Wrong Questions

Question 1

A compliance analyst has recently investigated an account where money was deposited in amounts below the reporting limit and almost entirely withdrawn in a foreign country. Which type of money laundering is the compliance analyst potentially identifying?
A. Trade-Based
B. Check Kiting (開空頭支票)
C. Structuring
D. Microstructuring

Answer 1

C

Question 2

When an institution receives a document request from law enforcement （執法部門）with regard to an STR that the institution has filed, what should institution do?
A. It should turn over the documents that were previously collected to support the STR
B. It should request a written subpoena or count order before turning over any documents
C. It should have its outside counsel review the request and the documents before doing anything
D. It should politely decline to provide the requested documents until the law enforcement agency can explain the nature and purpose of its inquiry

Answer 2

A

Question 3

Which statements describe risks that are associated with international business corporations? (Choose 2)
A. They facilitate asset protection
B. They are established as an off-shore company
C. They are established with nominee directors (境外匿名董事）
D. They are created in a tax haven
E. They are inexpensive to acquire

Answer 3

C,D
*境外匿名董事是用以保護真實公司董事身份
P98

Question 4

The regulators of a US financial institution find that the institution has failed to establish and maintain a reasonably designed AML program. Which regulatory actions should be taken? (Choose 2)
A. Criminal penalties
B. Deferred prosecution agreement 延期起訴
C. Obtain additional license
D. Cease and desist order (禁止令：行政機關或法院禁止個人或企業繼續某一特定行為的命令）
E. Matter requiring attention

Answer 4

B & D

Question 5

Which type of sanctions are likely to be used first in order to avoid escalating violent conflicts and/or proliferation of weapons?
A. Asset Freeze
B. Financial prohibitions
C. Export and import restrictions
D. Arms and related materials embargo 禁運武器和相關材料

Answer 5

D
According to https://www.international.gc.ca/world-monde/international_relations-relations_internationales/sanctions/types.aspx?lang=eng#

Question 6

Which scenario best justifies why a customer’s account might be closed by a financial institution?
A. The customer is the object of a civil subpoena
B. The account has transactions that triggered multiple suspicious activity reports
C. The customer uses a shipping company dealing with specially designated nationals
D. The account shows periodic fixed amount remittances for tuition fees

Answer 6

B

Question 7

How do drug traffickers and other criminals use the fine art industry to disguise illicit proceeds?
A. They use forged (偽造) or fraudulent invoicing of priceless works of art by auction houses
B. They commingle (混合) legitimate and illicit proceeds by principals for payment of fine art
C. They immediately resell priceless works of art after purchase from a foreign auction house
D. They use anonymous agents to buy the art and have the payment wired from offshore havens

Answer 7

D

Question 8

What should senior management do in order to promote a culture of anti-money laundering compliance?
A. They should include compliance with AML procedures as condition of employment
B. They should attend all training sessions with front-line employment
C. They should have close ties with the independent auditors of the AML program
D. They should base employee compensation on the amount of suspicious activity they detect

Answer 8

A

Question 9

What is the result of an increased awareness of the potential for gatekeepers to assist in money laundering in recent years?
A. The IMF (國際貨幣基金組織) has raised the profile of gatekeepers, requiring that countries regulate them
B. Lawyers who represent money launderers can more easily be prosecuted
C. Accountants are no longer considered gatekeepers, since they are not permitted to set up companies or trusts
D. The FATF recommendations cover lawyers performing financial transactions

Answer 9

D

please refer to the CAMS Mock Exam

Question 10

In some instances, a financial institution may receive a warrant from law enforcement authorities to search its premises. A search warrant is a grant of permission from a court for a law enforcement agency to search certain designated premises and seize specific categories of items or information. Generally, what is the required threshold for the requesting agency to establish in order to obtain a search warrant of a financial institution?
A. Reasonable belief
B. Probable cause
C. A preponderance of the evidence (占優勢的證據)
D. Clear and Convincing proof

Answer 10

A

Question 11

When should the anti-money laundering risk assessment be updated?

A. Every two years
B. When instructed to by the Financial Action Task Force
C. When the board of directors changes
D. After a merger or acquisition

Answer 11

D

Question 12

A compliance officer identifies a potentially significant risk in a popular financial product. Further investigation reveals there is no mitigating control.
Which course of action should the compliance officer take?

A. Implement a temporary mitigation plan that enables effective management of the risk until a permanent plan can be developed
B. Note the risk and address it during the next round of policy and procedure review
C. Immediately cease providing the product and only offer it after effective permanent mitigation is implemented
D. Launch a long-term project to remediate the control deficiency

Answer 12

A

Question 13

A compliance officer learns from an Information Technology (IT) source of a potential new financial service being discussed by the new product approval committee.
What is the correct next course of action?

A. Get as much information as possible from the source so that potential risks can be researched and a report prepared and presented to the head of marketing
B. Request that the new product approval committee include the compliance officer
C. Start initial research into potential risks but wait until notified that the service has been approved by the committee before initiating extensive research
D. Go to the board of directors and try to shut the new service down immediately because the committee did not communicate with the compliance officer

Answer 13

B

Question 14

A retail bank has just acquired a credit card business. The bank’s anti-money laundering policy requires that new employees are trained within 30 days of their hire date and refresher training is delivered to all employees on an annual basis.
Is the bank’s existing anti-money laundering training adequate to be delivered to employees of the newly acquired credit card business?

A. No, anti-money laundering training needs to be delivered face-to-face for credit card businesses.
B. Yes, the existing training covers the bank’s policies, procedures, and processes.
C. No, anti-money laundering training needs to be tailored and focused on the risks specific to the business.
D. Yes, the existing training covers the anti-money laundering regulations that the bank is required to follow.

Answer 14

C

Question 15

Who has the ultimate responsibility within a bank for ensuring that the bank has a comprehensive and effective Bank Secrecy Act / anti-money laundering (BSA/AML) program and oversight framework that is reasonably designed to ensure compliance with applicable regulations?

A. BSA/AML compliance officer
B. Board of directors
C. Senior management
D. Business line managers

Answer 15

B

Question 16

The scope of the 3rd EU ML Directive differs from the 2nd EU ML Directive in that:

A. It specifically excludes the category of trust and company service providers
B. It covers all dealers trading in goods who trade in cash over 25,000 Euros.
C. It brought money remittance offices under AML coverage.
D. The definition of financial institution includes certain insurance intermediaries

Answer 16

D

Question 17

Which of the following should a national legislature consider when criminalizing money laundering in line with the CFAFT 19 Recommendations:
(Choose 3)

A. Do not limit the number of specific 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

Answer 17

A,B and C

Question 18

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

A. EURO/USD 5K
B. EURO/USD 10K
C. EURO/USD 15K
D. EURO/USD 20K

Answer 18

C

Question 19

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 firms
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

Answer 19

A,B and D

Question 20

A bank account is established for a new business customer. The business was established five years ago with an address in another state. The business website contains few details other than stating it is a real estate business.
One principal has an international telephone number and appears to be living in another country. The other principal works out of a recreational vehicle.
What warrants enhanced due diligence in this scenario?

A. Shell company
B. Human trafficker
C. Politically exposed person
D. Money laundering through real estate

Answer 20

A

The correct answer is A. Options B and C are not logical as there is insufficient information, so they are eliminated. The real fight was between A and D; since the question “warrants enhanced due diligence,” it is vital to review the corporate structure before pinning the ML tag. Hence, A is the correct answer.

Question 21

A branch manager for a small community bank has a new customer who deposits four EUR 50,000 checks into one account. Shortly thereafter, the customer goes to another branch and asks to transfer all but EUR 1,500 to three accounts in different foreign jurisdictions.
Which suspicious activity should be the focus of the suspicious transaction report?

A. The customer opened the account with four large checks
B. The customer goes to a different branch to make this transaction
C. The customer transfers almost all of the funds out of the account
D. The customer asks to transfer funds to accounts in three different foreign jurisdictions

Answer 21

D

Question 22

A government has instituted new anti-money laundering laws which require all financial institutions to obtain certain information from its customers.
Which step should an institution located in this jurisdiction take to ensure compliance?

A. Change procedures to require that the necessary information is obtained
B. Change procedures and systems as necessary and provide employee training
C. Send a notice to customers asking them to provide the necessary information
D. Change systems to ensure the required information is automatically obtained from all customers

Answer 22

C

Question 23

Which of the following customer transactions with a securities dealer (証券交易所) would indicate the highest suspicion of money laundering?

A. An unexplained high level of account activity with very low levels of securities transactions (證券交易)
B. Recurring transfers of money into a brokerage account (經紀帳戶) subsequently invested in short-term securities.
C. Frequent trades in unlisted securities throughout the day on a regular basis.
D. Investment in securities with a significantly lower risk than the customer’s expressed risk tolerance.

Answer 23

A

Question 24

A popular restaurant in town has begun depositing less cash than it has in prior years. In a review of the customer’s accounts, you notice that credit cards receipts has increased with no explanation
The account officer discovers that the restaurant has installed a private-owned automated teller machine (ATM) onsite and has begun construction on a patio dining area.
Which red flag should trigger additional investigation?
A. Privately owned ATM
B. Low cash deposits
C. Increased credit card receipts
D. Construction of the new patio dining area

Answer 24

C

Question 25

A customer opens a corporate account with a broker-dealer on behalf of several beneficial owners, with a stated long-term investment goal. The customer deposits $25.5 million into the account and three days later transfers $5 million to an overseas bank. Shortly thereafter, the customer begins making numerous purchases of pesos. The compliance officer receives a query regarding the movement of funds. Within a month of account opening, the customer depletes the account.
Which two red flags should prompt the firm’s compliance officer to take action? (Choose two.)

A. The new account deposit is $25.5 million
B. A corporate account is opened on behalf of several beneficial owners
C. The compliance officer receives the query regarding the movement of funds
D. The customer’s stated investment goal is not reflective of account activity

Answer 25

C,D

Question 26

What should countries do to help prevent non-profit organizations from being abused for the financing of terrorism according to the Financial Action Task Force 40
Recommendations?

