Gathering Information Flashcards
The records of a wire transfer identify the amount of the wire, where it was sent, and the date it was sent, but they do NOT identify who sent the wire.
A. True
B. False
B. False
See pages 3.925 in the Fraud Examiner’s Manual
The records of a wire transfer identify who sent the wire, where it was sent, the date it was sent, and its amount.
Fraudsters might take advantage of foreign correspondent relationships to move illicit funds abroad using which of the following types of transactions or financial products?
A. International fund transfers
B. Letters of credit and loans
C. Foreign exchange services
D. All of the above
D. All of the above
See pages 3.926 in the Fraud Examiner’s Manual
Fraudsters might take advantage of foreign correspondent relationships to move illicit funds abroad and can use them to orchestrate transfers designed to conceal the funds’ movement. For example, fraudsters might utilize a correspondent financial institution in a jurisdiction with more lax anti-money laundering (AML) or know-your-customer (KYC) requirements to serve as a pass-through to make the origin of the funds more difficult to determine. This can potentially be accomplished by using financial services such as international fund transfers, letters of credit and loans, foreign exchange services, or lines of credit.
Which of the following is something that might be revealed by analyzing a subject’s electronic payment records?
A. Assets the subject has purchased
B. Assets effectively held by the subject
C. Direct deposit payments made to nonexistent employees
D. All of the above
D. All of the above
See pages 3.926-3.927 in the Fraud Examiner’s Manual
The term electronic payments (or e-payments) refers to any type of noncash payment that does not involve a paper check. Electronic payment records can reveal:
- Assets the subject has purchased
- The locations of the subject’s assets (e.g., through the payment of real estate taxes, broker’s fees, or utility payments)
- The locations of the subject’s residences and businesses (e.g., through analyzing the payments of utility bills)
- Loans the subject has obtained (e.g., through analyzing loan payments)
- Payments made to nonexistent employees with direct deposit
- The cities and countries in which the subject conducts business (e.g., through analyzing the payments for carrier services to deliver packages)
- Transfers of funds between individuals without an established business relationship
- Assets ostensibly owned by family members or close associates but effectively controlled, held, or gifted by the subject
- Hotel payments
- The true owner of a property (e.g., through analyzing the mortgage payments and payments for homeowner’s insurance)
A fraud examiner is based in Canada, a non-European Union (EU) country, and is collecting personal information from their company’s human resources (HR) files about an employee based in Brazil, a non-EU country. Based on these facts, the fraud examiner would need to comply with the EU’s General Data Protection Regulation (GDPR) when conducting their internal investigation.
A. True
B. False
B. False
See pages 3.606 in the Fraud Examiner’s Manual
The General Data Protection Regulation (GDPR) would not apply to this scenario because the fraud examiner is not based in a European Union (EU) country or collecting personal information about anyone located in an EU country. The GDPR applies to organizations that are based in the EU that collect or process the personal data of any person, regardless of where the person is located. The GDPR also applies to organizations that are not based in the EU if they collect or process the personal data of any person located in the EU for the purpose of:
Offering goods or services to the person, regardless of whether payment is required
Monitoring the person’s behavior
Most cryptocurrencies rely on public blockchains that provide visibility into every transaction that takes place.
A. True
B. False
A. True
See pages 3.962-3.963 in the Fraud Examiner’s Manual
A cryptocurrency is a type of digital currency that uses public or private key encryption in the currency’s creation and transfer. While cryptocurrency transactions can be difficult and complicated to trace, most cryptocurrencies rely on public blockchains that provide visibility into every transaction that takes place. A blockchain is a digital ledger, or database, of transactions that allows data to be distributed and stored on multiple computer systems at once. Although blockchain entries do not include direct identifying information, they do contain senders’ and recipients’ cryptographic addresses for each transaction. Therefore, by carefully examining blockchain data, fraud examiners can identify patterns that link certain users to criminal activity.
When using a confidential informant who demands payment in exchange for their information, a fraud examiner should only agree to provide compensation after the informant has delivered the information.
A. True
B. False
A. True
See pages 3.520 in the Fraud Examiner’s Manual
If the fraud examiner decides to pay an informant or source, then they should make the payment in cash and obtain a receipt for documentation purposes. If the source will not sign a receipt, then the fraud examiner should not pay them. There have been numerous instances where a receipt was not obtained, so the informant subsequently denied receiving funds or challenged the amount paid. If this happens, the fraud examiner will have to defend themselves without proof; indeed, some investigators have been accused of embezzling the payments. Payments should only be made after the informant has delivered the information.
Green believes that Blue, a fraud suspect, has purchased hidden personal property through suspicious financing. Which of the following sources, if available, would MOST LIKELY contain information that Green could use to locate Blue’s possible hidden assets?
A. Commercial filings
B. Health department records
C. Surveyor office records
D. Registrar of voters
A. Commercial filings
See pages 3.620 in the Fraud Examiner’s Manual
Commercial filings are records that can help fraud examiners identify personal property that an individual or business has financed. These filings and supporting documents can help fraud examiners uncover hidden ownership or relationships between parties by viewing the names of all listed debtors and their addresses. The fraud examiner might find information linking individuals to the companies they own or discover information about a company’s subsidiaries, branch offices, or parent company. Additionally, discovering financed assets can reveal information about a person or an organization’s financial condition.
