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Which of the following is the most common method of laundering money through a legal money services business?

Purchasing structured money instruments.
Smuggling bulk-cash.
Transferring funds through Payable Through Accounts (PTAs)
Exchanging Colombian pesos on the black market.

In general, the three phases of money laundering are said to be: Placement:

Structuring and manipulation.
Layering and integration
Layering and smurfing
Integration and infiltration.

Which statement is true?

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
Cuckoo smurfing is a significant money laundering technique identified by the Financial Action Task Force, where a form of structuring uses nested accounts with shell banks in secrecy havens.
In its 40 Recommendations, the FATF issued a list of â€œdesignated categories of offenseâ€ that asserts crimes for a money laundering prosecution.
E-cash is not attractive to the money launderer because it cannot be completely anonymous and does not allow for large amounts to be â€œtransportedâ€ quickly and easily.

Which three of the following is an indication of possible money laundering in an insurance industry scenario?

Insurance products sold through intermediaries, agents or brokers.
Single-premium insurance bonds, redeemed at a discount.
Policyholders who are unconcerned about penalties for early cancellation.
Policyholders who redeem the policy within the â€œfree lookâ€ period.

Which two activities are typically associated with the black market peso exchange (BMPE) money laundering system?

Converting illicit drug proceeds from dollars or Euros to Colombian pesos.
Converting illicit drug proceeds from Colombian pesos to dollars or Euros.
Facilitating purchases by Colombian importers of goods manufactured in the United States or Europe through peso brokers.
Facilitating purchases by European or U.S. importers of goods manufactured in Colombia through peso brokers.

What is the Right of Reciprocity in the field of international cooperation against money laundering?

The legal principle that financial institutions that have referred customers to other financial institutions can share information about these customers with the other institutions.
A rule of the Basel Committee allowing properly regulated financial institutes of another member state of the Basel Committee to do business without additional supervision to the degree that the other state grants the same right.
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.
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

The greatest risk for money laundering is for casinos that

Provide their customers with a wide array of gambling services.
Operate in a non-Egmont member country.
Allow customers with credit balances to withdraw funds by check in another jurisdiction.
Only send suspicious transaction reports to the financial intelligence unit of the country it operates in.

Which statement is true regarding the risk of Politically Exposed Persons (PEPs)?

PEPs provide access to third parties on whom the financial institution has not conducted sufficient due diligence.
PEPs have significantly greater exposure to the politically corrupt funds, including accepting bribes or misappropriating government funds.
PEPs are foreign customers who inherently present additional risk as they are engaged in cross border transactions.
PEPs generally do not pose enhanced risks to an institution due to their political standing; rather, PEPs increase the prestige of an institution.

In 2014 the Wolfsberg Group published their Anti-Money Laundering Principles for Correspondent Banking. Which elements are recommended to be included ...

The geographic risk.
The ownership and management structure
The customer base.
All of Above

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 branc...

The customer asks many questions about the brokerage account, but none of them are related to investing.
The address of the account holder and the branch where the customer came to open the account are not close to each other.
That the customer appears unconcerned about the fees.
All of Above

Trade Based Money Laundering requires the ability to:

Over- or under-invoice the goods.
Sell the imported goods for as little as possible.
Use goods that do not need to be declared.
Avoid the use of high-value assets such as luxury cars or boats.

Which of the following statements is true? Correspondent banking is MOST vulnerable to money laundering when the correspondent account is:

Maintained for foreign financial institutions that are banks.
Not used to provide services directly to third parties.
Maintained for a foreign bank that does not have a physical presence in any country.
Maintained for a foreign private bank that is publicly traded and is a qualified intermediary.

Which of the following statement is true in respect of the Fourth EU Anti-Money Laundering Directive?

It repeals and replaces the Third EU Directive on Anti- Money Laundering.
The beneficial owner is defined as having a minimum of 25% direct or indirect ownership of the company.
The definition of a PEP is expanded to include domestic persons.
All of Above

According to the EU Directives an independent legal professional is obligated to report suspicion of money laundering in a client relationship when:

Representing a client in a legal matter.
Ascertaining the legal position for a client.
Participating in financial or corporate transactions.
Obtaining information associated with a judicial proceeding.

Which of the following is the most difficult regulatory challenge facing a foreign financial institution with a correspondent banking relationship in ...

USA Patriot Act.
Basel Due Diligence Principles for Banks.
FATF Guidance on Terrorist Financing.
UN Security Council Resolution on Correspondent Banking.

Which were the Basel Committeeâ€™s two main motivations to encourage strong Know Your Customer programs in its paper â€œCustomer Due Diligenc...

Mirror FATFâ€™s KYC Recommendations.
Meet European Union guidelines.
Protect the safety and soundness of banks.
Protect the integrity of banking systems.

What is the definition of a predicate offense?

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.
Unlawful activity whose proceeds, if involved in the transaction, can give rise to prosecution for the crime of money laundering.
An interface which is the underlying segment of a suspicious transaction monitoring system.
A specified unlawful activity that is committed through concentration accounts deceiving customers that are not directly related to the account.