A. Allow for freezing assets of non-profit organizations
B. Require all non-profit organizations to register with the country’s financial intelligence unit
C. Ensure non-profit organizations cannot be used to conceal or obscure the diversion of funds intended for legitimate purposes to terrorists’ organizations Most Voted
D. Create laws that forbid non-profit organizations from completing cross-border transactions without first running them through known terrorist data bases

Answer 26

C

study guide pg no:80 The objective of Recommendation 8 is to ensure that NPOs are not abused by:
• Terrorist organizations posing as legitimate entities
冒充合法實體的恐怖組織
•Exploiting legitimate entities as conduits for terrorist financing
利用合法實體作為恐怖主義融資的渠道
• Concealing or obscuring the clandestine diversion of funds intended for legitimate purposes to terrorist 隱瞞／掩蓋將用於合法目的的資金秘密轉移給恐怖組織的行為

Question 27

In the context of AML Compliance Program Governance, which of the following is considered the most critical element to ensure the effectiveness of an AML program?
A. A comprehensive and dynamic risk assessment process
B. Regular and ongoing AML training for all employees
C. Automated transaction monitoring systems
D. Independent AML audits and reviews

Answer 27

A

A: A comprehensive and dynamic risk assessment process
A comprehensive and dynamic risk assessment process is crucial as it identifies and assesses the risks the institution faces and ensures that appropriate controls are in place to mitigate those risks.

B: Regular and ongoing AML training for all employees
While AML training for all employees is essential to raise awareness and ensure adherence to policies, it is not the most critical element overall.

C: Automated transaction monitoring systems
Automated transaction monitoring systems help in detecting suspicious activities, but they rely on the foundation of a solid risk assessment to be effective.

D: Independent AML audits and reviews
Independent AML audits and reviews are important for verifying compliance and effectiveness, but they are reactive rather than proactive measures.

Question 28

In developing an AML compliance program, which of the following aspects is most critical for preventing insider abuse?
A. Strict internal controls and frequent audits
B. Employee background checks and ongoing monitoring
C. Whistleblower protection mechanisms and a strong ethical culture
D. Training employees on AML policies and procedures

Answer 28

C

A: Strict internal controls and frequent audits
While strict internal controls and frequent audits are crucial, they alone may not be sufficient to prevent insider abuse if other fundamental aspects are neglected.

B: Employee background checks and ongoing monitoring
Thorough background checks and continuous monitoring are essential, but are not the single most critical aspect. They work best in combination with other measures.

C: Whistleblower protection mechanisms and a strong ethical culture
Creating an environment where employees feel safe to report suspicious behavior, along with fostering an ethical culture, is extremely vital in preventing insider abuse.

D: Training employees on AML policies and procedures
Employee training is key to ensuring that staff understand and can implement the AML policies effectively, but without whistleblower protections and ethical culture, insider abuse may still go unreported.

Question 29

In a complex money laundering investigation involving multiple jurisdictions, what is the most effective initial step to gather and analyze financial data across different countries?
A. Directly contacting financial institutions in each country to obtain transaction records
B. Utilizing international mutual legal assistance treaties (MLATs) to request information from foreign authorities
C. Leveraging Financial Intelligence Units (FIUs) to share information between jurisdictions
D. Hiring a private investigation firm with experience in international financial crime

Answer 29

C

A. Directly contacting financial institutions in each country to obtain transaction records.
While contacting financial institutions is important, it’s not the most effective initial step because it can be time-consuming and may not yield comprehensive results across multiple jurisdictions.

B: Utilizing international mutual legal assistance treaties (MLATs) to request information from foreign authorities.
Using MLATs can be effective for obtaining legal assistance between governments, but it can be a slow process and may not be the best initial step for gathering comprehensive data.

C. Leveraging financial intelligence units (FIUs) to share information between jurisdictions.
FIUs are designed to process and share information related to financial crimes across borders efficiently, making this an effective initial step.

D. Hiring a private investigation firm with experience in international financial crime.
Private investigation firms can be useful, but relying solely on them initially may bypass legal and official channels that can provide more authoritative and comprehensive information.

Question 30

In the context of Customer Due Diligence (CDD), which of the following measures is most effective for establishing the true beneficial owner of a legal entity?
A. Relying solely on the information provided by the customer
B. Reviewing corporate documents such as articles of incorporation and shareholder registers
C. Conducting a comprehensive background check and utilizing independent data sources and databases
D. Relying on a 3rd party intermediary to carry out due diligence

Answer 30

C

A. Relying solely on the information provided by the customer
While customer-provided information is useful, it may not always be reliable or complete to establish the true beneficial owner.

B. Reviewing corporate documents such as articles of incorporation and shareholder registers
Corporate documents provide valuable information about ownership structure, but they may not disclose the beneficial owner if ownership is complex.

C. Conducting a comprehensive background check and utilizing independent data sources and databases
A comprehensive background check, including the use of independent data sources and databases, is most effective for identifying the true beneficial owner, especially in complex ownership structures.

D. Relying on a third-party intermediary to carry out due diligence
Third-party intermediaries can provide additional due diligence, but reliance on them alone might not ensure the verification of the true beneficial owner.

Question 31

Under the USA PATRIOT Act, which section requires financial institutions to establish anti-money laundering programs and what are the four minimum requirements such programs must include?
A. Section 312; Customer Identification Program, Internal Controls, Compliance Officer, Independent Testing
B. Section 326; Customer Identification Program, Risk Assessment, Compliance Officer, Independent Testing
C. Section 353; Customer Identification Program, Internal Controls, Watch List Screening, Independent Testing
D. Section 352; Internal Controls, Compliance Officer, Ongoing Employee Training, Independent Testing

Answer 31

D

Section 312 of the USA PATRIOT Act focuses on due diligence procedures for correspondent accounts and private banking accounts for non-U.S. persons.

Section 326 of the USA PATRIOT Act requires financial institutions to implement a Customer Identification Program, but it does not prescribe the four minimum requirements of AML programs.

Section 353 of the USA PATRIOT Act does not exist. The Customer Identification Program and Watch List Screening are specific to other requirements.

Section 352 of the USA PATRIOT Act mandates that financial institutions establish AML programs, including internal controls, a compliance officer, ongoing employee training, and independent testing to ensure program implementation.

Question 32

What advanced technique can be employed to detect complex money laundering schemes that use layering to obscure the origin of funds?
A. Transaction Monitoring
B. Network Analysis
C. Know Your Customer (KYC)
D. Customer Due Diligence (CDD)

Answer 32

B

Network analysis is considered an advanced technique because it provides a detailed view of the connections and flow of funds between various entities. This can reveal hidden relationships and transactions structured to obscure the origin of funds, making it particularly effective in detecting complex money laundering schemes that use layering.
Transaction monitoring is fundamental in detecting suspicious activities but may not be sufficient alone in identifying complex layering schemes.

Question 33

When conducting an AML investigation into a complex network of shell companies, which of the following techniques is most effective in identifying the ultimate beneficial owners?
A. Using formal requests through mutual legal assistance treaties (MLATs)
B. Implementing continuous transaction monitoring systems
C. Conducting an extensive public records search including corporate and land registries
D. Engaging forensic accountants to follow financial trails across jurisdictions

Answer 33

D

Public records searches can provide information on legal owners but may not always reveal the true beneficial owners, especially in cases involving multiple layers of shell companies

Engaging forensic accountants to follow financial trails across jurisdictions is the most effective technique for identifying the ultimate beneficial owners. While other methods have their merits, forensic accountants are trained to dissect complex financial structures and can often penetrate the layers of obfuscation used by shell companies in money laundering schemes.

Question 34

Which directive under the European Union (EU) requires financial institutions to maintain detailed records for at least five years, implement customer due diligence (CDD), and report suspicious transactions?
A. 1st EU Directive
B. 2nd EU Directive
C. 3rd EU Directive
D. 4th EU Directive

Answer 34

C

The Third Anti-Money Laundering Directive (2005/60/EC) specifically provided detailed requirements for financial institutions, including maintaining records for at least five years, implementing customer due diligence measures, and reporting suspicious transactions to combat money laundering and terrorist financing.

The Fourth Anti-Money Laundering Directive, adopted in 2015, further enhanced the framework by emphasizing a risk-based approach and introducing stricter beneficial ownership and transparency requirements.

Question 35

Which method of money laundering involves the use of front companies (掩護機構) to integrate illicit funds into the financial system?
A. Layering
B. Placement
C. Integration
D. Structuring

Answer 35

C

Placement refers to the initial stage where illicit funds are introduced into the financial system

Integration is the third stage of money laundering where illicit funds are merged into the legitimate financial system. Front companies, which appear as a legitimate business, are often used to make illicit funds appear to be lawful revenue.

Question 36

Which of the following best describes the primary challenge when integrating multiple dynamic sanctions lists into an organization’s existing AML compliance program?
A. Ensuring real-time updates across all lists to avoid any potential false positives.
B. Balancing the legal requirements of different jurisdictions with internal compliance standards
C. Maintaining and effectively managing cross-references to prevent and detect merged entity complexities.
D. Implementing a system that automates the selection of relevant sanctions lists for different business lines.

Answer 36

C
A: While real-time updates are critical, they do not address the primary complexity of managing dynamic and sometimes conflicting data from multiple sources.
B: Managing legal requirements of different jurisdictions is crucial but not the primary challenge when dealing with multiple sanctions lists.
C: This is a significant challenge as merged entity complexities often arise due to differences in data formats and the need for accurate cross-referencing of entities across lists.
D: Implementing an automated system is important, but it does not fully capture the primary challenge of managing dynamic updates and cross-referencing

Explanation: The primary challenge in integrating multiple dynamic sanctions lists lies in maintaining and effectively managing cross-references to handle entities and their potential complexities. Differences in data formats, frequent updates, and potential overlaps or conflicts between lists necessitate robust systems to track and validate the accuracy of cross-references. Ensuring real-time updates and balancing legal requirements, while important, are secondary to the core challenge of managing merged entity complexities.

