Traving Illicit Transactions

Question 1

A relationship between foreign and domestic financial institutions in which one institution has the authority to provide certain financial services on another institution’s behalf can BEST be described as a(n):

A. Foreign correspondent relationship
B. Information exchange agreement
C. SWIFT partnership
D. Joint services relationship

Answer 1

A. Foreign correspondent relationship

Question 2

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 income correlation method
B. The expenditures method
C. The bank deposit analysis method
D. The asset method

Answer 2

D. The asset method

Question 3

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 statements provide information about the division of the subject’s assets.
B. Credit card statements show the source of the funds used to pay a credit card bill.
C. Credit card records are available online for public inspection.
D. Credit card records can reveal assets that a subject has acquired.

Answer 3

D. Credit card records can reveal assets that a subject has acquired.

Question 4

Most jurisdictions do not require cryptocurrency exchanges, digital wallet providers, or cryptocurrency automated teller machine (ATM) operators to record personal identifying information about their clients.

A. True
B. False

Answer 4

False

Question 5

The expenditures method (also known as the sources and application of funds method) for proving illicit income involves identifying all assets held by the subject that were acquired earlier, identifying the amount of the subject’s current liabilities, and taking the difference between the two values.

A. True
B. False

Answer 5

False

Question 6

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

Answer 6

False

Question 7

Which of the following types of records for a personal bank account would MOST LIKELY contain the account holder’s name, address, telephone number, and government identification number?

A. ATM withdrawal slip
B. Deposit slip
C. Canceled check
D. Signature card

Answer 7

D. Signature card

Question 8

Which of the following is considered a red flag indicating that a subject is seeking to conceal ill-gotten assets through a loan repayment?

A. Payments in odd amounts
B. Accelerated payments
C. Large paydowns
D. All of the above

Answer 8

D. All of the above

Question 9

Blockchain entries contain cryptocurrency senders’ and recipients’ _______, which can help fraud examiners identify patterns that link certain users to criminal activity.

A. Bank account information
B. Cryptographic addresses
C. Full legal names
D. Dates of birth

Answer 9

B. Cryptographic addresses

Question 10

A bank credit department generally maintains which of the following types of basic loan records?

A. The cash record
B. The accounting journal
C. The master appropriation file
D. The credit or loan file

Answer 10

D. The credit or loan file

Question 11

Which of the following is the BEST definition of the indirect method of tracing financial transactions?

A. Using the subject’s books and records to analyze the relationship between the subject’s receipt and subsequent disposition of funds or assets
B. Using circumstantial evidence to analyze the relationship between a suspect’s receipt and subsequent disposition of funds or assets
C. Using financial analysis to discover all significant expenses the target incurred during the relevant period to develop the financial profile
D. Using bank records and financial statements to identify and analyze information about the target’s personal characteristics to identify sources of hidden wealth or assets

Answer 11

B. Using circumstantial evidence to analyze the relationship between a suspect’s receipt and subsequent disposition of funds or assets

Question 12

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

Answer 12

D. All of the above

Question 13

Which of the following is a means through which a fraud examiner can potentially determine that a subject owns cryptocurrency assets?

A. The subject’s digital wallet provider via a court order
B. An interview with one of the subject’s close friends
C. An analysis of the subject’s bank statements
D. All of the above

Answer 13

D. All of the above

Question 14

Which of the following is a reason why a fraud examiner might be tasked with tracing illicit transactions?

A. To identify a judgment debtor’s assets
B. To determine if a potential defendant can pay if a judgment is ordered
C. To facilitate the recovery of criminal proceeds
D. All of the above

Answer 14

D. All of the above

Question 15

Credit card records and statements pertaining to a subject can provide insight into the subject’s movements and habits, including restaurants they frequent and locations where they have traveled.

A. True
B. False

Answer 15

True

Question 16

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 spending their illicit funds on items that would not cause an increase in net worth, such as travel and entertainment?

A. The income correlation method
B. The bank deposit analysis method
C. The asset method
D. The expenditures method

Answer 16

D. The expenditures method

Question 17

Which of the following is LEAST LIKELY to be revealed by analyzing a subject’s electronic payment records?

A. The true owner of a property
B. The locations of the subject’s assets
C. If the subject is skimming employer funds
D. The cities and countries in which the subject conducts business

Answer 17

C. If the subject is skimming employer funds

Question 18

Which of the following pieces of information is usually contained on the signature card of a personal bank account?

A. The identification number of the person opening the account
B. The address of the person opening the account
C. The name of the person opening the account
D. All of the above

Answer 18

D. All of the above

Question 19

Which of the following is NOT one of the most important questions for a fraud examiner to consider before commencing a legal action to recover assets?

A. “Are there nonlegal recovery methods or remedies available?”
B. “Does the defendant have sufficient property or money to satisfy a money judgment?”
C. “Is the suspect guilty of the fraudulent act that they are being charged for?”
D. “Will the case be referred for criminal prosecution?”