Which of the following types of records are commonly available from local governments?
A. Voter registration records
B. Health and fire department records
C. Utility records
D. All of the above
D. All of the above
See pages 3.607-3.609 in the Fraud Examiner’s Manual
The following items are basic types of public records that can commonly be accessed at the local level of government:
- Building inspector records
- Building permit records
- Health and fire department records
- Birth and death records
- Public school records
- Coroner’s register
- Voter registration records
- Utility records
- Marriage records
Which of the following is a reason why a subject’s credit card records and statements can be useful in asset tracing investigations?
A. Credit card records are available online for public inspection.
B. Credit card statements show the source of the funds used to pay a credit card bill.
C. Credit card records can reveal assets that a subject has acquired.
D. Credit card statements provide information about the division of the subject’s assets.
C. Credit card records can reveal assets that a subject has acquired.
See pages 3.935 in the Fraud Examiner’s Manual
Credit card records are important in tracing assets because they reveal a great deal of personal and business information about the account holder. Credit card records show card purchasing limits, previous payment history, account balance, when and where the subject has traveled, restaurants frequented by the subject, and assets the subject has acquired. In short, these records show the movements and habits of the person to whom the records pertain.
Credit card statements also contain a great deal of important information. Generally, these statements contain the name of the credit card issuer, the cardholder’s account number, a summary of the transactions on the account, payment information, and a list of all the transactions that occurred during that month’s billing cycle (i.e., purchases, payments, credits, cash advances, and balance transfers).
Records obtained from financial institutions are perhaps the single MOST IMPORTANT financial source available to fraud examiners for purposes of tracing assets.
A. True
B. False
A. True
See pages 3.912 in the Fraud Examiner’s Manual
Records obtained from financial institutions are perhaps the single most important financial source available to fraud examiners for asset-tracing purposes. They can be used as evidence for fraud, as well as to:
- Identify witnesses and other evidence.
- Uncover criminal profits.
- Identify criminal assets.
- Locate assets that can be used to satisfy a judgment.
- Identify locations where assets are stored.
- Determine the lifestyle of an account holder.
- Determine the financial health of an organization.
- Determine the source of funds placed into an account.
- Determine the use of the funds from an account.
Which of the following documents is MOST LIKELY to be included with the account-opening documents for a corporation’s business account?
A. A list of all shareholders
B. Copies of corporate resolutions of the board of directors authorizing the opening of the account
C. A copy of the corporation’s board-authorized personnel policies
D. A copy of all shareholders’ meeting minutes
B. Copies of corporate resolutions of the board of directors authorizing the opening of the account
See pages 3.920 in the Fraud Examiner’s Manual
To open a business account for a corporation, the opening party must provide a signature card, or similar document, and copies of corporate resolutions of the board of directors authorizing the opening of the bank account and naming the person who may authorize payments on the account. Also, the bank might require a copy of the company’s organizational or business filings (such as articles of incorporation). These documents should indicate who the company’s corporate officers are and the company’s date of incorporation.
In most jurisdictions, a fraud examiner can easily and legally obtain an individual’s personal credit information from any third-party information vendor if the fraud examiner suspects the individual of fraud.
A. True
B. False
B. False
See pages 3.626-3.627 in the Fraud Examiner’s Manual
In the case of consumer (individual) credit records and personal data, a growing number of jurisdictions regulate how such information is collected and stored, as well as who may access this information and for what purpose. In many cases, the consumer must be notified and must consent to the use of the report.
In jurisdictions that regulate credit information and personal data, a fraud examiner will generally need a legally acceptable reason for accessing such information from third parties. However, simply suspecting an individual of fraud is generally insufficient grounds for obtaining credit and personal data regarding the person from a reporting agency or data controller. The specific exceptions for allowing the processing and dissemination of credit and personal data vary, but some common circumstances include when:
- The individual has given consent.
- It is necessary for the extension of credit or to enter into a contract with the subject.
- It is necessary to protect the subject’s vital interest.
- It is necessary to comply with other legal requirements.
- An employer is conducting a background check for hiring or other employment purposes. (Consent is still required in many jurisdictions.)
- It is necessary to serve the public interest.
A fraud examiner is conducting an investigation involving ABC Company, a multinational, publicly traded company, and wants to obtain regulatory securities records regarding the company. Which of the following BEST describes where the fraud examiner should check to find these records?
A. Only the securities exchanges in the jurisdiction where the company does most of its business
B. Only domestic securities exchanges and exchanges in jurisdictions where the corporation has a substantial business presence
C. Only domestic securities exchanges located in the jurisdiction where the company is incorporated
D. Both domestic and foreign securities exchanges, including those in jurisdictions where the company has minimal business presence
D. Both domestic and foreign securities exchanges, including those in jurisdictions where the company has minimal business presence
See pages 3.622 in the Fraud Examiner’s Manual
While jurisdictions treat the concept of securities differently, governments or self-regulatory bodies generally set rules for the issuing and trading of certain types of securities. Among the most common and important rules are disclosure requirements for companies with publicly traded securities. These rules are designed to make sure that investors are reasonably informed about stock that they purchase. Fraud examiners should keep in mind that if a public company does not report to its domestic securities regulator, it might be registered with regulators of foreign securities exchanges. Even if the company has minimal or no presence in the foreign jurisdiction, it might be registered there to benefit from foreign investment. Therefore, searching multiple securities exchanges might be necessary for conducting a thorough securities records search.