Question 37

Which of the following best describes the primary focus of a company’s enhanced due diligence (EDD) in relation to financial sanctions screening?
A. Identifying politically exposed persons (PEPs) and their close associates
B. Screening transactions for possible ties to terrorist financing
C. Ensuring compliance with global anti-money laundering standards
D. Identifying and mitigating risks associated with entities under financial sanctions

Answer 37

D
Explanation: Enhanced due diligence (EDD) in relation to financial sanctions screening specifically focuses on identifying and mitigating risks associated with entities and individuals under financial sanctions. While it encompasses screening for PEPs, ensuring AML compliance, and detecting terrorist financing, its primary objective lies in managing the unique risks posed by sanctioned entities and individuals.

Question 38

Which of the following describes the main purpose of the 50 Percent Rule under the Office of Foreign Assets Control (OFAC) regulations?
A. To ensure that all transactions exceeding fifty thousand dollars are reported to OFAC
B. To mandate that financial institutions monitor all account holders with fifty percent or more ownership in any transaction.
C. To require that entities owned 50% or more in the aggregate by one or more blocked persons are themselves considered to be blocked.
D. To ensure that financial institutions block all transactions to countries with 50% or more residents on the Sanctions List.

Answer 38

C

Explanation: The 50 Percent Rule under OFAC’s regulations states that entities owned 50% or more in the aggregate, directly or indirectly, by one or more blocked persons are themselves blocked. Compliance with this rule is imperative for financial institutions to prevent dealing with sanctioned parties

Question 39

Which of the following challenges is most commonly associated with maintaining an accurate sanctions list within a financial institution’s compliance program?
A. Frequent updates and changes in sanctions lists by regulatory authorities
B. Lack of a clear regulatory framework
C. Difficulty in identifying beneficial ownership structures
D. High cost of compliance technology

Answer 39

A

Explanation: Financial institutions must continually monitor regulatory updates and changes to sanctions lists, which can be frequent and impactful. This makes maintaining an accurate and current sanctions list a significant challenge within any compliance program.

Question 40

Which of the following techniques is most effective in uncovering complex layering strategies used in money laundering schemes?
A. Transaction monitoring and pattern recognition
B. Automated negative news screening
C. Forensic accounting and financial analysis
D. Know Your Customer (KYC) procedures

Answer 40

C
Explanation: Forensic accounting and financial analysis is the most effective technique in uncovering complex layering strategies used in money laundering schemes. It involves a thorough examination of financial transactions and records, enabling investigators to trace funds and identify suspicious patterns that might indicate money laundering activities.

Transaction monitoring and pattern recognition involves analyzing transaction data to detect patterns that may indicate suspicious activities. It is effective but may not always uncover complex layering strategies without additional analytical methods.

Question 41

Which of the following techniques is most effective in identifying complex layering strategies in money laundering?
A. Transaction monitoring with predefined rules
B. Customer due diligence and enhanced due diligence
C. Implementation of machine learning and artificial algorithms
D. Regular audits and compliance reviews

Answer 41

C

Explanation: Complex layering strategies in money laundering often involve sophisticated and dynamic methods that can be difficult to detect with traditional rules-based systems. The use of machine learning and AI algorithms allows for the identification of complex and unusual patterns that are not predefined, providing a more robust tool in the detection of these advanced techniques.

While transaction monitoring with predefined rules can capture suspicious activities, it may not effectively identify complex layering strategies due to its reliance on known patterns.

Question 42

Which of the following steps should be prioritized when developing an Anti-Money Laundering (AML) Compliance Program to ensure its effectiveness?
A. Establishing a robust customer due diligence (CDD) process.
B. Ensuring senior management oversight and support for the AML program.
C. Deploying (部署) advanced transaction monitoring systems.
D. Implementing employee training on AML regulations.

Answer 42

B

Explanation: The effectiveness of an AML Compliance Program hinges on the commitment from senior management. Their oversight and support ensure that the program receives adequate resources, and aligns with the organization’s overall compliance objectives, which is critical for fostering a culture of compliance. While establishing a CDD process is crucial, it needs to be part of an integrated approach that includes other components of an AML program.

Question 43

Which of the following statements best describes the primary purpose of implementing an effective transaction monitoring system within a financial institution?
A. To detect and block fraudulent transactions in real-time
B. To ensure compliance with regulatory bodies by reporting suspicious activities related to money laundering or terrorism financing.
C. To increase the overall operational efficiency of the financial institution
D. To reduce the financial institution’s operational costs associated with manual transaction reviews.

Answer 43

B
Explanation: The primary purpose of implementing an effective transaction monitoring system in a financial institution is to ensure compliance with regulatory bodies by identifying and reporting suspicious transactions that could indicate money laundering or terrorism financing. While there are secondary benefits such as fraud detection and operational efficiency, the core objective remains regulatory compliance and the identification of illicit activities.

While transaction monitoring can help identify potentially fraudulent activities, its primary purpose in AML is not solely focused on real-time fraud prevention.

Question 44

Which of the following scenarios most likely warrants the filing of a Suspicious Activity Report (SAR)?
A. A customer makes frequent deposits slightly below the reporting threshold over a short period
B. A customer wires funds internationally for a legitimate business purpose
C. A customer withdraws a large sum of money during normal business hours
D. A customer frequently asks questions about the bank’s AML policies

Answer 44

A

Structuring, or making multiple transactions to evade reporting requirements, often indicates an attempt to avoid detection and therefore should raise suspicion.

While unusual, simply asking questions about AML policies doesn’t inherently indicate suspicious activity on its own.

Question 45

Which of the following scenarios is most likely to be indicative of layering in a money laundering scheme?
A. A customer makes a large cash deposit followed by an immediate transfer to an overseas account.
B. A customer consistently deposits amounts just below the reporting threshold over several weeks.
C. A company suddenly increases the number of wire transfers to international jurisdictions with no clear business purpose.
D. A customer withdraws large sums of cash from different bank branches within a short period.

Answer 45

C

Explanation: In the layering stage of money laundering, criminals focus on obscuring the origin of the illicit funds through complex layers of financial transactions. The scenario in option 3 describes a scenario that matches this stage well. Sudden and unjustified increases in wire transfers disrupts the paper trail, making it harder for the origin of the funds to be traced.

Question 46

Which of the following regulatory requirements specifically address the obligations of financial institutions to detect and prevent money laundering activities related to politically exposed persons (PEPs)?
A. USA PATRIOT Act Section 312
B. Financial Action Task Force (FATF) Recommendation 12
C. Bank Secrecy Act (BSA)
D. Basel Committee on Banking Supervision (BCBS) Guidelines

Answer 46

B

Question 47

Which of the following measures is considered the most effective in detecting suspicious activity in a financial institution?
A. Regular staff training on AML/CFT policies and procedures
B. Implementing a robust transaction monitoring system
C. Conducting periodic internal audits and reviews
D. Entering into information- sharing agreements with other financial institutions

Answer 47

B

A robust transaction monitoring system is designed to analyze and identify suspicious activity in real-time, making it an effective measure for detecting potential money laundering activities

While staff training is crucial for maintaining awareness and compliance, it is not the primary method for detecting suspicious activity.

Question 48

Which of the following is the most effective method for detecting suspicious activity related to trade-based money laundering?
A. Monitoring for price discrepancies in trade documents.
B. Comparing the volume and value of transactions to historical patterns.
C. Conducting enhanced due diligence on high-risk clients and transactions.
D. Using advanced analytics and machine learning to detect anomalies in trade transactions

Answer 48

D

Comparing the volume and value of transactions to historical patterns can help identify unusual trade activities, but it might miss sophisticated layering techniques.

Advanced analytics and machine learning can effectively detect patterns and anomalies that might be missed by traditional methods, making it the most effective option.

Question 49

Which of the following is the most effective method for detecting suspicious activity related to trade-based money laundering?
A. Monitoring for price discrepancies in trade documents.
B. Comparing the volume and value of transactions to historical patterns.
C. Conducting enhanced due diligence on high-risk clients and transactions.
D. Using advanced analytics and machine learning to detect anomalies in trade transactions

Answer 49

D

Comparing the volume and value of transactions to historical patterns can help identify unusual trade activities, but it might miss sophisticated layering techniques.

Advanced analytics and machine learning can effectively detect patterns and anomalies that might be missed by traditional methods, making it the most effective option.

Question 50

Which of the following is the most effective approach in identifying and reporting suspicious activity related to nested accounts within a correspondent banking relationship?
A. Relying solely on customer due diligence (CDD) information provided by the respondent bank.
B. Implementing enhanced due diligence (EDD) and transaction monitoring specifically tailored to detect nested accounts.
C. Conducting periodic on-site audits of the respondent bank to observe their AML controls directly.
D. Relying on regulatory reports and advisories to understand the risks posed by the respondent bank.

Answer 50

B
On-site audits can provide valuable insights into the respondent bank’s AML controls but may not be feasible on a frequent basis for all institutions.

Enhanced due diligence and tailored transaction monitoring are necessary to identify complex structures and transactions characteristic of nested accounts.

Question 51

Which of the following is the most critical component of an effective AML Compliance Program Governance framework?
A. Regular employee training and awareness initiatives
B. Strong oversight and periodic independent audits
C. Robust Know Your Customer (KYC) processes
D. Comprehensive transaction monitoring systems

Answer 51

B

Strong oversight and periodic independent audits are crucial as they ensure that the AML program, including employee training, KYC processes, and transaction monitoring is being effectively implemented and continuously improved. Independent audits, in particular, provide an unbiased assessment of the program’s effectiveness.

While regular employee training is essential for raising awareness and ensuring that all employees understand their role in preventing money laundering, it does not encompass (包含) the entire framework required for effective governance.

Question 52

Which of the following is the most critical component in the governance of an AML compliance program to ensure its alignment with regulatory expectations?
A. Having a dedicated AML compliance officer
B. Implementing robust transaction monitoring systems
C. Regular independent audits of the AML compliance program
D. Strong support and involvement from senior management and the board of directors

Answer 52

D

While all the provided options are important components of an AML compliance program, strong support and involvement from senior management and the board of directors are the most critical. This engagement ensures that the AML compliance program is prioritized, well-funded, and continuously improved to meet regulatory expectations.

