decision is made closest to where the activity occurred. C. The of cer should recommend that STRs only be led once they have been authorized by the Board of Directors of the bank. D. The of cer should recommend that STRs only be led once they have received a thorough legal review.

The compliance of cer is trying to put together a set of procedures for handling the documentation that supports the ling of an STR. What should the compliance of cer recommend to be part of these procedures? A. Make a list of all relevant documents available to all bank of cers 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 led STR to ensure that law enforcement has ready access to the documents. D. Rely on the ve year record retention policy that the bank has to be able to retrieve all relevant documents when requested.

The compliance of cer is trying to put together a set of procedures for handling the review of potentially suspicious transactions. What should the compliance of cer recommend be part of these procedures? A. That the institution rely primarily on the back of ce 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 ags in each area of the bank to cover all possible suspicious activity.

The compliance of cer reads about a large potential fraud case in the morning newspaper. When the of cer gets to the bank, the of cer uncovers the fact that the potential fraud case involves an important customer of the bank. After doing an internal investigation, the of cer determines that there is no suspicious activity in the customer's accounts. What should the of cer do next? A. The of cer should notify the Board of Directors of the nature and results of the internal investigation. B. The of cer should document the nature and results of the internal investigation and keep the documentation in an appropriate le. C. The of cer should le an STR in case that the customer's accounts could assist law enforcement in its formal criminal investigation. D. The of cer should le an STR in order to justify the time spent on the internal investigation and to not be second guessed by the bank examiners.

The following is an example of what laundering method? For a foreign money broker, an individual opens a number of checking accounts in the individual's local country, using both real and fictitious names. Identification papers may be provided by the broker and may include those of dead people. The funds used to open the accounts are provided by the broker, as are all subsequently deposited funds. All deposits are normally made in low four-figure amounts to avoid detection. Sometimes, some living expenses of the individual may be paid from an account to further deflect any suspicions. Once the checks arrive for the new accounts, the individual signs them all and ships them off to the foreign money broker. The broker then regularly draws checks off these accounts to pay for goods imported to his brokerage customers. With potentially hundreds of these accounts at the broker's disposal, he can effectively launder, and move cross-border, millions and millions of dollars per year. 1. Trade Price Manipulation 2. Black Market Peso Exchange 3. Bank Account Smurfing 4. Broker Manipulation

The general procedures for obtaining evidence through a Mutual Legal Assistance Treaty are listed below. Put them in their proper order. I The investigator asks the central authority for removal of the evidence to his country. II Local witnesses may need to attend court hearings in the requesting country. III The central authority of the requesting country sends a letter of request to the central authority of the local country. IV An investigator from the requesting country visits the country where the information is sought and accompanies the local investigator during visits when statements are taken. V The central authority sends the evidence to the requesting central authority, thereby satisfying the request. VI The central authority that received the request sends it to a local financial investigator who may make the necessary appointments and find out if the information that has been requested is available. 1. III - VI - IV - II - I - V 2. III - VI - IV - I - V - II 3. III - VI - I - IV - V - II 4. III - VI - II - IV - I - V

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 nancial intelligence unit of the country it operates in.

The process of exchanging smaller denomination bills for larger ones is called: 1. Placement 2. Layering 3. Integration 4. Refining

The tactic in which individuals make multiple deposits in small quantities to avoid detection is called: A. Paralleling. B. Integration. C. Investing. D. Structuring.

The three stages of money laundering are: A) Layering, Placement, Refining B) Placement, Refining, Integration C) Refining. Integration, Layering D) Integration, Layering, Placement

There are many online banking products and features that make them attractive to the money launderer. Among them are which of the following? I The speed, security and anonymity of Internet payment systems. I Lack of clear policies for record retention in the e-commerce environment. III The volume of electronic payments in e-space. IV The cross-border nature of the Internet. V Money laundering laws rely on a geographic presence for jurisdiction. VI In e-space, there are no clear supervisory, regulatory, enforcement or prosecutorial powers. VII Difficulties in Know Your Customer (KYC) / Enhanced Due Diligence (EDD), customer and third-party identification. 1. All of the above. 2. All, but II and IV 3. All, but I and III 4. All, but VI and VII

To assure that your AML compliance program provides adequate training, what types of training and to which groups should it be available? I Investigation and monitoring staff II Senior management, including the Board of Directors III Remedially, as needed IV Audit and compliance staff V New hire training VI Only to actual employees of the institution VII Routine refresher training VIII New hires 1. All of the above 2. All, but II and III 3. All, but V and VIII 4. All, but VI Correct Training should be provided to ALL employees of the institution, the Board of Directors, AND all contractors.

Tom works as a compliance of cer 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 le, 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.

Trust and company service providers (TCSP) include those persons and entities that, on a professional basis, participate in the creation, administration and management of corporate vehicles. They refer to any person or business that provides which of the following services to third parties? I Acting as a formation agent of legal persons. II Acting as (or arranging for another person to act as) a director or secretary for a company, a partner of a partnership, or a similar position in relation to other legal persons. III Providing a registered office, business address or accommodation, correspondence or administrative address for a company, a partnership or other legal person or arrangement. IV Acting as a formation agent for natural persons based in tax secrecy havens. V Acting as (or arranging for another person to act as) a nominee shareholder for another person. 1. All of the above 2. All, but II 3. All, but IV 4. All, but V

Typically, when should a nancial institution le an STR? A. Whenever they are preparing to close an account. B. Whenever they detect unusual or suspicious transactions. C. Only when they are able to establish the existence of a criminal violation. D. Only when the Board of Directors approves the ling of the STR.