A company’s organizational filing with the government generally includes information about the company’s ownership, directors and officers, initial shareholders, and the location of its principal office.
A. True
B. False
A. True
See pages 3.618 in the Fraud Examiner’s Manual
Companies are formed by submitting some type of organizational filing to the government of the jurisdiction in which the entity is incorporated. These filings might be referred to in various ways in different jurisdictions (e.g., articles of incorporation, corporate constitution, or corporate charter). Organizational filings are generally public records and usually include:
- Corporate name
- Ownership information
- Nominal stock value
- Names of initial shareholders
- Names of the directors and officers
- Registered agent(s)
- Location of the principal office
- Date of incorporation
- Standing/status
Lance wants to search the internet for sites with information on mortgage fraud. Which of the following search strings will yield the BEST result using a basic search engine?
A. “Mortgage fraud”
B. Mortgage OR fraud
C. Mortgage -fraud
D. *Mortgage fraud
A. “Mortgage fraud”
See pages 3.636-3.638 in the Fraud Examiner’s Manual
Users can employ advanced search operators (or Boolean operators) to gain more control over the search results. Advanced search operators are query words or symbols used to instruct search engines to perform special actions when executing a search. They help search engines better understand exactly what the user is looking for, and they improve searches and return relevant results faster.
Placing quotation marks around a phrase will indicate to the search engine that it is to search only for pages that have the exact phrase. Thus, performing a search for “mortgage fraud” will yield pages containing that exact phrase. In Lance’s case, this search would yield the best results.
In some search engines, adding the minus sign before unwanted terms will produce results that do not contain the word following the “-.” So, a search for “mortgage -fraud” will return pages in which the word mortgage appears but will exclude pages that reference the word fraud.
In some search engines, adding the word OR between two terms will yield sites in which either word appears.
In some search engines, a user can insert an asterisk (*) as a placeholder for any unknown terms.
When gathering information for a fraud investigation, virtually all helpful documentary evidence will come from internal sources.
A. True
B. False
B. False
See pages 3.601 in the Fraud Examiner’s Manual
Internal sources—those generated and kept within the subject organization—are often the only resource for certain types of documents, such as private business tax records or employee personnel files, unless the fraud examiner secures the subject’s consent or a legal order to obtain those documents from other parties. Even so, a large amount of information and documentary evidence can also be gathered from external sources. External sources can be particularly crucial in helping investigators locate missing assets; locate witnesses and suspects; determine ownership in vendors, competitors, and other related parties; research the suspects’ assets and financial condition; and document the suspects’ lifestyle and background information. All this information will help an investigator build a case and will provide the basis for conducting interviews and obtaining confessions later in the investigation.
Under which of the following circumstances would a fraud examiner need to comply with the European Union’s (EU) General Data Protection Regulation (GDPR)?
A. The fraud examiner is based in Spain (an EU country) and is collecting personal information about an individual who lives in the United States (a non-EU country)
B. The fraud examiner is based in the United States (a non-EU country) and is collecting personal information about an individual who lives in Denmark (an EU country)
C. The fraud examiner is based in France (an EU country) and is collecting personal information about an individual who lives in Luxembourg (an EU country)
D. All of the above
D. All of the above
See pages 3.606 in the Fraud Examiner’s Manual
The General Data Protection Regulation (GDPR) applies to organizations that are based in the European Union (EU) that collect or process the personal data of any person, regardless of where the person is located. The GDPR also applies to organizations that are not based in the EU if they collect or process the personal data of any person located in the EU for the purpose of:
- Offering goods or services to the person, regardless of whether payment is required
- Monitoring the person’s behavior
Therefore, the GDPR applies to most companies that have customers in the EU even if the companies have no physical presence in the EU.
The GDPR could limit the availability of personal information for fraud examiners whether they or their organization is collecting that information or attempting to access personal information collected and disclosed by other organizations.
Which of the following pieces of information is usually contained on the signature card of a personal bank account?
A. The name of the person opening the account
B. The identification number of the person opening the account
C. The address of the person opening the account
D. All of the above
D. All of the above
See pages 3.918-3.919 in the Fraud Examiner’s Manual
To open a personal account, an individual must provide a signature card, or similar document, evidencing a contract between the customer and bank. The signature card is a source of valuable information. Although its form varies, the card usually contains the person’s name, address, telephone number, identification number, amount of the opening deposit (and possibly the source of the opening deposit), and security data (e.g., mother’s maiden name). The person’s identification information might be significant, especially if the depositor used an alias. Also, a fraud examiner might be able to trace the opening deposit through the bank’s records to disclose a source of income.
Net worth can be defined as the difference between assets and liabilities at a particular point in time.
A. True
B. False
A. True
See pages 3.950 in the Fraud Examiner’s Manual
Net worth can be defined as the difference between assets and liabilities at a particular point in time.