Question 53

Which of the following is the MOST effective approach to detect and report suspicious activities related to trade-based money laundering (TBML)?
A. Implementing advanced data analytics and machine learning algorithms to monitor trade transactions in real time.
B. Conducting annual reviews of trade transactions manually.
C. Relying solely on customer due diligence (CDD) during account opening.
D. Establishing collaborations with other financial institutions to share information on suspicious trade activities.

Answer 53

A

The implementation of advanced data analytics and machine learning algorithms provides the most effective method for real-time monitoring and detection of suspicious trade-based money laundering activities. While manual reviews, customer due diligence, and collaborations with other institutions are important, they are less effective when used alone without the support of sophisticated technological tools.

Question 54

Which of the following is considered the most challenging method for detecting money laundering activities?
A. Layering through shell companies
B. Structuring transactions
C. Using non-profit organizations
D. Trade-based money laundering

Answer 54

D

Trade-based money laundering involves the use of trade transactions to disguise the origins of illicit funds, which can be particularly difficult to detect due to the complexity and volume of global trade.

Layering through shell companies involves using multiple entities to obscure the origin of funds, making it difficult to trace.

Question 55

Which of the following is a primary method used by money launderers to integrate illicit funds into the legitimate financial system?
A. Placement
B. Layering
C. Integration
D. Structuring

Answer 55

C

Integration is the process of moving laundered money into the economy, making it appear as legitimate business earnings.

Integration is a key method used by money launderers to make illicit funds appear as legitimate business earnings by moving them into the economy through various legitimate means.

Question 56

Which of the following elements is a critical component of an effective sanctions compliance program?
A. Regular training and awareness programs for employees.
B. Automated transaction monitoring systems.
C. Regular independent audits of the sanctions compliance program.
D. Having multiple sanctions lists from various jurisdictions integrated into the system.

Answer 56

A

An effective sanctions compliance program comprises several components, including regular training, automated transaction monitoring, independent audits, and integrating various sanctions lists. Among these, regular independent audits stand out as critical because they ensure that the entire program is working effectively and can identify and rectify weaknesses.

Training and awareness programs ensure that employees are knowledgeable about sanctions regulations and their responsibilities in adhering to them.

Question 57

Which of the following elements is most crucial for an effective AML compliance program governance to prevent and detect money laundering and terrorist financing activities?
A. Automated Transaction Monitoring Systems
B. Top Management and Board Involvement
C. Regular Training for Staff
D. Customer Due Diligence Procedures

Answer 57

B

Top management and board involvement is critical for setting the tone at the top and ensuring adequate resources and support for the AML compliance program.

Regular training for staff helps in raising awareness and ensuring that employees can identify suspicious activities, but without top management support, the program might lack the necessary resources and enforcement.

Question 58

Which of the following governance structures is most effective in ensuring independence and objectivity in the AML compliance program?
A. Embedding the AML compliance function within the internal audit team
B. Having the AML compliance function report directly to the CFO
C. Establishing the AML compliance function as an independent division reporting directly to the board of directors
D. Integrating the AML compliance function with the legal department

Answer 58

C

Establishing the AML compliance function as an independent division reporting directly to the board of directors is the most effective governance structure to ensure independence and objectivity. This setup minimizes conflicts of interest and enables the AML compliance function to have the necessary authority and autonomy to fulfill its responsibilities effectively.

Question 59

Which of the following international regulatory frameworks requires member countries to establish and implement measures against money laundering, financing of terrorism, and proliferation of weapons of mass destruction?
A. USA PATRIOT Act
B. Financial Action Task Force (FATF) Recommendations
C. European Union’s 5th Anti-Money Laundering Directive (5AMLD)
D. Basel III Accord

Answer 59

B

Question 60

Which of the following is a key component in ensuring the effectiveness of an Anti-Money Laundering (AML) compliance program governance?
A. Annual internal audits checking for procedural compliance
B. Comprehensive staff training programs conducted quarterly
C. Establishing a robust transaction monitoring system
D. Strong leadership oversight and accountability from the board of directors

Answer 60

D

While all the options listed are important components of an AML compliance program, strong leadership oversight and accountability from the board of directors are key to ensuring the program’s overall effectiveness. Without the support and active involvement of senior leadership, efforts in other areas may not be adequately coordinated or effective.

Question 61

Which of the following is a key indicator of a layered money laundering scheme involving international trade?
A. Large volumes of wire transfers between unrelated companies in different jurisdictions.
B. Consistently rounded dollar amounts in all transactions.
C. Sudden influx of cash deposits followed by immediate withdrawals.
D. The use of high-value assets bought and sold within short timeframes.

Answer 61

A

Large volumes of wire transfers between unrelated companies in different jurisdictions are a typical sign of layering, especially when these transactions involve international trade. This method is used to disguise the origin of illicit funds by moving them through various accounts and jurisdictions, making it difficult for authorities to trace the money back to its illegal source.

Sudden influxes of cash followed by immediate withdrawals may be indicative of structuring, which is a tactic used in the placement stage, not necessarily in the layering stage of money laundering.

Question 62

What are two legal risks of having inadequate privacy policies and procedures? (Choose two.)

A. Diminished reputation
B. Industry of regulatory sanctions
C. Charges of deceptive business practices
D. Higher marketing and public relations costs

Answer 62

B and C

Having inadequate privacy policies and procedures can expose a business to several legal risks. Two of the most significant legal risks include:

Industry or regulatory sanctions: One of the most severe legal risks of having inadequate privacy policies and procedures is the possibility of facing industry or regulatory sanctions. These sanctions can include fines, penalties, and even the revocation of licenses or permits to operate. Such sanctions can arise if a business fails to comply with applicable privacy laws and regulations. For example, businesses in the European Union must comply with the General Data Protection Regulation (GDPR), and those in the United States must comply with the California Consumer Privacy Act (CCPA) and other state and federal privacy laws. Inadequate policies and procedures can lead to violations of these laws and regulations, resulting in severe penalties.

Charges of deceptive business practices: Inadequate privacy policies and procedures can also lead to charges of deceptive business practices. This can occur if a business fails to adequately disclose its privacy policies and procedures to customers, or if it misrepresents the extent to which it protects customer data. For example, if a business claims to have robust security measures in place to protect customer data but fails to implement these measures, it could face charges of deceptive business practices. Such charges can lead to litigation, fines, and other legal penalties.

While diminished reputation and higher marketing and public relations costs may also result from inadequate privacy policies and procedures, they are not typically considered legal risks in the same way that industry or regulatory sanctions and charges of deceptive business practices are.

Question 63

1.The assets of an international bank have more than tripled because this bank ignored the concern of the sources of wealth of the 15 largest depositors. These depositors account for up to 45% of the increase in this bank. When a new scandalous CEO is elected on this bank, 10 out of 15 largest depositors request to withdraw all their money out of banks. Which is the greatest risk to the bank in this case? (Choose one)

A. Reputational risk.

B. Legal risk.

C. Operational risk.

D. None of the above

Answer 63

Please refer to pages 8-9 of the book. The risk exposed to the bank in this scenario is concentration risk, which is defined as the potential for loss results from too much credit or loan exposure to one borrower or group of borrowers. (answer D)

Question 64

If a financial institution is itself the subject of a serious criminal money-laundering investigation, what it should do? (Choose one)

A. Show a cooperative attitude by providing all information, documentation, reports for the law enforcement agency.

B. Use in-house counsel with a better knowledge of the institution, its policies, and procedures.

C. Delay responding to law enforcement requests for information or documents until the financial institution has the best solution to deal with this prosecution.

D. Hire or consult experienced outside legal counsel.

Answer 64

D

Please refer to pages 294 of the book, which discusses Cooperating With Law Enforcement & Obtaining Counsel for an Investigation Against a Financial Institution. Answer A is wrong as it is the institution’s right to contest law enforcement agencies if their requests are unreasonable. Answer B is wrong as using in-house counsel will cost less, and in-house counsel will start out with a better knowledge of the institution. However, if the conduct under investigation could involve or lead to a criminal investigation or indictment, outside counsel who specializes in defending financial institutions in these matters may be more appropriate. Answer C is not appropriate as this behavior destroys the reputation of the institution.

Question 65

The vice president of the foreign correspondent banking department at a large United States bank has been notified that a foreign bank with an offshore license wants to open a correspondent account.

Which two things must the vice president acquire under the USA PATRIOT Act? (Choose two.)

A. A list of all the customers of the correspondent bank
B. A list of the types of businesses served by the correspondent bank
C. Information relating to the foreign bank’s anti-money laundering program
D. The identity of 10% owners of the correspondent bank, unless it is publicly traded

Answer 65

CD

Under the USA PATRIOT Act 312, it is mandatory for US banks to conduct due diligence on their foreign correspondent banking relationships to ensure that they are not being used for money laundering or terrorist financing purposes. When a foreign bank with an offshore license seeks to open a correspondent account, the vice president of the foreign correspondent banking department at the US bank must acquire certain information as part of this due diligence process.

Two things that the vice president must acquire under the USA PATRIOT Act are:

Information relating to the foreign bank’s anti-money laundering (AML) program: The vice president must obtain information about the AML program of the foreign bank to ensure that it is in compliance with international AML standards and regulations. This information will help the US bank assess the level of risk associated with the correspondent banking relationship and take appropriate measures to mitigate that risk.

The identity of 10% owners of the correspondent bank, unless it is publicly traded: The vice president must obtain information about the ownership structure of the foreign correspondent bank, including the identity of any individuals or entities that own 10% or more of the bank’s equity. If the correspondent bank is publicly traded, this information may be readily available. However, if it is not publicly traded, the US bank must obtain this information to ensure that it is not inadvertently facilitating money laundering or terrorist financing by dealing with individuals or entities that have questionable backgrounds.

It is important to note that while options A and B may be useful in obtaining a broader understanding of the correspondent bank’s business, they are not explicitly required under the USA PATRIOT Act. Therefore, options C and D are the correct answers to this question.

Question 66

How does the Financial Action Task Force (FATF) communicate its findings regarding jurisdictions with strategic anti-money laundering / Counter Financing of Terrorism deficiencies?