United Nations Security Council Resolution 1373 contains strong provisions to "prevent and suppress the financing of terrorist acts" by requiring states to... I freeze "without delay" funds, assets, or economic resources of persons who commit, attempt to commit, or facilitate terrorist acts and entities owned or controlled by them. II deny safe haven to those who finance, plan, support, or commit terrorist acts, or provide safe haven (to those who do). III make committing, aiding, or supporting those involved in terrorist acts, a capital crime, including state-sponsored terrorism. IV refrain from providing any form of support to entities or personas involved in terrorism. V criminalize the use or collection of funds intended, or known to be intended, for terrorism. VI prohibit nationals or persons within their territories, from aiding or providing any aid to persons or entities involved in terrorism. 1. All of the above 2. All, but VI 3. All, but II 4. All, but III

What are some of the acceptable forms of verifying the Customer Identification information obtained at account opening for an individual? I Confirming the permanent address by a utility bill, tax assessment, bank statement, or a letter from a public official in the name of the accountholder. II Confirming the validity of official documentation through certification by an authorized person, such as an embassy official. III Confirming the veracity of the information obtained through a notarized affidavit sworn to by the accountholder. IV Confirming the date of birth from an official document (eg, birth certificate, driver's license, passport, etc). V Contacting the customer by telephone, letter or e-mail to confirm information provided (a disconnected phone, returned letter, or incorrect e-mail address should warrant further investigation). VI Confirming the customer's driver's license against the Social Security Death Index. 1. All of the above 2. All, but I and II 3. All, but III and VI 4. All, but IV and V

What are some of the major changes that have resulted from the FATF 40 Recommendations and their subsequent revisions? I Prohibited the use of bearer shares. II Expanded the definition of "financial community." III Coverage of all non-financial businesses and professions. IV Stronger standard for predicate offenses. V Improved the transparency of natural persons. VI Increased scrutiny for financially exposed corporations. VII Application of AML provisions to gatekeepers. VIII Enhanced due diligence for correspondent banking. 1. All of the above 2. I, II, and III 3. IV, VII and VIII 4. V, VI and VII

What are the key goals of any good AML compliance program? I To train all pertinent employees on the legal and internal procedures that must be followed. II To educate customers to reduce incidents of suspicious activity. III To train employees on the dangers they and the business face. IV To report suspicious activity to the proper authorities if the law allows. V To train employees on how, based on their job responsibilities, they may encounter specified money laundering risks. VI To prevent money laundering and terrorist financing. VII To prevent tax evasion and assist in the location of assets. 1. All of the above 2. All, but I and V 3. All, but III and IV 4. All, but II and VII Correct While we may report on situations of potential tax evasion, we must remember that tax evasion tends to be a crime of the future. Since we normally don't know what will be filed on the customer's tax return, we are speculating at best. Also, while a subpoena may be issued in order for taxing authorities to search for assets, it is not the goal of any AML program to perform such a search.

ACD

What are the three classic gateways for international cooperation and sharing? A. Mutual Legal Assistance Treaties (MLATs). B. Law enforcement use grand jury subpoenas. C. Exchange of information between Financial Intelligence Units (FIUs). D. Exchange of information between supervisory agencies.

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.

What are the three key goals of an anti-money laundering program? A. Prevent and detect money laundering and terrorist nancing; 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 nancing. D. Reduce regulatory burdens; help the court systems in convicting money launderers; protect the institution

ABD

What are three developments that should cause a nancial institution to conduct an internal investigation? A. When the institution receives a grand jury subpoena with regard to transactions that have occurred within several accounts at the institution. B. When several employees of the institution alert senior management or the compliance of cer that there are some suspicious transactions within an account. C. When the institution's auditor identi es various shortcomings in the institution's AML policies and procedures. D. When a small local business starts engaging in overseas activity involving numerous, unexplained wire transfers.

ABC

What are three factors a prosecutor should take into consideration in deciding whether to bring criminal charges against a nancial 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.

ABC

What are three of the recommended ways to respond to a law enforcement inquiry? A. Cooperate with the law enforcement inquiry as much as possible. B. Respond to all formal requests for information as promptly and thoroughly as possible, unless there is a valid objection that can and should be made. C. Ensure that all communication, written and oral, is funneled through a centralized place. D. Guard against unwarranted publicity by resisting all inquiries and requests whenever possible.

BCD

What are three possible red ags indicating suspicious or unusual activity that might warrant an investigation and the ling of an STR? A. The opening of a new account without a local telephone number or utility bill available. B. Unusually high monthly balances in comparison to known sources of income. C. High level of monetary transactions through an account during the course of a month, but low beginning and ending balances. D. Multiple cash deposits made just under the reporting threshold.

ABC

What are three practical tips in interviewing employees with regard to an unusual or suspicious transaction that they have witnessed? A. One should interview the employees as soon after the occurrence as possible in order to ensure that their memories are fresh. B. One should try to put the employees at ease during the interview and start with relatively easy, non- controversial, questions before getting into more sensitive matters. C. One should use open-ended questions for the employees in order to ensure that the questions do not dictate what the expected answer is. D. One should control the interview as much as possible in order to attempt to resolve the matter quickly and uncover the wrongdoer.