Gamma, a Certified Fraud Examiner (CFE), is attempting to locate the exact birthplace of Theta, a fraud suspect. Where is Gamma MOST LIKELY to find such a record if it exists?
A. The jurisdiction’s tax assessor
B. The local commercial filing agency
C. The local property records agency
D. The jurisdiction’s health records agency
D. The jurisdiction’s health records agency
See pages 3.608 in the Fraud Examiner’s Manual
Some local health records agencies maintain birth and death records. The content and availability of these records varies widely, but they might include the name of the individual, address, sex, age, race, birthplace, birth date, death place, date and time of death, government identification number, close family members, occupational information, medical certificate, and coroner’s certificate. If such records are not available locally, there might be a state/provincial or national health office that maintains them.
Giada, a fraud examiner, is investigating a suspected embezzlement by one of XYZ Corporation’s employees. As part of the investigation, she is assembling a financial profile of the suspect. Among other things, Giada wants to see if the suspect has made any significant real estate purchases since the embezzlement scheme began. Information on real estate transactions, such as deeds, grants, transfers, and mortgages, is usually located:
A. With the jurisdiction’s commercial filing registrar
B. With the local court clerk or judicial records agency
C. With the jurisdiction’s organizational filing agency
D. With the jurisdiction’s land registry office
D. With the jurisdiction’s land registry office
See pages 3.615-3.616 in the Fraud Examiner’s Manual
Most jurisdictions have a land registry office that maintains various information on real property and its owner(s). Both the level of government where these records are found and the information they contain will vary by jurisdiction, but the following information is often present:
- Documents pertaining to real estate transactions—including deeds, grants, real estate transfers and mortgages, releases of mortgages, powers of attorney, and leases that have been acknowledged or approved
- Mortgages on real property
- Security interests or liens on property
- Wills admitted to probate
- Official bonds
- Notices of mechanic’s liens
- Transcripts of judgments that are made liens on real estate
- Notices of attachment on real estate
- Land cadastre (i.e., a registry of land surveys that specifically details each plot of real estate in an area and contains information about value, ownership rights, and other details)
- Papers in connection with bankruptcy
- Certified copies of decrees and judgments of courts of record
- Other documents permitted by law to be recorded
- Historical sale prices
- Residences and addresses of the buyer and seller
- Identity of the party financing the property if applicable
- Improvements to a property
Which of the following is a common use of public records in fraud examinations?
A. Obtaining a person’s credit records
B. Accessing an individual’s income tax filings
C. Tracing and recovering assets
D. All of the above
C. Tracing and recovering assets
See pages 3.602, 3.624 in the Fraud Examiner’s Manual
Public records are documents that a governmental agency is required to keep by law or that are necessary to discharge the duties imposed by law. Public records, which can generally be accessed by the public and are thus available to anyone who wishes to use them, can be useful to fraud examiners for numerous reasons. They can supply invaluable background information on entities, employees, suspects, and witnesses. They can also be used to corroborate or refute witness statements, help investigators track the flow of stolen money or other assets, and aid efforts to recover losses.
Individual tax records and consumer credit records are typically nonpublic information.
Which of the following is LEAST LIKELY to be revealed by analyzing a subject’s electronic payment records?
A. The locations of the subject’s assets
B. The cities and countries in which the subject conducts business
C. If the subject is skimming employer funds
D. The true owner of a property
C. If the subject is skimming employer funds
See pages 3.926-3.927 in the Fraud Examiner’s Manual
The term electronic payments (or e-payments) refers to any type of noncash payment that does not involve a paper check. Electronic payment records can reveal:
- Assets the subject has purchased
- The locations of the subject’s assets (e.g., through the payment of real estate taxes, broker’s fees, or utility payments)
- The locations of the subject’s residences and businesses (e.g., through analyzing the payments of utility bills)
- Loans the subject has obtained (e.g., through analyzing loan payments)
- Payments made to nonexistent employees with direct deposit
- The cities and countries in which the subject conducts business (e.g., through analyzing the payments for carrier services to deliver packages)
- Transfers of funds between individuals without an established business relationship
- Assets ostensibly owned by family members or close associates but effectively controlled, held, or gifted by the subject
- Hotel payments
- The true owner of a property (e.g., through analyzing the mortgage payments and payments for homeowner’s insurance)
Freddie calls Alex’s bank and claims to be Alex with the intention of stealing Alex’s identity. Freddie tells the bank representative that he needs to make sure the bank has the correct government identification number on his account because he noticed an error on his statement. The bank representative refuses to give the number, so Freddie hangs up. Assuming that each of the following is illegal in the relevant jurisdiction, which of the following crimes did Freddie commit?
A. Fraud in the inducement
B. Embezzlement
C. Pretexting with a financial institution
D. Defalcation
C. Pretexting with a financial institution
See pages 3.630-3.631 in the Fraud Examiner’s Manual
Broadly defined, pretexting is the act of impersonating someone else or making false or misleading statements to obtain, sell, or buy information about a person or organization.
Under the broad definition, pretexting for nonfraudulent purposes is not always illegal, but it should be used with caution. For example, if a fraud examiner is trying to find a witness or a suspect, they might call the person’s relative and pretend to be an old friend who is requesting the individual’s phone number. This type of pretexting might be permissible. However, it is more often illegal to use pretexting to obtain certain types of information, such as financial records and phone history records.