A. By issuing four formal documents to the deficient jurisdictions
B. By issuing two formal documents three times per year
C. By issuing informal communication to FATF members
D. By issuing documentation to the private sector

Answer 66

B
Please refer to P134

Question 67

A bank has maintained an account for a European charity for several years. The charity provides clothing to persons in need in various countries with active terrorists’ cells.

Which action by the charity indicates possible terrorist financing?
A. The charity frequently withdraws cash from the bank
B. The charity has branch locations located in various countries
C. The charity receives cash donations primarily from European countries
D. The charity maintains a bank account for non-business-related expenses

Answer 67

C
Option A: “The charity frequently withdraws cash from the bank” could be an indication of money laundering or other suspicious activity. However, the question specifically asks about possible terrorist financing, so this option is less likely to be the correct answer in this scenario.

Option C: “The charity receives cash donations primarily from European countries” is the most concerning option. Terrorist organizations may seek to use charities as a way to launder funds or disguise the source of their financial support. In this case, if the charity is primarily receiving cash donations from European countries, it may be a cause for concern as it could potentially indicate an attempt to hide the true source of the funds. European countries have implemented stringent anti-money laundering and counter-terrorism financing measures, so it is crucial to investigate this further and ensure that the funds are coming from legitimate sources.

Question 68

In a multi-national organization, which of the following is the most crucial element to ensure consistent and effective compliance monitoring across all jurisdictions?
A. Centralized compliance policies
B. Decentralized compliance teams
C. A robust internal audit function
D. Integrated compliance monitoring and reporting system

Answer 68

D

An integrated compliance monitoring and reporting system is essential for a multi-national organization as it ensures real-time, consistent, and unified compliance monitoring and reporting across jurisdictions. It also facilitates adherence to both centralized policies and local regulations, ensuring comprehensive compliance management.

Question 69

In the context of the European Union’s Anti-Money Laundering Directives, which key element was introduced in the 5th Directive (AMLD5) to enhance the transparency of beneficial ownership information?
A. The requirement for financial institutions to conduct Enhanced Due Diligence (EDD) on customers from high-risk 3rd countries
B. The establishment of a central register of beneficial owners accessible to competent authorities and obliged entities
C. The introduction of an explicit definition of Politically Exposed Persons (PEPs)
D. The mandatory reporting of suspicious transactions to the Financial Intelligence Unit (FIU) within 24 hours

Answer 69

B, please refer to p152

Question 70

Under the EU 5th Anti-Money Laundering Directive (5AMLD), which specific sectors of business were newly required to implement enhanced due diligence measures?
A. Real estate market and cryptocurrency exchanges
B. Non-profit organizations and art dealers
C. Banking sector and online gambling platforms
D. Insurance companies and precious metal dealers

Answer 70

A
Please refer to P153

Question 71

What is the primary purpose of conducting a gap analysis (差距分析) in the context of an Anti-Money Laundering (AML) compliance program?
A. To identify the weaknesses in the existing AML policies and procedures
B. To ensure that all employees are adequately trained on AML compliance
C. To validate the effectiveness of the transaction monitoring system
D. To report to regulatory authorities about compliance levels

Answer 71

A

A gap analysis is a structured process used to identify where an AML compliance program falls short in meeting legal, regulatory, or internal requirements. It is fundamentally about identifying weaknesses and areas for improvement in the AML framework to ensure better compliance and risk management

Question 72

What should be the first step in creating an effective Anti-Money Laundering (AML) compliance program within an organization?
A. Conducting a risk assessment
B. Appointing a compliance officer
C. Developing customer identification procedures
D. Creating an employee training program

Answer 72

A
The first step in creating an effective AML compliance program is conducting a thorough risk assessment. This assessment allows the organization to identify specific areas of vulnerability and tailor its compliance efforts accordingly. Subsequent steps, such as appointing a compliance officer, developing customer identification procedures, and creating an employee training program, should be based on the insights gained from the risk assessment.

Question 73

When conducting an internal investigation into potentially suspicious activity reports (SARs), what is the most crucial first step to ensure a comprehensive and lawful response?
A. Immediately notify all customers involved
B. Gather all relevant financial records and transaction details
C. Form an investigation team with clear roles and responsibilities
D. Contact legal counsel to ensure compliance with laws and regulations

Answer 73

C

Starting with a clearly defined investigation team ensures that all subsequent steps are structured and compliant with internal policies and regulatory expectations. This minimizes the risks of errors and ensures a thorough, legally sound investigation process

Gather all relevant financial records and transactions details is a crucial steps but not the first. Initial actions should establish a secure and clear investigative framework before data gathering

Question 74

Which emerging technology poses the greatest challenge for Anti-Money Laundering (AML) compliance due to its ability to facilitate anonymous transactions?
A. Blockchain Technology
B. Artificial intelligence
C. Dark Web Marketplaces
D. Quantum Computing

Answer 74

A
Blockchain Technology, particularly cryptocurrencies, poses a significant challenge for AML compliance due to its high level of anonymity and pseudonymity it can provide for transactions, making it difficult for authorities to trace and identify the parties involved in the transactions

Dark Web marketplaces often trade in cryptocurrencies, which can be untraceable, but the marketplaces themselves are not the technology but a platform

Question 75

Which emerging trend in money laundering involves the use of decentralized finance (DeFi) platforms to obscure the source and destination of illicit funds?
A. Anonymous shell companies
B. Hawala transactions
C. Cryptocurrencies tumbler service
D. DeFi yield farming

Answer 75

D

DeFi yield farming is a particularly complex and emerging trend in money laundering. It utilizes decentralized finance platforms that often lack stringent (嚴格的) regulatory oversight, making it easier for money launderers to obscure the origin and destination of illicit funds while generating profits from their crypto assets

Cryptocurrency tumbler service mix various transactions to obscure their origins but do not specifically involve decentralized finance (DeFi) platforms

Question 76

Which of the following acts was primarily responsible for establishing the Financial Crimes Enforcement Network (FinCEN) within the United States Department of the Treasury?
A. The Money Laundering Control Act of 1986
B. The USA Patriot Act
C. The Annunzio-Wylie Anti-Money Laundering Act
D. The Bank Secrecy Act

Answer 76

D
FinCEN was established by the U.S. Department of the Treasury in 1990 to combat domestic and international money laundering and other financial crimes. This was a direct outcome of the Bank Secrecy Act, which provided the groundwork for creating such an entity to track and report suspicious financial activities

Question 77

Which of the following best describes the Wolfberg Principles‘ approach to correspondent banking?
A. The principles provide a detailed regulatory framework for correspondent banking relationship
B. The principles emphasize the need for banks to conduct enhanced due diligence (EDD) on their correspondent banking clients
C. The principles mandate (授權) that banks must report all suspicious transactions to the Financial Action Task Force (FATF)
D. The principles require banks to establish a centralized compliance commitee to oversee all correspondent banking activities

Answer 77

B

The Wolfberg Principles are a set of guidelines designed to enhance the effectiveness of AML and CFT program in correspondent banking (P172), they stress the importance of enhanced due diligence when dealing with correspondent banking clients to prevent the misuse of financial system for illicit activities

Enhanced due diligence especially for nested accounts, PEPs and correspondent banking clients (P173)

Question 78

Which of the following complex layered techniques is most often used in cross-border money laundering to obscure the origin of illicit funds?
A. Shell Companies
B. Trade-Based Money Laundering
C. Smurfing
D. Casino Laundering

Answer 78

B

This method involves exploiting international trade by falsifying invoices and other documents to transfer value internationally, thereby making it challenging to trace the illicit origin of funds (P80)

Shell companies are entities created with no significant assets or operations to facilitiate illegal financial transactions. While useful, they alone do not specifically address cross-border laundering but can be part of complex scheme

Smurfing is not typically associated with cross-border laundering as it focuses on domestic transactions

Question 79

Which of the following best describes the significance of the Financial Action Task Force (FATF) 40 Recommendations in global anti-money laundering efforts?
A. They provide a non-binding (不具約束力) framework that countries can optionally adopt to combat money laundering and terrorist financing
B. They serve as a mandatory set of regulations that all member countries of FATF must implement without deviation
C. They outline the penalties and sanctions that countries will face for non-compliance with international AML/CFT standards
D. They detail the specific types of suspicious sctivities that financial institutions should report to regulatory authorities

Answer 79

A

The FATF Recommendations are not mandatory regulations but rather standards and best practices that countries are expected to implement in a manner consistent with their own legal context (p124)
While the FATF Recommendations are not legally binding, they are considered as the international standard and countries are strongly encouraged to comply for global coordination and to avoid being blacklisted

Question 80

Which of the following best practices should be employed to ensure the completeness and accuracy of Suspicious Activity Reports (SAR) generated by the compliance monitoring system?
A. Automate the SAR filing process to reduce human error
B. Implement a multi-tier review process involving compliance officers, legal advisors, and the board of directors
C. Only focus on transactions exceeding a predefined threshold amount, as they are more likely to be linked to illegal activities
D. Use stardardized forms and templates to ensure consistency across all SARs

Answer 80

B
Implementing a multi-tier review process involving various layers of expertise ensures that Suspicious Activity Reports (SARs) are not only accurate but also complete, making it the best practice among the option listed. While standardization ensures consistency, it does not guarantee completeness or accuracy in identifying and reporting suspicious activities

Automation can reduce human error but might miss context-specific nuances (細微差別) and suspicious patterns that require human judgment

Question 81

Whuch of the following international bodies is primarily responsible for establishing standards and promoting effective implementation of legal,regulatory and operational measures for combating money laundering, terrorist financing, and other related threats to the integrity of the international financial systems?
A. Financial Action Task Force (FATF)
B. International Monetary Fund (IMF)
C. World Bank
D. United Nation Office on Drugs and Crime (UNODC)

Answer 81

A
Please refer to P175-176

Question 82

Which of the following is a key challenge in combating the rise of cryptocurrency-related money laundering activities?
A. Regulatory consistency across jurdiscations
B. Lack of digital literacy (數位素養)

數位素養一詞意指有能力靈活地在多種平台和工具之間轉換，有策略性地選取最適合的方式來解決問題的概念

C. Limited transparency of blockchain transactions
D. High transaction fees

Answer 82

A

Different countries have varying regulations on cryptocurrency, making it challenging to have a consistent global approach to combat money laundering

Blockchain transactions are inherently transparent and publicly available, making it easier to trace transactions, though anonymity features can pose a challenge

Question 83

Which of the following is a primary objective of the Financial Action Task Force (FATF) Recommendations?
A. To establish a centralized global enforcement authority for AML/CFT
B. To develop international policies to combat money laundering and terroist financing
C. To provide financial institutions with specific transaction monitoring software and tools
D. To negotiate bilateral agreements between countries for sharing intelligence

Answer 83

B

Question 84

Which of the following is an essential element for the effectiveness of a Suspicious Activity Report (SAR) filing to regulatory authorities?
A. Accurate and comprehensive information
B. Filing the report within 45 days of the suspicious activity
C. Ensuring the report is reviewed by internal compliance teams
D. Securing the approval of the Chief Financial Officer (CFO) before filing

Answer 84

A
SARs must contain detailed and accurate information to be useful in investigations and regulatory actions. The core utility of a SAR in combating money laundering activities hinges (關鍵) on how detailed and accurate the report is.