What characteristics make charities and non-profit organizations especially vulnerable to misuse for terrorist financing? I Are often cash intensive. II Can spring up and operate solely in response to a particular natural disaster. III Enjoy the public trust. IV Are often ethnic and related to a particular religious belief. V Often are subject to little or no regulation or have few obstacles to their creation. VI May have a global presence, often exactly in or near those regions that are most exposed to terrorist activity. VII All tend to have considerable reserves of funds. 1. All of the above 2. All, but I, III and V 3. All, but II and VI 4. All, but IV and VII

What could happen to compliance of cers 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 nes, negative reputation to their employer. C. Nothing. Only the nancial institution's legal counsel will be responsible for complying with laws. D. Nothing. Only the staff directly handling transactions have to worry.

What do the following all have in common? Asia Pacific Bank European Merchant Bank First National Security Trust London Overseas Bank Ltd World Bank Ltd 1. They are all members of the Wolfsberg Group 2. They are all foreign respondent banks 3. They all have seats on the Basel Committee 4. They are all unlicensed "banks"

What five countries spearheaded the 1992 gathering of Caribbean nations that resulted in the "Kingston Declaration on Money Laundering?" 1. Jamaica, Aruba, The British Virgin Islands, Guyana and Bermuda. 2. The Bahamas, St Kitts & Nevis, Costa Rica, Belize and Panama. 3. Canada, France, the United Kingdom, the Netherlands, and the United States. 4. The Republic of Haiti, Honduras, the Cayman Islands, Nicaragua and Antigua & Barbuda.

What is Proliferation Finance? 1. The use of front companies in a particular marketplace, underwriting their legitimate operations with illicit proceeds. This gives the front companies an unfair advantage in the marketplace. This edge is used to drive the legitimate competitors from business and allows the launderer to set up more of the same front companies (proliferation). More and more controlled front companies allow for greater funds to be laundered. 2. The building (proliferation) of such a complex and intricate network of interrelated companies, usually at least 50 or more, that it becomes impossible to discern the beneficial ownership of any of the entities. Money that goes into this labyrinth emerges far removed from any suspicions. 3. It refers to the current explosion (proliferation) in the use of e-cash and mobile phone devices in money laundering and terrorist financing. 4. Any money use or movement that contributes to a program working toward the proliferation of weapons of mass destruction (WMD). As such a program is considered a form of terrorist financing, it falls under the AML / CTF laws.

What is an advantage of having an outside counsel perform an internal investigation on behalf of the nancial institution? A. The outside counsel can bring an impartial and legal perspective to the review. B. The outside counsel can intimidate the employees into confessing complicity with the wrongdoers. C. The outside counsel can create an attorney-client privilege not just vis à vis the bank, but also in connection with each employee. D. The outside counsel will be able to convince the prosecutors not to take any action against the institution.

What is considered a bene cial 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.

What is the Right of Reciprocity in the eld of international cooperation against money laundering? A. The legal principle that nancial institutions that have referred customers to other nancial institutions can share information about these customers with the other institutions. B. A rule of the Basel Committee allowing properly regulated nancial 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.

What is the best step a financial institution can take to reduce its exposure to trade-base money laundering, specifically trade price manipulation? 1. Nothing. It is nearly impossible to detect and prevent. 2. Require the customer to transact all of their foreign business with you. Having all of their foreign trade will better enable you to spot suspicious transactions. 3. Require the customer to provide copies of all customs documents related to each foreign transaction. 4. Inquire of and require the customer's management to attest to the validity and legality of all foreign transactions. Correct In normal trade, pricing discrepancies are only a civil matter. In trade price manipulation, remember that both parties are complicit in the act. No matter how egregious the discrepancy may be, no court action will ever take place. However, lying on customs documents is a criminal action, and most money launderers do not want to expose themselves to that needless risk. Therefore, customs documents can give the financial institution a clearer understanding of the transaction that took place and the product(s) involved.

What is the de nition 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 speci ed unlawful activity that is committed through concentration accounts deceiving customers that are not directly related to the account.

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.

What is willful blindness de ned as? A. Failing to le a Suspicious Transaction Report for dealing with companies or nancial institutions from offshore tax havens. B. Not following customer identi cation procedures as set out in the institution's procedures. C. Deliberate avoidance of knowledge of the facts or ignoring obvious money laundering red ags. 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.

What measures might limit the vulnerabilities to money laundering of new payment systems? I Limiting the functions and capacity of smart cards (including maximum value and turnover limits, as well as number of smart cards per customer). II Linking new payment technology to financial institutions and bank accounts. III Requiring standard recordkeeping procedures for these systems to enable examination. IV Documentation and seizure of relevant records by investigating authorities. V Establishing international standards for these measures. 1. All of the above 2. All, but I 3. All, but IV 4. All, but V

What potential red flags are in the following insurance transaction? What additional steps would a prudent insurer have taken? The policyholder is from the United States. He purchases a single premium life insurance policy in Monaco. Claiming he had won big at local casino, he convinces the agent to take the payment in cash. The agent then pays the premium from his own account. During the "cooling off" period, the policyholder cancels the policy and asks for the refund to be sent to his residence in the United States. The policy had a $250,000 face value. I The policyholder purchased the policy in a foreign country, despite similar policies being easily available "back home." II The insurer and agent failed to determine what ties the policyholder had to Monaco (business, second residence, etc). III The agent accepted a cash payment and hid this fact from the insurer. IV The policy had a face value of $250,000. V The insurer did not run the policyholder's name against known "hotlists" and restricted persons lists. VI No reason appears to have been obtained when the policy was surrendered. VII No one at the insurer appears to have viewed this as a potentially suspicious transaction and / or failed to notify their Money Laundering Reporting Officer (MLRO). 1. All of the above 2. All, but VI and VII 3. All, but IV 4. All, but I and II Correct There is nothing presented that would make the face value of the policy suspicious. It is a fairly common amount.