Several jurisdictions have prohibited pretexting against financial institutions even if no fraudulent intent is present. In the context of financial institutions, pretexting is the act of obtaining or attempting to obtain customer information from financial institutions using deceptive tactics. Some individuals use pretexting to gather financial information about a subject. Pretexters contact a financial institution and pretend to be the customer, or another individual authorized to obtain financial information, and trick the financial institution into providing information about the subject.
Which of the following statements concerning court records is MOST ACCURATE?
A. In most countries, court records are not public records and require judicial authorization to access.
B. In most countries, reliable court records are best obtained from the court in which the case was heard or tried.
C. There are multiple databases that contain a comprehensive database of court documents from all court cases in every country.
D. When searching for records for a particular court case, a fraud examiner needs only to search the central/federal court records, as they serve as a repository for all cases heard at all court levels.
B. In most countries, reliable court records are best obtained from the court in which the case was heard or tried.
See pages 3.609-3.611 in the Fraud Examiner’s Manual
A great deal of litigation occurs each year, and many people might be subject to judicial action, voluntarily or not. Court records are a common direct or indirect source of information for fraud examinations. Many jurisdictions allow fraud examiners to search court records, and there are also a variety of services that compile and search such records.
To perform court records searches, fraud examiners need to be familiar with the structure of the jurisdiction’s court system. Many jurisdictions implement a tiered court structure in which minor offenses and causes of action (e.g., small claims) are held in one set of courts while more serious offenses or issues are held in another set. Similarly, a jurisdiction might have courts that are divided based on local/municipal, state/provincial, and central/federal levels of government. Court records are typically maintained by a clerk or administrative office of the court that heard the case. However, there might be an agency that maintains records from multiple court levels. Therefore, to conduct a thorough search of court records, fraud examiners might need to search at multiple court levels.
It is rare for there to be a central public database that maintains all court records at every level of a jurisdiction, and there are no parties that maintain a comprehensive database of court records on a global basis (despite what some records merchants might claim).
Spencer, a fraud examiner, plans to use a confidential informant. The informant agrees to aid Spencer in exchange for cash. Spencer prepares a receipt for the transfer of cash to the informant and asks the informant to sign it, but the informant refuses. What should Spencer do?
A. Have a witness observe the transfer of cash and sign a statement attesting to the transaction
B. Give the informant the cash, but do not make any record of the transaction
C. Refuse to pay the cash without a receipt, even if it means the informant will not aid Spencer
D. None of the above
C. Refuse to pay the cash without a receipt, even if it means the informant will not aid Spencer
See pages 3.520 in the Fraud Examiner’s Manual
If the fraud examiner decides to pay an informant or source, then they should make the payment in cash and obtain a receipt for documentation purposes. If the source will not sign a receipt, then the fraud examiner should not pay them. There have been numerous instances where a receipt was not obtained, so the informant subsequently denied receiving funds or challenged the amount paid. If this happens, the fraud examiner will have to defend themselves without proof; indeed, some investigators have been accused of embezzling the payments. Payments should only be made after the informant has delivered the information.
Which of the following documents is typically included with the account-opening documents for a corporation’s business account?
A. A signature card
B. Copies of corporate resolutions of the board of directors authorizing the opening of the account
C. Copies of corporate resolutions of the board of directors naming the person who may authorize payments on the account
D. All of the above
D. All of the above
See pages 3.920 in the Fraud Examiner’s Manual
To open a business account for a corporation, the opening party must provide a signature card, or similar document, and copies of corporate resolutions of the board of directors authorizing the opening of the bank account and naming the person who may authorize payments on the account. Also, the bank might require a copy of the company’s organizational or business filings (such as articles of incorporation). These documents should indicate who the company’s corporate officers are and the company’s date of incorporation.
A fraud examiner in an organized crime investigation believes a particular commercial restaurant is being used as a place of operation by the suspects. Which of the following types of records would be the LEAST LIKELY to help the fraud examiner discover who owns or occupies the building in which the restaurant operates?
A. Voter registration records
B. Building permit records
C. Health department records
D. Fire department records
A. Voter registration records
See pages 3.607-3.609 in the Fraud Examiner’s Manual
There are many public records often found at the local level that can help fraud examiners gather various types of information. To determine who owns a particular property, there might be direct information or leads found in the records of several agencies, including health and fire departments. Many local health or fire departments conduct routine inspections of businesses for health and safety code or fire code violations. These inspection records might contain valuable information about the business and its occupants, including its operations, employees, and owners.
If a business or an individual constructs a new building or makes improvements to an existing building, there should be a building permit on file with the local building authority. In addition, before most businesses may begin conducting business, local agencies might require that they possess certain permits. In many cases, the person applying for permits will be the owner or someone traceable to the owner.
Voter registration records are not public in all jurisdictions, but if they are available, they might contain useful information. Usually, much of the information contained in such records is withheld from the public for privacy purposes, but voter registration records might contain a person’s date of birth, mailing address, and political affiliation. However, this information is less likely than the other sources listed to identify the owner of a commercial building.