Question 85

Which of the following is considered the most complex method of trade-based money laundering?
A. Over-invoicing of goods or services
B. Misstatement of Quantity
C. Multiple Invoicing for the same goods and services
D. Commingling of funds from legitimate and illicit sources

Answer 85

C
It is due to the difficulty in monitoring and verifying the true value or quantity of goods traded. It allows the creation of multiple layers and makes detection harder for regulatory authorities

Question 86

Which of the following is the most effective method for a financial institution to ensure ongoing compliance with AML regulations?
A. Relying on periodic internal audits
B. Implementing a robust transaction monitoring system with real-time alerts
C. Training staff on AML policies once a year
D. Conducting external audits every 5 years

Answer 86

B
While all methods contribute to compliance, implementing a robust transaction monitoring system with real-time alerts is the most effective way for ongoing compliance because it allows immediate detection and response to suspicious activities

Annually training may not be sufficient on its own to ensure ongoing compliance due to evolving (不斷發展的) regulations and emerging threats

Question 87

Which of the following is the most sophisticated method of layering in the money laundering process?
A. Structuring transactions to avoid regulatory thresholds
B. Using shell companies and offshore accounts to obscure the origin and ownership of funds
C. Conducting physical smuggling of cash across the borders
D. Purchasing high-value assets like real estate to integrate illicit funds

Answer 87

B
Using shell companies and offshore accounts represents a sophisticated method of layering because it incorporates a high degree of financial and corporate complexity to disguise the true source of illicit funds. This method exploits (利用) legal framework and multiple jurisdictions, making detection and investigation more challenging for authorities.

Question 88

Which of the followinf methods is mostly likely to be used in Trade-Based Money Laundering (TBML) to obscure the origin of illcit funds?
A. Over- and under-invoicing of goods and services
B. Use of shell companies to transfer funds
C. Use of virtual currencies for transactions
D. Structuring transactions to avoid detection

Answer 88

A
Please refer to p80
Over- and under- invoicing involves misstating the price of goods and services in order to transfer value. This can obscure the origin of funds by making it difficult to determine the actual price and the true beneficiary

Question 89

Which if the following methods is often used by terrorists to disguise the origins and destinations of financial transactions?
A. Layering through shell companies
B. Integration of funds into legitimate business
C. Bulk Cash Smuggling
D. Use of cryptocurrency mixing service

Answer 89

D
Cryptocurrency mixing services are increasingly used by terrorists due to their ability to anonymize and obscure financial transactions. This makes them a hard-to-trace option compared to more traditional methods like layering through shell companies or bulk cash smuggling.
While integration is a stage in money laundering, terrorists often use other methods like layering to conceal the transaction paths

Question 90

Which of the following regulatory framework imposes the strictest penalties for non-compliance with anti-money laundering directives?
A. Financial Action Task Force (FATF)
B. EU 4th Directive
C. Patriot Act (Title III)
D. Bank Secrecy Act (BSA)

Answer 90

C
The Patriot Act (Title III) expanded the provisions of anti-money laundering laws in the United States and impose stricter compliance measures and penalties compared to other framework. it widened the net for penalties related to AML non-compliance, particularly impacting financial institutions (Section 353: increase the civil and criminal penalties for violation of any orders made under the BSA, Section 363: gave the Secretary of Treasury the authority to issue more penalties in an amount equal tonot less than 2 times the amount of the transaction, but not more than US$500,000 on any financial institution or agency who commits a civil or criminal violation of international counter money laundering measures )

Question 91

Which of the following techniques is most commonly associated with the placement stage of money laundering?
A. Structuring deposits to avoid reporting threshold
B. Transferring funds via shell companies
C. Investing in real estate and high-value assets
D. Using front businesses to commingle funds

Answer 91

A
The placement stage of money laundering involves introducing illicit funds into financial system, often by breaking down large sums into smaller, less suspicious amounts through methods such as structuring (also known as smurfing).

Front business can be used at any stage but are particularly useful in the layering stage where dirty money is mixed with legitimate business revenue

Question 92

Which of the following techniques is often used to obfuscate (混淆) the origins of funds and avoid detection by authorities in terrorism financing?
A. Trade-Based Money Laundering
B. Smurfing
C. Virtual Currencies
D. Layering

Answer 92

A
Trade-based money laundering (TBML) is a complex method that leverages international trade to obscure the origins of illicit funds. This technique involves over- or under- invoicing, multiple invoicing or falsifying documents. Due to its complexity and ability to move large sums, it is often used to both launder money and financing terrorism. Other methods like smurfing, virtual currencies, and layering are also used, but TBML remains particularly insidious due to its international nature and the difficulty of detection.

Virtual currencies often anonymity and are decentralized, making them attractive for terrorism financing. However, their usage can still be traced through sophisticated blockchain analysis

Question 93

Which two factors assist a money laundering investigation that involves multiple countries? (Choose two.)

A. Law enforcement and other authorities should have access to financial information that is pertinent to the investigation.
B. Every country should share all their information with foreign law enforcement and government authorities to facilitate rapid investigations.
C. Law enforcement and other authorities should be allowed to establish and utilize joint investigative teams with law enforcement in other countries.
D. Law enforcement and other authorities should not expedite information sharing between countries to ensure that all information is provided at the same time to avoid premature conclusions.

Answer 93

AC

. Law enforcement and other authorities should have access to financial information that is pertinent to the investigation:

Money laundering often involves the movement of funds across borders, making it necessary for law enforcement and authorities to have access to financial information from different countries. This access allows them to track and trace the flow of funds, identify suspicious transactions, and gather evidence to build a strong case against money launderers. The availability of pertinent financial information, such as bank records, transaction details, and account information, greatly enhances the effectiveness of a money laundering investigation that spans multiple jurisdictions. By accessing this information, investigators can uncover the underlying financial activities and connections between individuals, entities, and countries involved in the money laundering scheme.

C. Law enforcement and other authorities should be allowed to establish and utilize joint investigative teams with law enforcement in other countries:

Money laundering investigations often require collaboration and cooperation between law enforcement agencies from multiple countries. Establishing and utilizing joint investigative teams enables authorities to pool their expertise, resources, and intelligence to tackle complex money laundering cases that transcend borders. These teams, composed of investigators from different countries, work together to share information, coordinate actions, and conduct joint operations. By leveraging the collective capabilities and knowledge of participating countries, joint investigative teams can overcome jurisdictional challenges, effectively track illicit financial flows, and apprehend money launderers. This collaborative approach enhances the speed and efficiency of investigations and increases the chances of successful prosecution and disruption of money laundering networks.

It’s important to note that option B is not a correct answer. While international cooperation and information sharing are essential, it is not practical or feasible for every country to share all their information with foreign law enforcement and government authorities. Information sharing is typically conducted through established channels and protocols, such as mutual legal assistance treaties (MLATs), extradition agreements, and information exchange agreements. These mechanisms ensure that information is shared in a controlled and lawful manner, respecting the sovereignty and legal frameworks of each country involved.

Question 94

An organization’s automated surveillance system identifies large fluctuations in customer activity. As a result of an audit, the compliance officer is informed that the system is not generating alerts when activity is consistently abnormal over a long period of time. Currently the organization is evaluating new alert scenarios in an attempt to address this problem. Which type of scenario is helpful in mitigating this weakness?
A. Below-the-line 在界線下
B. Income 收入
C. Mapping 對應
D. Peer 對等

Answer 94

D

A “Peer” scenario is a type of alert scenario that compares the behavior of one customer to that of their peers within the same customer segment or category. By identifying outliers within a customer segment, a Peer scenario can help detect abnormal behavior that may indicate potential money laundering or terrorist financing activity.In the context of the scenario presented, the organization’s automated surveillance system is failing to generate alerts when activity is consistently abnormal over a long period of time. This indicates that the system may not be effectively detecting long-term, subtle patterns of behavior that deviate from normal activity.Introducing a Peer scenario would be helpful because it would enable the system to identify patterns of behavior that are abnormal compared to the behavior of the customer’s peers within the same category or segment. This would allow the system to generate alerts for behavior that may otherwise go undetected, even if it is consistently abnormal over a long period of time.

Question 95

A compliance officer at an insurance company has been reviewing the transaction activity of several clients.

Which transaction is considered a red flag for potential money laundering?

A. A client paid the quarterly life insurance premium using money orders from two different banks.
B. A client from a high-risk jurisdiction recently purchased property insurance for a real-estate development.
C. A corporation owns several affiliates and recently opened separate group life insurance policies for each of the affiliates.
D. A client established a $100,000 charitable annuity with a non-profit organization that provides health and safety assistance internationally.

Answer 95

D

Question 96

A law enforcement official calls a bank inquiring about a customer who is currently under investigation. The law enforcement official requests information about the customer.

How should the bank respond?