What should be the financial institution's mindset be in regard to government investigations? 1. "We do no wrong here, so there is nothing to be concerned about." 2. "If one of our employees does something that causes a government investigation, we will cooperate with the government and the employee is on their own." 3. "We recognize that investigations can and do occur, so we should have detailed plans in place in case one ever comes our way." 4. "Since we have fairly strict company policies to prevent any such investigations, we'll deal with one if, and when, it occurs."

ABD

What three steps should be taken when there is a criminal investigation that is targeting the bank itself? A. The senior management and the Board of Directors should be noti ed and kept apprised of the progress of the investigation. B. The bank should consider retaining experienced outside counsel to assist the bank in responding to the investigation. C. The bank should immediately go to the media and explain why it has done nothing wrong. D. The relevant employees of the bank should be noti ed of the existence of the investigation and should be given instructions as to what to do and how to act.

When a bank receives a subpoena for information about a speci c account, what two steps should the compliance of cer take? A. The compliance of cer should ensure that the staff research and collect all documents responsive to the subpoena. B. The compliance of cer should insist on law enforcement explaining why the subpoena was issued and what law enforcement is looking for. C. The compliance of cer should ensure that an independent review is conducted of the account and the transactions in the account. D. The compliance of cer should only comply with the subpoena after rst getting approval from the bank's legal counsel.

When a nancial institution is responding to a formal criminal investigation by a law enforcement agency, what is the primary purpose of requiring information going through a central point within the institution? A. To be able to ensure that nothing damaging to the nancial institution gets released. B. To ensure that responses are timely and thorough and that privileged material is not inadvertently handed over. C. To ensure that the employees of the institution do not divulge information that would breach the privacy rights of customers. D. To ensure that there is one person who can adequately and thoroughly apprise the Board of Directors of the progress of the investigation.

BCD

When a nancial institution is served with a search warrant by a law enforcement agency, what are three things that the employees of the institution should do? A. They should not release any documents until the institution's outside counsel arrives on the scene. B. They should cooperate fully with the law enforcement agents and remain calm and polite. C. They should try to obtain an inventory of the materials that the law enforcement agents take from the institution. D. They should review the warrant to determine its scope.

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 pro tability of the product. C. The projected pro tability 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 pro tability of the product.

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.

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.

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.

When is it appropriate for an institution to freeze a suspected launderer's funds? 1. Whenever it deems the risk is too high. 2. At the close of business on the last day of a given month. 3. Generally, only upon receipt of a lawfully executed order, following that country's laws and regulations. 4. In order to be effective, the institution should wait until there is at least $200,000 in the account(s).

When served with a search warrant, which of the following steps are NOT appropriate? I Call a criminal lawyer immediately. II Review the warrant as soon as possible. III Ask for AND obtain a copy of the warrant. IV Write down the names and agency affiliations of the lead agents who conducted the search. V Answer any questions posed by the law enforcement agents. VI Remain present while the agents record an inventory of all items they have seized and intend to remove from the premises. VII Call your appropriate legal counsel immediately. VIII Ask for a copy of the affidavit that supports the search warrant. IX Ask for a copy of the agents' inventory. X Keep track of the records taken by the agents. XI For identification, take photographs of each agent involved in the search. 1. III, VI and X 2. I, II and VIII 3. IV, VII and IX 4. I, V and XI

ABD

When should a compliance of cer recommend that a nancial institution conduct an internal investigation? Choose three out of four. A. When there is a suspicion that an employee is conspiring with a long-term customer to launder money through the bank. B. When a series of customers open separate accounts at different branches, but with the same contact information. C. When the bank's regulatory agency gives the bank low marks with regard to its AML compliance efforts. D. When a long term employee decides to take only intermittent vacation days, but not two weeks in a row, per bank policy.

When should a financial institution consider retaining an experienced outside counsel to assist it? A. Whenever the institution receives a subpoena from any law enforcement agency. B. When the institution itself appears to be the target of a criminal investigation. C. When law enforcement appears to be focused on the accounts of a very good and long-standing customer of the institution. D. When the banking agencies criticize the adequacy of the institution's AML monitoring procedures.

When should a nancial institution consider retaining an experienced outside counsel to assist it? A. Whenever the institution receives a subpoena from any law enforcement agency. B. When the institution itself appears to be the target of a criminal investigation. C. When law enforcement appears to be focused on the accounts of a very good and long-standing customer of the institution. D. When the banking agencies criticize the adequacy of the institution's AML monitoring procedures.