Answer 19

C. “Is the suspect guilty of the fraudulent act that they are being charged for?”

Question 20

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 residences and businesses
B. Fund transfers between individuals who do not have a business relationship
C. The market value of any real property owned
D. Loans the subject has obtained

Answer 20

C. The market value of any real property owned

Question 21

Net worth can be defined as the difference between assets and liabilities at a particular point in time.

A. True
B. False

Answer 21

True

Question 22

Which of the following is NOT a characteristic that asset hiders generally look for in the financial products they use to conceal assets?

A. Accessibility
B. Security
C. Liquidity
D. Transparency

Answer 22

D. Transparency

Question 23

Which of the following is NOT a piece of information contained on most wire transfers?

A. The date of the transfer
B. The name of the sender or originator
C. The routing number of the recipient bank
D. The recipient’s government identification number

Answer 23

D. The recipient’s government identification number

Question 24

What is mutual legal assistance (MLA)?

A. A formal request by the government of a country seeking information from a defendant residing in another country
B. A formal request by the courts of one country seeking judicial assistance from the courts of another country
C. A letter whereby a criminal defendant requests that the government release exculpatory information
D. A process by which countries request and provide assistance in law enforcement matters

Answer 24

D. A process by which countries request and provide assistance in law enforcement matters

Question 25

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. Foreign exchange services B. Letters of credit and loans C. International fund transfers D. All of the above

Answer 25

D. All of the above

Question 26

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 naming the person who may authorize payments on the account C. Copies of corporate resolutions of the board of directors authorizing the opening of the account D. All of the above

Answer 26

D. All of the above

Question 27

Which of the following is an accurate statement about tracing the disposition of loan proceeds? A. Tracing loan proceeds can determine if hidden accounts were used for loan payments B. Tracing loan proceeds can uncover hidden assets or unknown witnesses C. Tracing loan proceeds can determine whether a subject has taken out a loan for someone else D. All of the above

Answer 27

D. All of the above

Question 28

Most cryptocurrencies rely on public blockchains that provide visibility into every transaction that takes place. A. True B. False

Answer 28

True

Question 29

A fraud victim hires Kennedy, a Certified Fraud Examiner (CFE), to trace a fraudster’s assets to facilitate the recovery of the illicit proceeds obtained by the fraudster. Which of the following will typically be the MOST USEFUL source of information for Kennedy in his efforts to trace the fraudster’s assets? A. Third-party witnesses B. Surveillance footage C. The fraudster’s paystubs D. The fraudster’s bank records

Answer 29

D. The fraudster’s bank records

Question 30

To reduce risks of illicit transactions, most jurisdictions require financial institutions to obtain all the following information from an institution with which they have a foreign correspondent relationship EXCEPT: A. The institution’s tax statements B. The institution’s ownership details C. The institution’s licenses or certifications D. The institution’s anti-money laundering processes

Answer 30

A. The institution’s tax statements

Question 31

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. A copy of all shareholders' meeting minutes C. A copy of the corporation’s board-authorized personnel policies D. Copies of corporate resolutions of the board of directors authorizing the opening of the account

Answer 31

D. Copies of corporate resolutions of the board of directors authorizing the opening of the account

Question 32

Which of the following is a common method that fraudsters use to hide their ill-gotten gains? A. Prepaying a home mortgage B. Purchasing a life insurance policy C. Transferring assets into foreign trusts D. All of the above

Answer 32

D. All of the above

Question 33

Which of the following information CANNOT be obtained from a subject’s safe deposit box record(s)? A. The time and date of people entering the safe deposit box B. The record of contents contained in the safe deposit box C. The signatures of people entering the safe deposit box D. The identity of people who have access to the safe deposit box

Answer 33

B. The record of contents contained in the safe deposit box

Question 34

Which of the following pieces of information is NOT usually contained on the signature card of a personal bank account? A. The telephone number of the person opening the account B. The address of the person opening the account C. The identification number of the person opening the account D. The thumbprint of the person opening the account

Answer 34

D. The thumbprint of the person opening the account

Question 35

Which of the following is a step in the general process for tracing illicit transactions? A. Implementing litigation hold procedures B. Establishing reporting protocols C. Building a financial profile D. Selecting a response team

Answer 35

C. Building a financial profile

Question 36

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

Answer 36

True

Question 37

Asset hiders look for financial products that offer clear links between the initial receipt of an asset and its final disposition to ensure the traceability of the asset. A. True B. False

Answer 37

False

Question 38

Analyzing a subject’s bank statements for transactions involving cryptocurrency exchanges can sometimes reveal information about cryptocurrency ownership. A. True B. False

Answer 38

True

Question 39

Which of the following is a common method that fraudsters use to conceal illegally acquired assets? A. Transferring assets into another person’s name B. Creating a will to allocate assets at death C. Making tax-deductible donations D. Purchasing a used vehicle

Answer 39

A. Transferring assets into another person’s name

Question 40

Asset hiders generally prefer the financial products they use to conceal assets to be traceable, inaccessible, illiquid, and exclusive. A. True B. False

Answer 40

False

Question 41

When determining a subject’s net worth for asset-tracing purposes, all assets should be valued at current market value to eliminate any question about estimates. A. True B. False

Answer 41

False