A. Confirm the customer is either a current or former customer
B. Inform the board of directors before responding to the request
C. Provide the requested information to help aid in the investigation
D. Request a formal letter be submitted to verify the validity of the request

Answer 96

D

Request a formal letter be submitted to verify the validity of the request: This is the most appropriate response in this scenario. Banks should request a formal letter be submitted to verify the validity of the request. By doing so, the bank can ensure that the request is legitimate and complies with legal requirements. The formal letter should ideally be on official letterhead, issued by the relevant law enforcement agency, and clearly state the purpose of the investigation and the specific information being requested. This procedure helps the bank exercise due diligence and ensures that the request is authorized and necessary.

Question 97

The compliance officer for a private bank has been tasked with writing a policy on how the bank will deal with intermediaries.

Which two aspects should be included in the policy in respect of intermediaries to align it with the Wolfsberg Anti-Money Laundering Principles for Private

Banking? (Choose two.)

Answers
A. When an intermediary introduces clients to the bank, it is not necessary for the bank to perform due diligence on the intermediary’s clients.
B. Where an intermediary introduces clients to the bank, the bank must obtain the same type of information with respect to an introduced client that would otherwise be obtained by the bank, absent the involvement of the intermediary.
C. Where an intermediary manages assets on behalf of a number of clients and is the account holder with the bank, but that intermediary does not conduct the same level of due diligence as the bank, it is necessary for the bank to undertake due diligence on the intermediary’s clients.
D. Where an intermediary manages assets on behalf of a number of clients and arranges for the opening of accounts for its clients with the bank, and that intermediary is a financial institution subject to similar regulations, it is necessary for the bank to perform due diligence on the intermediary’s clients.

Answer 97

BC
The Wolfsberg Anti-Money Laundering Principles for Private Banking are a set of guidelines developed by a group of international banks to provide guidance on best practices for anti-money laundering (AML) and counter-terrorism financing (CTF) compliance in the private banking sector.

The two aspects that should be included in the policy in respect of intermediaries to align it with the Wolfsberg Anti-Money Laundering Principles for Private Banking are:

B. Where an intermediary introduces clients to the bank, the bank must obtain the same type of information with respect to an introduced client that would otherwise be obtained by the bank, absent the involvement of the intermediary.

This means that the bank should perform due diligence on the intermediary’s clients as if the bank had a direct relationship with them. The bank should obtain the same type of information that would be obtained if the client had approached the bank directly. This includes information about the client’s identity, source of funds, and beneficial ownership. This is important because intermediaries can be used to mask the true identity of clients and the source of their funds.

C. Where an intermediary manages assets on behalf of a number of clients and is the account holder with the bank, but that intermediary does not conduct the same level of due diligence as the bank, it is necessary for the bank to undertake due diligence on the intermediary’s clients.

This means that the bank should perform due diligence on the intermediary’s clients if the intermediary manages assets on behalf of a number of clients and is the account holder with the bank, but does not conduct the same level of due diligence as the bank. This is important because intermediaries can be used to provide access to the banking system for high-risk clients who would not otherwise have access. The bank should ensure that it has sufficient information about the intermediary’s clients to assess the risks associated with them.

D. Where an intermediary manages assets on behalf of a number of clients and arranges for the opening of accounts for its clients with the bank, and that intermediary is a financial institution subject to similar regulations, it is necessary for the bank to perform due diligence on the intermediary’s clients.

This answer is incorrect because it only applies if the intermediary is a financial institution subject to similar regulations. If the intermediary is not a financial institution subject to similar regulations, the bank should still perform due diligence on the intermediary’s clients.

Question 98

A non-U.S. bank wants to open an account at Bank A, which is a U.S.-based bank.

Which information must Bank A obtain under the USA PATRIOT Act?

A. A complete client list from the non-U.S. bank
B. The identity of owners and percentage of ownership of the non-U.S. bank
C. The structure and identity of the management team at the non-U.S. bank
D. The details of the non-U.S. bank’s anti-money laundering compliance training program

Answer 98

B

Out of the four options given, option B is the correct answer. When opening an account for a non-U.S. bank, Bank A must obtain the identity of the owners and percentage of ownership of the non-U.S. bank. This information is important because it helps Bank A to understand the ownership structure of the non-U.S. bank and identify any potential risks associated with the account.

Question 99

A customer living in a high-risk jurisdiction makes frequent, large cash deposits at a bank. The same customer sends small wire transfers to unrelated parties in other high-risk jurisdictions.

What are two red flags that may indicate money laundering? (Choose two.)

A. The bank allows cash deposits
B. The client resides in a high-risk jurisdiction
C. Wire transfers are to high-risk jurisdiction
D. Large cash deposits are from a high-risk jurisdiction

Answer 99

BC

B. The client resides in a high-risk jurisdiction: A high-risk jurisdiction is a country or geographic area with a higher probability of financial crime, such as money laundering or terrorist financing. This means that transactions involving customers who reside in high-risk jurisdictions are more likely to be suspicious. Therefore, the fact that the customer resides in a high-risk jurisdiction is a red flag.

C. Wire transfers are to high-risk jurisdiction: Wire transfers to high-risk jurisdictions are also a red flag as they could indicate that the customer is trying to move funds to a location where it may be easier to hide or launder money. These transactions could be part of a larger scheme to move illicit funds across borders, making them difficult to trace.

D. Large cash deposits are from a high-risk jurisdiction: While it is true that large cash deposits from a high-risk jurisdiction could indicate potential money laundering activity, the scenario described in the question does not provide information about the source of the cash deposits. Therefore, it is not a valid red flag in this case.

Useful link: https://complyadvantage.com/insights/aml-red-flags/

Question 100

Why do governments and multi-national bodies impose economic sanctions?

A. To impede kleptocracy 阻止盜賊統治
B. To enforce foreign policy objectives 執行外交政策目標
C. To combat an imminent terrorist threat 打擊迫在眉睫的恐怖主義威脅
D. To prevent fraudulent international trade transactions
防止詐欺性國際貿易交易

Answer 100

B

Economic sanctions are defined as the withdrawal of customary trade and financial relations for foreign- and security-policy purposes.

經濟制裁被定義為出於外交和安全政策目的而取消習慣貿易和金融關係
(From online source)

Question 101

Question 48 (Unsure)
Which three methods are commonly used by an accountant to launder money? (Choose three.)

A. Representing a client in court
B. Understating income to take a tax loss
C. Overstating income to hide excess cash
D. Acting as a conduit (渠道)for transferring cash between accounts
E. Acting as a designee （指定人）for someone who wishes to hide their identity

Answer 101

CDE

Overstating income to hide excess cash: Alternatively, an accountant may overstate a client’s income to hide excess cash, creating a legitimate explanation for the presence of the illicit funds. This method is particularly effective when the launderer has a business that generates large amounts of cash, such as a restaurant or bar.

Acting as a conduit for transferring cash between accounts: In this method, an accountant may act as a conduit for transferring illicit cash between accounts. The launderer can use the accountant’s client trust account to deposit the illicit funds, and then the accountant can transfer the funds to other accounts, thereby creating the appearance of legitimate transactions.

Accountants may also act as a designee for someone who wishes to hide their identity or use other complex methods to conceal the origin and ownership of illicit funds.

Question 102

A bank located in Arizona is considering a loan application for a new client. The collateral (抵押品) for the loan is a property in Florida.

The loan will be in the name of a limited liability company (LLC) whose ownership is not disclosed to the bank. The LLC was established by a New York-based attorney (=lawyer).

The loan will be repaid by the LLC in monthly wire transfers of $9,000 which is more than the required monthly payment.

Which aspect indicates the potential for money laundering?

A. The LLC’s ownership is not disclosed to the bank
B. The collateral, a property in Florida, is not located in Arizona
C. The repayment in the amount of $9,000 indicates potential structuring
D. The attorney associated with the account is outside the bank’s lending area

Answer 102

A

One of the key elements in identifying potential money laundering is the lack of transparency regarding the ownership of the entity involved in the financial transaction. In this case, the bank considering the loan application is not aware of the ownership of the limited liability company (LLC) that will be the borrower. This lack of disclosure raises suspicions because it prevents the bank from properly assessing the risks associated with the transaction.

Money launderers often use anonymous or opaque entities, such as shell companies or undisclosed ownership structures, to conceal the true source and ownership of funds. By keeping the LLC’s ownership undisclosed, the individuals behind the company can hide their identities and potentially engage in illicit activities, such as funneling illicit funds through the loan.

While the other answer choices may raise some concerns, they do not directly indicate potential money laundering as clearly as the lack of disclosure of the LLC’s ownership:

Question 103

What is a key risk associated with Correspondent Accounts according to the Basel Customer Due Diligence paper?

A. It is not used on a daily basis
B. The service fees are insufficient to cover the cost of managing the account
C. The respondent bank’s customer acceptance and know your customer policies are ineffective
D. The volume and value of transactions passing through the account may not be in line with the original correspondent agreement

Answer 103

D

According to the Basel Customer Due Diligence paper, a key risk associated with Correspondent Accounts is that “the volume and value of transactions passing through the account may not be in line with the original correspondent agreement.” This means that the actual activity conducted through the account may not match the expected level of activity that was agreed upon when the correspondent relationship was established.

Correspondent accounts are established between two banks where one bank (the correspondent bank) provides services to another bank (the respondent bank) to facilitate transactions for the respondent bank’s customers. These accounts are often used to facilitate cross-border transactions, and they can be an important tool for banks to expand their customer base and provide more services to their clients.

However, correspondent accounts can also be used for illicit purposes, such as money laundering or terrorist financing. One way that this can happen is if the respondent bank’s customer acceptance and know your customer (KYC) policies are ineffective, which is another potential risk associated with correspondent accounts. If the respondent bank is not properly identifying and verifying the identities of its customers, it may be unknowingly facilitating illicit activity through the correspondent account.

The risk identified in the Basel Customer Due Diligence paper, however, relates specifically to the volume and value of transactions passing through the account. If the actual level of activity conducted through the account is significantly higher than what was agreed upon in the correspondent relationship, it may indicate that the account is being used for illicit purposes. For example, if the correspondent bank expected the respondent bank to conduct only a few transactions per month, but instead the account is used to facilitate hundreds or thousands of transactions, this may be a red flag for potential money laundering or other illicit activity.