When your financial institution is facing an investigation, which of the following is true about media relations? I Public perception is immaterial compared to the true merits of the allegations. II Your competitors will be envious of all the free media exposure your financial institution receives. III Management should grant frequent press interviews, stressing that no problems exist and nothing wrong was done. IV The Public Relations department should craft a careful plan to guide the firm through the investigation. V The phrase "No Comment" should be avoided as it gives the perception of guilt. 1. All of the above 2. III, IV and V 3. I, II and III 4. None of the above

Which comment about the following quote about the USA PATRIOT ACT is true? If the USA PATRIOT ACT of 2001 is to be known for one thing it is the great expansion it gave to the extraterritorial reach of the United States money laundering and forfeiture laws. These laws are unique among their world counterparts for their far-reaching applicability and coercive provisions beyond national borders. The PATRIOT ACT also amended the Bank Secrecy Act more than 50 times. It addresses such areas as: private banking and correspondent accounts of foreign persons, special measures the Treasury Department can take concerning foreign-based situations, and the prohibition of US correspondent accounts for foreign shell banks. It also seeks to achieve important policy objectives, including fighting foreign official corruption, policing the operations of multinational financial institutions, and limiting the activities of offshore banking centers. It can even confiscate assets of non-US citizens who have never even set foot inside the US borders. 1. It is all true. 2. The PATRIOT ACT did not amend the Bank Secrecy Act. 3. The Treasury Department cannot take any specials measures concerning foreign-based situations. 4. It only impacts US citizens or persons who have been within its borders.

Which of the following are FATF-style regional bodies? I Asia /Pacific Group on Money Laundering (APG) II Caribbean Financial Action Task Force (C-FATF) III Council of Europe Select Committee of Experts on the Evaluation of Anti-Money Laundering Measures (MONEYVAL) IV Eurasian Group (EAG) V Financial Action Task Force of the Russian Federated States (FATF-RFS) VI Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) VII Financial Action Task Force on Money Laundering in South America (GAFISUD) VIII Middle East and North Africa Financial Action Task Force (MENAFATF) 1. All of the above 2. All, but IV 3. All, but VIII 4. All, but V

Which of the following are among the higher risks associated with Correspondent Banking? I The foreign respondent bank could be passing those services along to foreign shell banks. II The foreign respondent bank may be offering pass-through account (PTA) services to some of their major multi-national, publicly-traded corporate customers. III The foreign respondent bank may be offering pass-through account (PTA) services to a number of key political and military figures in a foreign country. 1. All of the above 2. I and III 3. II and III 4. I and II

Which of the following are banned in all countries due to their lack of information regarding the beneficial owner? I Bearer bonds II Bearer shares III Bearer checks 1. All of the above 2. I and II 3. III only 4. None of the above

Which of the following are concerns related to securities products? I Offsetting transactions II Commission-based compensation III Pump and dump operations IV Easy to trade, even globally 1. All of the above 2. I and II only 3. III and IV only 4. None of the above

Which of the following are true about SHELF COMPANIES? I They are ready made "paper companies" that have fulfilled all requirements for legal registration. II They may be bought by anyone to bypass the lengthy registration of incorporation process. III Shelf companies are formed and sold, often by accounting or law firms. IV According to FATF, banks are not permitted to deal with shelf companies. V Shelf companies are not permitted in secrecy and tax havens. VI They are also referred to as shell companies or blank check companies. VII They can be a money launderer's tool because they can reference when they were formed, but that may have been years before it was sold and taken "off the shelf." VIII Shelf companies are banned in the United States. 1. All of the above 2. All, but I, II and VI 3. All, but III and VII 4. All, but IV, V and VIII

Which of the following are true regarding the European Union's 3rd Directive: I Those subject to the Directive must report suspicions of money laundering or terrorist financing to the public authorities, usually the national financial intelligence unit. II The Directive's scope is applicable to all providers of goods, when payments are made in cash in excess of 15,000 Euros. III Those subject to the Directive must take supporting measures, such as ensuring proper training of their personnel and the establishment of appropriate internal preventative policies and procedures. IV The Directive is applicable to the financial sector as well as lawyers, notaries, accountants, real estate agents, casinos, trust and company service providers. V Those subject to the Directive must identify and verify the identity of their customer and of its beneficial owner, and to monitor their business relationship with the customer. 1. All of the above 2. All, but II and III 3. All, but I and II 4. All, but IV and V

Which of the following are valid considerations when selecting outside counsel to assist with a government investigation of your financial institution? I Outside counsel demonstrates the ability and temperament to guide you in making decisions, treats you and your staff with respect, and supports you as the head of the legal function. II Outside counsel takes control of the situation and makes all decisions based upon their legal experience. III Avoid counsel with big egos. You tend to want to have the case settled - not dragged through the courts while the attorneys are only concerned about their egos and reputations. IV If facing imminent criminal prosecution, opt for an experienced litigator. Otherwise, consider seasoned bank lawyers with money laundering case experience. V Former career prosecutors may be useful and effective, but former high-ranking federal prosecutors are best. VI Career defense counsel may have personal prejudices against federal prosecutors, which can lead to more combative confrontations, rather than opportunities for a desired settlement. 1. All, but II and III 2. All, but II and V 3. All, but I and VI 4. All, but I and V

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 nancial institutions using concentration accounts.

Which of the following can be components of Enhanced Due Diligence? I Description of business operations; anticipated volume of sales; list of major customers and suppliers; and financial statements. II Domicile (location of business); customer's primary trade area; and proximity of customer's residence, place of employment and place of business. III Customer's name; address; identification number (SSN/TIN); and date of birth IV Anticipated volume of currency & wires; banking references; international transactions; and explanations of changes in account activity. V Purpose of the account; beneficial owners; occupation / type of business; and source of funds versus source of wealth. 1. All of the above 2. All, but I 3. All, but III 4. None of the above. EDD is simply the verification of them all

Which of the following can be social or economic consequences of money laundering? I Increased crime and corruption. II Legitimate businesses are hurt from competition with front companies. III Weakened financial institutions. IV Economic distortion and instability. V Impaired ability to make sound decisions by governments regarding economic policy. VI Loss of tax revenues. VII Increased law enforcement and health care expenditures. VIII Increased risk to privatization efforts. IX Reputational risk to countries. X Increased risk to stability of governments due to flight capital. 1. All of the above 2. All, but IV, V, IX and X 3. All, but I, VI, VII and IX 4. All, but II, III, VI and VIII

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 elds 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.