Which of the following is an accurate statement about tracing the disposition of loan proceeds?
A. Tracing loan proceeds can determine whether a subject has taken out a loan for someone else
B. Tracing loan proceeds can uncover hidden assets or unknown witnesses
C. Tracing loan proceeds can determine if hidden accounts were used for loan payments
D. All of the above
D. All of the above
See pages 3.933 in the Fraud Examiner’s Manual
If a fraud examination involves a loan with proceeds that have been disposed, the fraud examiner should trace the disposition of the loan’s proceeds. A fraud examiner can trace loan proceeds to determine if hidden accounts were used for loan payments or if the proceeds were deposited into hidden accounts. Also, because loans might be secured by hidden assets or co-signed by previously unknown cohorts, tracing loan proceeds can uncover hidden assets or unknown witnesses. Moreover, if the subject has taken out a loan for someone else, tracing the disposition of the loan proceeds will uncover those leads.
In jurisdictions that regulate the processing and dissemination of personal credit information and personal data, such information regarding an individual cannot be obtained under any circumstances without the person’s consent.
A. True
B. False
B. False
See pages 3.626 in the Fraud Examiner’s Manual
In the case of consumer (individual) credit records and personal data, a growing number of jurisdictions regulate how such information is collected and stored, as well as who may access this information and for what purpose. In many cases, the consumer must be notified and must consent to the use of the report.
In jurisdictions that regulate credit information and personal data, a fraud examiner will generally need a legally acceptable reason for accessing such information from third parties. However, simply suspecting an individual of fraud is generally insufficient grounds for obtaining credit and personal data regarding the person from a reporting agency or data controller. The specific exceptions for allowing the processing and dissemination of credit and personal data vary, but some common circumstances include when:
- The individual has given consent.
- It is necessary for the extension of credit or to enter into a contract with the subject.
- It is necessary to protect the subject’s vital interest.
- It is necessary to comply with other legal requirements.
- An employer is conducting a background check for hiring or other employment purposes. (Consent is still required in many jurisdictions.)
- It is necessary to serve the public interest.
Bianca, a fraud examiner for the Levine Corporation, suspects that an employee of another company has committed a fraud scheme against Levine Corporation. The relevant jurisdiction regulates the distribution of credit information and personal data. Although Bianca has not obtained the suspect’s consent, she will likely be allowed to access their credit report from a third party.
A. True
B. False
B. False
See pages 3.626 in the Fraud Examiner’s Manual
In the case of consumer (individual) credit records and personal data, a growing number of jurisdictions regulate how such information is collected and stored, as well as who may access this information and for what purpose. In many cases, the consumer must be notified and must consent to the use of the report. In jurisdictions that regulate credit information and personal data, a fraud examiner will generally need a legally acceptable reason for accessing such information from third parties. However, simply suspecting an individual of fraud is generally insufficient grounds for obtaining credit and personal data regarding the person from a reporting agency or data controller.
Some jurisdictions provide an exception to this rule when a party is conducting a background check for employment purposes, but because the suspect in this case is not an employee of the investigating party, the exception would not apply.
___________ refers to an instance when law enforcement officers or government agents induce a person to commit a crime that they are not previously disposed to commit.
A. False imprisonment
B. Collusion
C. Entrapment
D. Covert operation
C. Entrapment
See pages 3.505 in the Fraud Examiner’s Manual
Many jurisdictions recognize the legal defense of entrapment. Entrapment occurs when law enforcement officers or government agents induce a person to commit a crime that they are not previously disposed to commit. Entrapment also poses a legal problem in covert operations, particularly in undercover operations, because the defendant might not be found liable if it appears that they were improperly induced to commit the crime. Therefore, it is imperative that proper predication exists before the operation is commenced. The law enforcement officer or government agent must act based on more than mere suspicion. For example, if the officer received a reliable tip that a suspect committed fraud, then that could serve as proper predication. Covert operations must not be used for aimless searches for information performed without notions of what might be uncovered.
Which of the following is a common method that fraudsters use to hide their ill-gotten gains?
A. Prepaying a home mortgage
B. Transferring assets into foreign trusts
C. Purchasing a life insurance policy
D. All of the above
D. All of the above
See pages 3.958-3.959 in the Fraud Examiner’s Manual
Any type of asset can be hidden (e.g., real property, jewelry, stocks, bonds, vehicles, cash), and there are many techniques that a fraudster might use to hide ill-gotten gains. Some common techniques for hiding assets include transferring assets into foreign trusts, overpaying taxes, prepaying on a home mortgage, obtaining a life insurance policy, and transferring assets into someone else’s name.
Which of the following is a limitation of conducting a search for public records using online databases?
A. Online availability of public records varies widely across jurisdictions
B. Online public records are usually brief abstracts of the original public record
C. Information from online databases must be validated for accuracy and timeliness
D. All of the above
D. All of the above
See pages 3.643-3.644 in the Fraud Examiner’s Manual
The main limitations of conducting searches for public records using online databases include:
- Online availability of public records varies widely across jurisdictions, and therefore, there are many degrees of accessibility to public records between jurisdictions.
- Online public records searches are limited in the area they cover. Therefore, when looking for information on a subject, fraud examiners often must search for public records in multiple jurisdictions.