What is considered a beneficial owner of an account? A person or entity:

That has direct signatory authority over an account, and whose name appears on the account.
That is ultimately entitled to the funds in the account, even though his name may not appear on the account.
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.
That is a gatekeeper, has the legal title to the account, and typically transfers the funds to a trust.

The FinCen â€œAdvisory to US Financial Institutions on Promoting a Culture of Complianceâ€, published in 2014, listed six areas of emphasis. ...

Leadership Should Be Engaged.
Information Should Be Shared Throughout the Organization.
Leadership and Staff Should Understand How Their BSA Reports are Used.
All of above

Which of the following should a national legislature consider when criminalizing money laundering in line with the CFATF 19 Recommendations?

Do not limit the number of specific predicate offenses for money laundering.
Criminalize conspiracy or association to engage in money laundering.
Indicate whether it is relevant that a predicate offense may have been committed outside the local jurisdiction.
All of above

Which statement is true about the 4th EU Directive on Money Laundering? It:

Updates European Community legislation to be further in line with the Financial Action Task Force (FATF) 40 Recommendations.
Repeats the customer due diligence requirements of the previous Directives, but adds more detail to the requirements by, for example, including a specific requirement to identify the beneficial owner and includes ongoing monitoring requirements.
Requires firms to apply the customer due diligence requirements to existing customers at appropriate times on a risk sensitive basis.
All of above

Which one of the following statements is correct in respect of the FATF 40 Recommendations which state that countries should:

Not allow bearer shares and legal persons that are able to issue bearer shares.
Gather statistics on STRs; prosecutions and convictions; on property frozen, seized and confiscated; and on mutual legal assistance, but not necessarily on other international requests for co- operation.
Consider the feasibility of a system where banks and other financial institutions and intermediaries would report currency transactions without indicating a minimum fixed amount.
Not approve the establishment or accept the continued operation of shell banks.

Among the Principles for Information Exchange Between Financial Intelligence Units for Money Laundering Cases, issued by the Egmont Group on June 13, ...

Information-sharing agreements must follow the model issued by the Egmont Group.
Information which is shared under these agreements will be exempt from the local privacy laws of the countries involved.
Information exchanged between FIUs may be used only for the specific purpose for which the information was sought or provided.
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.

In which stage of money laundering would you classify depositing small amounts of cash into several related accounts?

Integration.
Structuring.
Placement.
Construction.

In which stage of money laundering would you classify the use of laundered funds to purchase high value assets and luxury items?

Integration
Structuring
Placement.
Construction.

In most laws criminalizing money laundering, it is stated that:

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.
Informing customers that their accounts and/or transactions are the subject of an AML investigation is not punishable.
The dirty money undergoing money laundering will not be confiscated because of privacy laws.
It is required that the institution identifies the beneficial owner(s) of the account.

The tactic in which individuals make multiple deposits in small quantities to avoid detection is called:

Paralleling.
Integration.
Investing
Structuring.

In which case might a Suspicious Transaction Report NOT be necessary?

A customer who deposits money of suspicious origins and refuses to answer questions from the financial institutionâ€™s staff.
A customer who tries to move money that is suspected of being derived from criminal activity.
A customer who owns a large supermarket and deposits large amounts of cash several times a day.
A customer whose account is showing transaction activities which are beyond his known financial capability.

As part of their role in fighting money laundering, financial institutions should:

Designate a compliance officer.
Depend solely on The Stateâ€™s staff for combating money laundering.
Refuse small cash deposits under the reporting threshold.
Not open accounts for people from high risk jurisdictions.

A junior compliance analyst learns over lunch with a friend in the computer operations department that during the previous week there was a problem re...

Congratulate his friend on his prompt action.
Congratulate his friend and, as soon as possible, ensure that the Compliance Officer is aware of the situation.
Nothing because the appropriate controls are in place for such events.
Immediately report the situation to the regulators.

What is willful blindness defined as?

Failing to file a Suspicious Transaction Report for dealing with companies or financial institutions from offshore tax havens.
Not following customer identification procedures as set out in the institutionâ€™s procedures.
Deliberate avoidance of knowledge of the facts or ignoring obvious money laundering red flags.
Deliberate avoidance of a customer based on the assumption that his or her behavior suggested a potential threat as money launderer and/or terrorist.

In anti-money laundering terminology a â€œred flagâ€ is:

A warning sign indicating potentially suspicious, risky transactions or activities.
A general banking term used once the balance is negative / overdue.
The standard flag of countries not cooperative in fighting money laundering and terrorist financing.
An indicator that a customer is listed on an economic sanctions list.

The AML Reporting Officer of a financial institution should:

Report everything that comes his way from anyone in the organization.
Report everything that comes his way from senior management or Board of Directors.
Review all available information and file a Suspicious Transaction Report in respect of any unusual or potentially suspicious activity.
Report only what the Reporting Officerâ€™s superior agrees should be reported.