Which of the following have been issued by the Wolfsberg Group? I AML Principles on Private Banking II Statement on the Suppression of the Financing of Terrorism III AML Principles for Correspondent Banking IV AML Principles for Real Estate Transactions V Statement Against Corruption VI AML Principles for Securities Brokers VII Trade Finance Principles VIII AML Principles for the Insurance Industry IX Guidance on a Risk Based Approach for Managing Money Laundering Risks 1. All of the above 2. All, but I, II and III 3. All, but IV, VI and VIII 4. All, but V, VII and IX

Which of the following is NOT a key difference between money laundering (ML) and terrorist financing (TF)? 1. In ML, the money route is circular, with the funds eventually back with the person who generated it; in TF, the route is linear, with the goal to get the funds to the people who will carry out the terrorist action. 2. In ML, the motivation is purely for profit; in TF, the motivation tends to be ideological. 3. In ML, the funds tend to have originated from some predicate crime; in TF, they do not. 4. In ML, the detection focus tends to be on suspicious transactions; in TF, the tendency is a focus on suspicious relationships.

Which of the following is NOT true about the Joint Money Laundering Steering Group? 1. It has published a series of AML Guidance Notes that apply to different sectors of the financial community. 2. Since prepared by their own trade association, these Guidance Notes have a mandatory application to all members of the trade groups. 3. It is a group of leading UK Trade Associations in the financial services industry. 4. The group's goals are to promote good practices in countering money laundering and to give practical assistance in interpreting the UK Money Laundering Regulations and laws.

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.

Which of the following is the most dif cult regulatory challenge facing a foreign nancial 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.

Which of the following is the most true regarding interviews with tangential (non-suspect and non-potential suspect) interviewees? 1. All tangential interviewees should be asked the same information gathering questions, as you never know what they can add to your investigation. 2. All tangential interviews should be conducted right after lunch - at a time when people tend to be most sated and relaxed. 3. All tangential interviews should take place in either your office or that of the corporate counsel. 4. All tangential interviews need to be recorded, using either audio, video or stenographic methods.

Which of the following is true about FIUs? I FIUs offer an official gateway for communication between themselves and other bodies set up to fight money laundering and other financial crimes. II Financial Investigative Units are authorized to investigate money laundering crimes. III Financial Intelligence Units share information amongst themselves informally in the context of investigations, usually on the basis of memoranda of understanding. IV Financial Intelligence Units have the task of receiving and analyzing suspicious transaction reports and maintaining close links with police and customs officials. V This gateway is not normally used for obtaining evidence, but for obtaining intelligence that might lead to evidence. 1. All of the above 2. All, but I and V 3. All, but II 4. All, but III and IV

Which of the following is true about Memoranda of Understanding (MOUs)? I Like the MLAT, it is binding upon the governments. II Reflects an understanding of the signing supervisory authorities' policies. III Gateway to evidence. IV It is not a treaty and is usually not binding upon the governments. V Shared widely among government entities. VI Information communicated is sometimes for supervisory purposes only. VII May be valuable based on the reach of the regulatory authority. 1. I, III, V and VI 2. II, IV, VI and VII 3. I, II, VI and VII 4. III, IV, V and VII

Which of the following is true about cash deposits made by third parties? I Institutions should be on the lookout for cash deposits made by third parties at branches other than where the customer's account is held. II It could be the indicator of laundering and therefore should be subject to suspicious activity reporting. III Law enforcement will need information on the depositor, so institutions should seek to identify cash deposits made by third parties and retain surveillance footage. IV Institutions should be on the lookout for cash deposits made by third parties that are structured. V The existence of these deposits is not necessarily grounds to reconsider the customer's relationship. 1. All of the above 2. All, but I and IV 3. All, but II and V 4. All, but III

Which of the following is true about communications made through the supervisory channel? I The ability to share information is often defined in the legal framework under which the supervisory agency operates, but it may also be supported by a MLAT. II This channel may be especially valuable where other types of entities, such as securities or trading firms, are within the jurisdiction of a specific regulatory authority because it could share information on customer transactions throughout a larger segment of the financial market. III Information communicated through the supervisory gateway is communicated for supervisory purposes only, and may therefore not ordinarily be used as evidence or be widely shared among government entities. 1. I and II 2. I and II 3. I and III 4. II and III

Which of the following is true about orders to restrain or freeze accounts or assets? 1. Orders to restrain, freeze or block funds or other assets are common in all jurisdictions as are the methods to obtain and issue those orders. 2. Generally, the order is obtained based on a sworn affidavit, which is sometimes included with the order. 3. Generally, law enforcement will issue a restraining order to freeze an account or prevent assets from being withdrawn or moved. 4. Upon request of the financial institution, law enforcement must offer a copy of the sworn affidavit, which will reveal more clues to the financial institution as to why they are being petitioned for the customer's information.