- Often, online public records are brief abstracts of the original public record.
- The source of the information compiled in an online database must be reliable.
- Fraud examiners must validate information retrieved from online databases to determine if it is accurate and up to date.
- The public records compiled in an electronic format might cover only a limited period.
- Online searches can be erratic in the information they return.
It is best practice for fraud examiners to conduct covert operations at the same time that they are employing conventional methods of gathering evidence.
A. True
B. False
B. False
See pages 3.501 in the Fraud Examiner’s Manual
A covert operation is an investigation technique designed to obtain evidence by use of agents whose true intentions are not communicated to the target. Covert operations must be undertaken carefully.
When considering a covert operation, fraud examiners must consider privacy laws, the potential cost of human and technological resources, any source or informant’s motivations and expectations regarding their participation, and the potential to alert suspects to the existence of an investigation. Therefore, fraud examiners should only resort to covert operations after conventional methods of gathering evidence have been exhausted and proven unsuccessful.
Which of the following is a good practice when searching the internet for information?
A. Use filters to focus searches
B. Use specific nouns instead of pronouns
C. Use more than one search engine
D. All of the above
D. All of the above
See pages 3.640 in the Fraud Examiner’s Manual
The following is a list of tips and guidelines for searching the internet for information:
- Use more than one search engine. Everyone has a favorite search engine, but relying on one search engine is insufficient because every search engine collects and catalogs information differently.
- Be clear about what is being searched for. Define the search topic as clearly and succinctly as possible.
- Use unique, specific keywords. Be specific when entering search terms.
- Use nouns for keywords.
- Use format terms (e.g., transcript, document, report, statistics, pdf, policy, dictionary) in addition to subject words.
- Exclude articles (e.g., a, an, the) and pronouns (e.g., he, she, it, they) from search terms unless they are part of a key phrase.
- Use correct spelling and include alternative spellings (e.g., colour OR color).
- Use filters to focus searches. Filters tell search engines to screen out specified types of pages or files.
- Check all the tips and features of any search engine to be used and utilize them.
- Increase the number of results displayed per page.
- Customize searches using advanced search operators, such as the minus (-) operator and quotation marks, to narrow the search results.
- Search for phrases. Search for a sequence of words in a specific order, using quotation marks around the phrase.
- Search for base words (do not include suffixes) to avoid excluding relevant pages.
- Use metasearch engines if early searches are unsuccessful.
- Set a time limit for searching, and when the set amount of time has elapsed, stop and try another method.
- Use a browser’s find feature to find a word or phrase on a web page and help navigate search results.
Which of the following is a type of information that can be obtained from the deep web?
A. An archived version of a web page that is no longer online
B. An old version of a web page that has since been updated
C. Websites without any links pointing to them
D. Web content indexed by standard search engines
C. Websites without any links pointing to them
See pages 3.647-3.649 in the Fraud Examiner’s Manual
The deep web (also known as the invisible web) refers to web content that is not indexed by standard search engines. There are numerous reasons why the deep web exists. For instance, there are websites where web crawling programs cannot enter. Web crawlers are scripts that create copies of visited web pages that are indexed by a search engine to provide faster searches. These deep web resources include websites without any links pointing to them, certain file formats that search engines cannot handle, websites that have been blocked from web crawler access, password-protected websites, and information stored in databases. Also, search engines limit the depth of their crawl on a website. Moreover, web crawlers cannot crawl as quickly as pages are added or updated.
Alternatively, the term internet archives refers to archived versions of web pages that have since been updated or are no longer available online. The most popular tool for searching the internet archives is the Wayback Machine, located at https://archive.org. The Wayback Machine allows users to see archived versions of web pages throughout time. Fraud examiners can use the Wayback Machine to find historical information, such as:
- A photo posted on a website that has been removed
- Content, views, writing, and opinions rescinded by an author
- A company’s old job ads, statements, affiliations, or product lines
In many jurisdictions, when an individual purchases real estate, they usually become a registrant in which of the following records?
A. Real property records
B. Property tax records
C. Tax assessor records
D. All of the above
D. All of the above
See pages 3.615 in the Fraud Examiner’s Manual
Real property records are extremely important, and in many jurisdictions, they are relatively easy to access and contain a vast amount of information. It is common for real property records to be found at the local level of government, but some jurisdictions might keep them at the national level of government or a centralized location. When an individual purchases real estate, they become a registrant in real property records, property tax records, and tax assessor records (if applicable).
Which of the following is LEAST LIKELY to be revealed by analyzing a subject’s electronic payment records?
A. Fund transfers between individuals who do not have a business relationship
B. The locations of the subject’s residences and businesses
C. Loans the subject has obtained
D. The market value of any real property owned
D. The market value of any real property owned
See pages 3.926-3.927 in the Fraud Examiner’s Manual
The term electronic payments (or e-payments) refers to any type of noncash payment that does not involve a paper check. Electronic payment records can reveal:
- Assets the subject has purchased
- The locations of the subject’s assets (e.g., through the payment of real estate taxes, broker’s fees, or utility payments)
- The locations of the subject’s residences and businesses (e.g., through analyzing the payments of utility bills)
- Loans the subject has obtained (e.g., through analyzing loan payments)
- Payments made to nonexistent employees with direct deposit
- The cities and countries in which the subject conducts business (e.g., through analyzing the payments for carrier services to deliver packages)
- Transfers of funds between individuals without an established business relationship
- Assets ostensibly owned by family members or close associates but effectively controlled, held, or gifted by the subject
- Hotel payments
- The true owner of a property (e.g., through analyzing the mortgage payments and payments for homeowner’s insurance)
In most jurisdictions, which of the following statements about bankruptcy court records is CORRECT?