Which of the following statements is true?

Credit cards are not likely to be used in the layering phase of money laundering because of restrictions in cash payments.
Credit cards are effective instruments for laundering money because the transactions do not create an audit trail.
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.
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.

Why is a Payable Through Account vulnerable to money laundering?

It can be very difficult to conduct due diligence on the foreign institution customers who are ultimately using these accounts.
These are concentration accounts located in a domestic branch of a foreign bank.
These are nested correspondent accounts at a foreign shell bank with customers with whom the domestic bank did not exercise due diligence.
These are master escrow accounts on which a domestic bank generally does not conduct periodic verification.

What is the reasoning behind implementing a â€œrisk-based anti-money laundering approachâ€?

It will keep the regulators focused on money laundering controls in sectors beyond banks.
Institutions can best use their limited resources to focus on matters where the money laundering risks are highest.
A quantitative approach will generate better results than a qualitative approach.
It allows the institution to focus on selling products that have a better return on investment.

According to the FATF 40 Recommendations, â€œdesignated non-financial businesses and professionsâ€ include:

Casinos, real estate agents and dealers in precious stones.
Money service businesses, gatekeepers, and issuers of electronic money.
Dealers in precious metals, lawyers, commodity futures traders.
Life insurance companies, real estate agents and notaries.

According to the FATF 40 Recommendations, the threshold for identifying occasional customers at financial institutions is:

EURO/US$ 5,000.
EURO/US$ 10,000.
EURO/US$ 15,000.
EURO/US$ 20,000.

Tom works as a compliance officer at ABC Bank. He is looking at the transactions of one of the bankâ€™s customers, Mr. Brown, the owner of a chec...

Deposited checks from casinos.
Did not make withdrawals of cash against check deposits.
Showed uncommon curiosity about commissions and fees charged.
Does not have an escrow account.

A small broker-dealer has an AML compliance program that addresses procedures for filing Suspicious Transaction Reports and includes policies, procedu...

The AML program should be tested by an independent person, not the compliance officer.
The AML program should be tested more than once per year
The board should receive the same training provided to the employees.
Employees should not be trained via the Internet, because classroom training is better.

Susan works as a senior Money Laundering Reporting Officer at XYZ Bank. She is taking a closer look at the activity of several customers. What would a...

A customer who owns several check cashing companies in town and rents safe deposit boxes at different branches.
A customer who avoids taking vacations.
A small business that provides financial statements which are not prepared by an accountant.
A customer involved in investment management who guarantees a very high rate of return, well above what other competitors can offer.

Which of the following best describes the â€œalternative remittance systemâ€?

The transfer of values between countries, outside of the legitimate banking system.
A non-electronic data remittance system used in several foreign countries to report suspicious activities.
Old-fashioned reporting requirements commonly used in non-cooperative countries and territories.
The transfer of funds between two or more financial institutions using concentration accounts.

An AML compliance officer was reviewing customers at XYZ Bank and one of the customers (Mr. Sam Tropicana) attracted her attention. Through a period o...

Sam maintained a personal account as well as the business account.
Samâ€™s home telephone number was disconnected last month.
Sam asked for a letter of credit to finance some imports from a new supplier.
Sam conducted large cash transactions for his import/ export business.

Which of the following statement is true?

Online gambling provides an excellent method of laundering because transactions are conducted primarily through credit or debit cards and the sites are typically unregulated offshore firms.
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.
Some banks no longer allow the use of credit cards for online gambling transactions.
All of above

Which one of the following statements is true?

The Egmont Group membership comprises national FIUs.
The Wolfsberg Group membership comprises central bank governors of the G10.
The European Union recommends legistation to be passed in the member countries.
The Basel Committee levies fines on the member countries for non-compliance with AML laws.

Which of the following statement is included in Section 313 of the PATRIOT Act definition of â€œPhysical Presenceâ€ in respect of Shell Banks...

A fixed address.
Employ at least one full time employee.
Keep banking records at the fixed address.
All of above

The FATF has consistently noted the use of casinos in money laundering schemes in its annual typologies reports. One laundering technique involving ca...

Asking for winnersâ€™ checks to be made out in the name of third persons or without a payee.
Abusing casinos by circumventing its gatekeepers.
Prepaying a casino token or chip by using funds that are already in the casino system, creating a debit balance.
Extensive gambling via multiple games throughout the casino.

Which of the following should an anti-money laundering specialist include on an internal investigation log?

A government order on a customer that garnishes his wages for failure to pay child support.
Supporting documentation and materials for denying service to a client with a bad credit rating.
Notes pertaining to activity that is unusual, but for which a Suspicious Transaction Report has not been filed.
Reference to a memorandum to the companyâ€™s corporate management relating to budgetary and similar concerns.

What are the three key criteria in AML risk rating?

Customer type, geographic location, products and services used.
Geographic location, customer type, employment status.
Products and services used, customer type and prior banking relations.
Employment status, customer type, products and services used.

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