Which of the following scenarios involving ATM usage could most likely be an indication of possible suspicious activity? I Customer makes the maximum daily cash withdrawal at 11:58 pm, then another one 5 minutes later. II The customer, the sole person tied to the account,, comes into the branch and deposits $200 cash 10:18 am. That same amount is withdrawn from an ATM located 600 miles 5 minutes later. III Customer is a consultant with direct deposit of payroll and expenses. During a regular month, there appear to be ATM withdrawals from the account in several cities. IV Customer is a real estate agent with multiple ATM cards for the account. Each card makes at least one cash deposit every calendar day at ATMs spread throughout a number of states. 1. All of the above 2. I and III 3. II and IV 4. None of the above

Which of the following scenarios will most likely require the filing of a Suspicious Activity Report (SAR) with the national FIU? I A dance nightclub located near a Midwestern community college, makes $9,000 cash deposits every day. The deposited items are solely $50 and $100 bills. II A check casher makes $9,000 cash deposits every day. The deposited items are primarily $10 and $20 bills. III A grocery store makes multiple ATM deposits each day at around the same time. The deposits are a combination of checks and cash - mostly smaller bills. In total, there are usually 400-500 items deposited each day. IV A busy around the clock gas station / convenience store, located at a major intersection, makes three deposits each calendar day, utilizing tellers, night drops and ATMs. The total cash deposited on weekdays often comes near the currency reporting threshold. Monday deposits require the bank to file Currency Transaction Reports due to the aggregation of the weekend deposits - however, this is done in the back office without the customer's knowledge. 1. All of the above 2. I and II 3. I, III and IV 4. III and IV

ABC

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 speci c 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.

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 led. D. Reference to a memorandum to the company's corporate management relating to budgetary and similar concerns.

Which of the following should be considered when obtaining Customer Identification information? I A permanent street address should be acquired. A mailing address, such as a Post Office Box, is not sufficient. II The person's occupation should be acquired when inquiring about employer. The type of work a person does changes much less frequently than who pays them for it. III The number of persons they are financially responsible for should be acquired. This better frames the financial transactions that are seen throughout the account. 1. All of the above 2. I and II 3. II and III 4. I and III

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.

Which of the following statements is true? Correspondent banking is MOST vulnerable to money laundering when the correspondent account is: A. Maintained for foreign nancial 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 quali ed intermediary.

Which of the following would be considered "willful blindness?" I A teller takes daily cash deposits of $9,950 from different people, all going into the same individual's account. All the bills are crumpled smaller denominations ($1s, $5s, $10s and $20s). The teller feels that this is not suspicious and does not inform the manager of the situation. II An individual comes in weekly and requests the manager wire $45,000 to an account in an offshore secrecy haven. The manager sees that 4-5 deposits are made to the account every day at a variety of branches, including their own. A check with the tellers indicates that the deposits they see are all cash. The total daily deposits do not seem to exceed the currency reporting threshold, so no CTRs have been filed. The manager does not want to jeopardize the account and does not inform the institution's Compliance Department. III An individual comes into a branch in southern California and opens a small business account for a real estate sales company. They state they are a local 3 person shop. After about six months, the bank's internal FIU does a review and sees a large volume of deposits are being made at various branches around New York City, Chicago, Atlanta, Dallas, and Seattle. Reports indicate that the deposits are all cash and range from $1,500 to $9,500 daily. In aggregation, Currency Transaction Reports are being filed by the bank for the customer. The investigator also sees that the majority of funds are being withdrawn from a branch in Miami. Since CTRs are being filed, the investigator decides not to file a Suspicious Activity Report (SAR). 1. All of the above 2. I and II 3. I and III 4. II and III All of these situations are highly suspicious (and likely drug related). Failure to inform proper management, and the subsequent failure to file a SAR, could be deemed - at best - "willful blindness" on the part of the individuals and even the institution.

Which of the following would be considered structuring? I An inventor receives a monthly royalty check from a known corporation for $200,000. You see in the account activity, large quarterly checks for income tax estimates. Once or twice each week, his wife goes to the branch and withdraws $10,000 in cash. II A busy gas station / convenience store makes at least three deposits each day. The cash never exceeds the $10,000 reporting threshold. The store owner has shown you his insurance policy which limits his losses for cash at $10,000. III A local liquor store cashes checks and paychecks for customers. The third party checks in his deposits support his level of cash withdrawal activity. His regular pattern is to deposit more than $10,000 in third party checks and promptly withdraw $10,000 in cash. Once or twice a month, usually on a Friday, he comes in and performs a second set of deposits / withdrawals. His liquor store has a history of being robbed several times a year. 1. All of the above 2. I only 3. II only 4. III only

Which of the following would be examples of structuring / smurfing? I A group of young college women are recruited each weekend to go to casinos. They are given $10,000 each in cash. They may gamble and keep any winnings, but they must return on Monday - each with casino checks totaling $10,000. II A very large group of migrant workers are recruited. Once or twice a week, each is given $300 cash. Each worker is given a name of a person in an appropriate country to whom they are to send $275, using a money transmitter. The remaining $25, they are to send to their own families. III A runner is recruited to picks up deposits from a number of small, local businesses and make deposits to their accounts at different banks around town. He makes these runs twice a day. IV A group of retired people are recruited, each is to make six deposits of $5,000 cash daily. They are given account names, numbers and bank locations in which to make the deposits. Each person received $60 per day for their services. 1. All of the above 2. All, but III 3. All, but I 4. None of the above, as none of the people had knowledge as to whether the currency they were handling was illicit.