A. Bankruptcy documents are usually located in the jurisdiction where the most debt was incurred
B. A bankruptcy file typically contains the bankruptcy petition or filing document
C. Only the party filing for bankruptcy and the creditors may access bankruptcy records
D. All of the above
B. A bankruptcy file typically contains the bankruptcy petition or filing document
See pages 3.614 in the Fraud Examiner’s Manual
Many jurisdictions provide bankruptcy records to the authorized parties or the general public. Bankruptcy proceedings generally occur in the jurisdiction in which the debtor resides. It is common for countries to have separate bankruptcy courts that handle most or all such cases. The information available in bankruptcy records varies, but common items include:
- The bankruptcy petition or other type of filing document, which might include the subject’s government identification number; street address and primary place of business; location of principal assets of business; type of business; name of legal representative; estimated amount of assets; estimated number of creditors, liabilities, and employees; financial data; and a list of corporate shareholders
- Claim documents by creditors listing the amounts that the debtor allegedly owes
- A final accounting that shows which claims were paid
- A descriptive list of the debtor’s property at the time of filing (real estate, personal property, investments, accounts receivables, etc.)
- Filings that describe the debtor’s income and expenditures
- The bankruptcy plan (Some jurisdictions allow bankrupt parties to reorganize businesses or participate in a debt reduction plan, as opposed to liquidating all assets.)
- Details from a fraud examination if the bankrupt party was suspected of bankruptcy fraud
Which of the following pieces of information is NOT usually contained on the signature card of a personal bank account?
A. The thumbprint of the person opening the account
B. The identification number of the person opening the account
C. The address of the person opening the account
D. The telephone number of the person opening the account
A. The thumbprint of the person opening the account
See pages 3.918-3.919 in the Fraud Examiner’s Manual
To open a personal account, an individual must provide a signature card, or similar document, evidencing a contract between the customer and bank. The signature card is a source of valuable information. Although its form varies, the card usually contains the person’s name, address, telephone number, identification number, amount of the opening deposit (and possibly the source of the opening deposit), and security data (e.g., mother’s maiden name). The person’s identification information might be significant, especially if the depositor used an alias. Also, a fraud examiner might be able to trace the opening deposit through the bank’s records to disclose a source of income.
While a bank signature card evidencing a contract between the customer and bank contains several important pieces of identifying information, it typically does not contain the fingerprints of the account holder.
Suppose that a fraud examiner needs to prove a suspect’s illicit income circumstantially. Which of the following methods of tracing assets would yield the BEST result when the suspect is using their illicit funds to accumulate wealth and acquire assets or pay down debts, thus causing their net worth to increase?
A. The expenditures method
B. The bank deposit analysis method
C. The asset method
D. The income correlation method
C. The asset method
See pages 3.943, 3.950, 3.953, 3.955 in the Fraud Examiner’s Manual
The asset method, the expenditures method, and the bank deposit analysis method can all be used to establish a subject’s sources of income using circumstantial proof.
The asset method allows the fraud examiner to prove income circumstantially by showing that the subject’s assets for a given period exceed those that can be accounted for from known or admitted sources of income. Fraud examiners should use the asset method when it is suspected that the subject has accumulated wealth and acquired assets or paid down debts with illicit proceeds, which causes the subject’s net worth—the difference between a person’s assets and liabilities at a particular point in time—to increase from year to year.
The expenditures method (also known as the sources and application of funds method) compares the suspect’s known expenditures and known sources of funds during a given period of time. That is, this analysis seeks to quantify the cost of the subject’s lifestyle and determine whether the subject’s reported income is sufficient to support their lifestyle. The expenditures method is best used when the subject spends illicit income on consumables (e.g., travel and entertainment) that would not cause an increase in net worth.
The bank deposit analysis method of tracing illicit funds is recommended as a primary method of proof when most of the subject’s income is deposited and the accounting and business records of their company or employer are unavailable, withheld, incomplete, or maintained on a cash basis.
The income correlation method is not a method of tracing illicit funds.
A fraud examiner can request a business’s bank records even if the business is not legally obligated to comply.
A. True
B. False
A. True
See pages 3.629 in the Fraud Examiner’s Manual
The simplest way to obtain relevant documents, such as bank records, is to request them. This usually works for fraud examiners representing large organizations that are important customers to the party with the information. Vendors and other customers of the company conducting the investigation might cooperate voluntarily if they have nothing to hide (or think that incriminating evidence cannot be found) and are anxious to maintain good relations with the company. A subject can consent to produce the records or execute a written consent for the fraud examiner to obtain such records from banks, credit agencies, or the taxing authority.
If the business does not voluntarily provide the records, fraud examiners may pursue them through subpoenas and other legal processes.