Which of the following would be satisfactory elements of an Anti-Money Laundering Program? I - A CAMS certified employee in the Investigations Unit writes up a few policies and procedures and posts them on the department bulletin board. II - Shortly after attaining their CAMS certification, the individual provides AML training to the Investigations Unit. III - The CAMS certified individual routinely reviews the work of the Investigations Unit. IV - The CAMS certified individual assumes the responsibility of a compliance watchdog. A) All of the above would be satisfactory B) II and IV would be satisfactory C) I and III would be satisfactory D) None of the above would be satisfactory The correct answer would be "D - None of the above would be satisfactory." I - The AML program must be approved by the Board of Directors. II - An AML training program is required of all personnel (and contractors). III - The review of the bank's Financial Intelligence Department, as part of the audit of the AML program, must be performed by an independent (and knowledgeable) party. IV - The Compliance Officer must be appointed by the Board of Directors (or upper management with the Board's approval).

Which of the following would be satisfactory elements of an Anti-Money Laundering Program? I A CAMS certified employee in the Investigations Unit writes up a few policies and procedures and posts them on the department bulletin board. II Shortly after attaining their CAMS certification, the individual provides AML training to the Investigations Unit. III The CAMS certified individual routinely reviews the work of the Investigations Unit. IV The CAMS certified individual assumes the responsibility of a compliance watchdog. 1. All of the above would be satisfactory 2. II and IV would be satisfactory 3. I and III would be satisfactory 4. None of the above would be satisfactory

Which of the following would be true in an AML program? I The Board has the ultimate responsibility of the program, must openly voice their commitment to the program, and ensure their commitment flows through the entire organization. II The Board should be responsible for the oversight of the program. III The Board should routinely converse with regulators and auditors about their commitment to the program, their understanding of the law, and knowledge of how their institution operates. IV The Board is responsible for ensuring that corrective action is taken for all program shortcomings identified by regulator or auditor examination. 1. All of the above 2. I and II 3. III and IV 4. None of the above. They are all the responsibility of the Designated Compliance Officer.

Which statement is true regarding the risk of Politically Exposed Persons (PEPs)? A. PEPs provide access to third parties on whom the nancial institution has not conducted suf cient due diligence. B. PEPs have signi cantly 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.

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 smur ng is a signi cant money laundering technique identi ed 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.

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 bene cial owner. D. Can be abused by launderers by using the accounts they set up for them for the placement and layering of funds.

BCD

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.

ABD

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 rms. 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.

ACD

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 de nitions included in the Second Directive, including the de nition of a politically exposed person. C. Repeats the main customer due diligence requirements of the rst and second Directives, but adds more detail to the requirements by, for example, including a speci c requirement to identify the bene cial owner if one exists and includes ongoing monitoring requirements. D. Requires rms to apply the customer due diligence requirements to existing customers at appropriate times on a risk sensitive basis.

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.

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.

While the laws are loosening across the globe as to how much information law enforcement agencies have access to in their money laundering investigations, there are still some restrictions in offshore havens which have strict bank secrecy laws. However, financial institutions... 1. must not provide financial records if their corporate charter does not permit it. 2. must provide financial records if they are legally compelled to do so by subpoena, summons, or court order. 3. must provide financial records only if their corporate charter and local laws permit it. 4. must provide financial records if the requests originate from such jurisdictions as the US or the EU, whose far-reaching laws supercede any local laws.

While there is no exhaustive list of suspicious activity indicators, one might turn to which of the following publications for guidance? I The Wolfsberg Principles II The US FinCEN's SAR Activity Review III The Egmont Group's FIUs in Action IV The Basel Committee's Case Study Review V The FATF Typologies 1. All of the above 2. II, IV and V 3. II, III and V 4. I, III and IV

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 veri cation.

BCD

With regard to exchanges of information between FIUs of different countries, what are three controlling principles? A. That sharing between FIUs be permitted only if the central banks are also a party to the sharing. B. That the sharing of information should be done as freely as possible on the basis of reciprocity. C. That the sharing should be on the basis of requests and also spontaneously. D. That differences in the de nition of offenses should not impede the free exchange of information.

Within a financial institution, a typical suspicious / unusual activity investigation and reporting process will include: I Employee training on detecting suspicious activity. II Procedures to identify potential suspicious activity. III Documentation of the suspicious activity reporting decision, whether or not filed with the authorities. IV A formal evaluation of each instance, and continuation, of unusual activity. V Procedures to periodically notify senior management or the board of directors of suspicious activity filings. 1. All of the above 2. All, but I 3. All, but II and III 4. All, but IV and V

Your manuals and training sessions for your compliance program should, at the least, include all of the following pertinent topics EXCEPT: I How to work with law enforcement or regulatory staff on an investigation. II How to respond to customers who want to circumvent reporting requirements. III How to react when faced with a suspicious client or transaction. IV How to complete a STR/SAR form. V Definitions and examples of money laundering and terrorist financing. VI Relevant money laundering laws and regulations. VII How to pass information along to Egmont and proper federal prosecutors. VIII Verifying customer identification IX How many terrorists and criminals your investigations have caught so far. 1. I, II and VI 2. VII and IX 3. III, IV, V and VIII 4. None of the above - all should be included.

n disclosing progress or findings of a comprehensive internal investigation to the board of directors, outside counsel should highly consider using _______________, as it has clear advantages. It arises from counsel's notes, which contain not only facts, but also counsel's intermingled opinions, thoughts and legal advise. As opinion work product, it will thus be virtually assured of protection from disclosure to third parties, and will have a strong supplemental level of immunity, in addition to the attorney-client privilege that will normally attach to it. 1. a written report 2. an oral report 3. an e-mail message 4. a voice-mail message

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