Therefore, correspondent banks should ensure that they have effective controls and monitoring mechanisms in place to identify and mitigate the risks associated with correspondent accounts, including the risk that the volume and value of transactions passing through the account may not be in line with the original correspondent agreement. These controls may include conducting enhanced due diligence on correspondent accounts, monitoring transaction activity for unusual patterns, and requiring regular reporting from the respondent bank on its transaction activity.

Question 104

Which two factors should increase the risk of a correspondent bank customer and require additional due diligence according to the Wolfsberg Anti-Money

Laundering Principles for Correspondent Banking? (Choose two.)

Answers
A. The customer is located in a Financial Action Task Force member country and provides services primarily to a local individual customer.
B. The customer is located in a Financial Action Task Force member country and the bank’s head of information security is a politically exposed person.
C. The customer is located in a Financial Action Task Force member country and provides services to other correspondent banks in neighboring countries.
D. The customer is located in a non-Financial Action Task Force member country and services mostly commercial customers who engage in international trade.

Answer 104

CD

To answer this question, we need to consider which factors increase the risk of a correspondent bank customer and require additional due diligence, according to the Wolfsberg Anti-Money Laundering Principles for Correspondent Banking. The two factors that should increase the risk and require additional due diligence are:

The customer is located in a non-Financial Action Task Force (FATF) member country and services mostly commercial customers who engage in international trade.
Explanation: The FATF is an intergovernmental organization that sets international standards for combating money laundering and terrorist financing. Countries that are members of the FATF are considered to have higher AML/CFT standards than non-member countries. Therefore, if a correspondent bank customer is located in a non-FATF member country, this would increase the risk and require additional due diligence. Additionally, if the customer services mostly commercial customers who engage in international trade, this would also increase the risk, as such customers are more likely to be involved in cross-border transactions that could be used to launder money or finance terrorism.

The customer is located in a FATF member country and provides services to other correspondent banks in neighboring countries.
Explanation: If a correspondent bank customer is located in a FATF member country and provides services to other correspondent banks in neighboring countries, this would increase the risk and require additional due diligence. This is because correspondent banking relationships involving multiple countries and banks can create a higher risk of money laundering and terrorist financing. Additionally, if the customer is located in a FATF member country, this could suggest a higher AML/CFT risk due to the country’s own risk profile, which could be compounded by the cross-border nature of the correspondent banking relationship.

Option A is incorrect because it suggests that a customer located in a FATF member country providing services primarily to a local individual customer would increase the risk and require additional due diligence. While providing services to local individual customers could pose a risk, this is not necessarily specific to correspondent banking relationships and would not on its own trigger additional due diligence.

Option B is incorrect because it suggests that the bank’s head of information security being a politically exposed person would increase the risk and require additional due diligence. While politically exposed persons are generally considered higher risk, this is not directly related to correspondent banking relationships and would not on its own trigger additional due diligence.

Option C is correct because it suggests that a customer located in a FATF member country providing services to other correspondent banks in neighboring countries would increase the risk and require additional due diligence, as explained above.

Therefore, the correct answers are C and D.

Question 105

Question 57 (Unsure)
What are the regulatory risks to a bank employee who willfully violates anti-money laundering laws?

A. Investigation and reputational damage
B. Fines and suspension from the industry
C. Criminal investigation and imprisonment
D. Enforcement actions including fines against the financial institution

Answer 105

Except D

Willful violations of anti-money laundering laws can result in a number of regulatory risks for bank employees, including:

->Investigation and reputational damage: If a bank employee is found to have willfully violated AML laws, they may be investigated by law enforcement or regulatory agencies. This could damage the employee’s reputation and make it difficult to find future employment in the financial services industry.
->Fines and suspension from the industry: Willful violations of AML laws can also result in fines and suspension from the financial services industry. The penalties can be significant, and could even lead to the employee being barred from working in the industry altogether.
->Criminal investigation and imprisonment: In some cases, willful violations of AML laws can lead to criminal investigation and imprisonment. The penalties for criminal convictions can be severe, and could result in years in prison.

Question 106

An institution is about to release a new peer to peer (P2P) funds transfer product to provide much needed remittance services to an under-banked population segment in the country.

一家機構即將發布新的點對點 (P2P) 資金轉帳產品，為該國銀行服務不足的人群提供急需的匯款服務

The service allows customers to transfer funds through a mobile banking application to individuals worldwide entering only a name and mobile number. The new service charges less than comparable market solutions and offers real time transfer of funds. The customer onboarding process is conducted at branch locations with identity verification.

該服務允許客戶透過行動銀行應用程式將資金轉移給世界各地的個人，只需輸入姓名和手機號碼。新服務的收費低於同類市場解決方案，並提供即時資金轉帳。客戶登記流程在分公司進行，並進行身分驗證

Which three present the highest anti-money laundering or sanctions risk and will require controls prior to launch? (Choose three.)

A. Customer onboarding
B. Cross-border functionality
C. Real time transfer of funds
D. Servicing the under-banked population
E. Limited access to counterparty information

Question 107

An institution is about to release a new peer to peer (P2P) funds transfer product to provide much needed remittance services to an under-banked population segment in the country.

一家機構即將發布新的點對點 (P2P) 資金轉帳產品，為該國銀行服務不足的人群提供急需的匯款服務

The service allows customers to transfer funds through a mobile banking application to individuals worldwide entering only a name and mobile number. The new service charges less than comparable market solutions and offers real time transfer of funds. The customer onboarding process is conducted at branch locations with identity verification.

該服務允許客戶透過行動銀行應用程式將資金轉移給世界各地的個人，只需輸入姓名和手機號碼。新服務的收費低於同類市場解決方案，並提供即時資金轉帳。客戶登記流程在分公司進行，並進行身分驗證

Which three present the highest anti-money laundering or sanctions risk and will require controls prior to launch? (Choose three.)

A. Customer onboarding
B. Cross-border functionality
C. Real time transfer of funds
D. Servicing the under-banked population
E. Limited access to counterparty information

Question 108

An employee of a financial institution (FI) receives an email from a client directing the employee to transfer funds from the client’s account to another account overseas. The bank employee complies, but later, the Fi discovers the email did not come from the client. Which type of cyber-enabled crime occurred?

A. Phishing
B. Spear phishing
C. Spoofing
D. Ransomware

Answer 108

B

Please refer to p270 for definitions

Question 109

When investigating an AML event, which techniques would be used to investigate suspected mule accounts? (Choose three.)

A. Reconcile the stated purpose of the account with actual transaction history and compare with peer groups.
B. Determine if the suspected accounts are being accessed by a common person, telephone number, or device.
C. Contact the appropriate law enforcement agency and report the account activity.
D. Review the account history and determine if there are previous payments to charity accounts.
E. Establish the frequency in which the funds are moved in and out of the accounts.
F. Submit a SAR/STR to the national Financial Intelligence Unit (FIU).

Answer 109

ABE

Reconcile the stated purpose of the account with actual transaction history and compare with peer groups: This technique involves examining the stated purpose of the account, as provided by the account holder, and comparing it with the actual transaction history. It helps determine if the account’s activities align with its intended purpose. Additionally, comparing the account’s transaction patterns with peer groups, such as similar accounts within the same institution or industry, can reveal any anomalies or suspicious activities.

Determine if the suspected accounts are being accessed by a common person, telephone number, or device: This technique focuses on identifying any commonalities in the individuals or entities accessing the suspected mule accounts. Investigators analyze whether there are shared characteristics, such as a common person, telephone number, or device, associated with these accounts. This can help uncover connections or networks involved in money laundering activities.

Establish the frequency in which the funds are moved in and out of the accounts: By analyzing the frequency of funds being moved in and out of the suspected mule accounts, investigators can identify patterns or unusual activity. Unusually high or frequent transactions can be indicators of money laundering. This technique allows for the detection of rapid movement of funds, which is often associated with money laundering schemes involving mule accounts.

Question 110

Which is a key role of FATF-Style Regional Bodies (FSRBs)?

A. Support the system of mutual evaluation
B. Setting regional standards for combatting money laundering
C. Bring additional terrorist financing laws into action in the region
D. Enforce the specific FATF laws in the region

Answer 110

A
Please refer to notes P157

Question 111

A financial institution (FI) is being investigated for possible money laundering. When cooperating with law enforcement agencies, which additional steps should the

FI ensure are taken? (Choose two.)

A. Centralized control is maintained over all requests and responses to ensure completeness and timely responses.
B. Make employees, including corporate officers, unavailable for interviews and refuse documents upon receipt of a subpoena.
C. Subpoenas and other information requests should be reviewed by senior management and an investigations group or counsel.
D. Address the document destruction policy to ensure the relevant documents are destroyed.
E. Inquiries from the media are not answered directly, but rather are addressed by replying, “No comment.”

Answer 111

AC
Please refer to P293, but don’t understand why E cannot be 1 of the answers, it also mentioned in p296

Question 112

Which statement is true regarding the FATF standards for SARs/STRs information sharing within a financial group?

A. FIs must retain copies of SARs/STRs and supporting documentation for five years from the date of filing the STRs.
B. FIs cannot share customer information at all since it is confidential.
C. Financial institutions (FIs) should establish sufficient safeguards concerning the confidentiality of information shared for AML purposes.
D. FIs must require approval from regulators to share SARs/STRs information and supporting documentation.

Answer 112

C
Please refer to point 54 of https://www.fatf-gafi.org/content/dam/fatf-gafi/reports/Private-Sector-Information-Sharing.pdf

A please refer to notes P286: it should be from BSA

Question 113

Which activity would require an update to the first line training program

A. The implementation of a new system that provides information for monitoring customer accounts.
B. The expansion to customer segments that will utilize newly established products.
C. The maintenance of regulatory requirements for onboarding documentation collections of a customer base.
D. The onboarding of a new customer type which was previously reviewed and risk rated.

Answer 113

C

B. The expansion to customer segments that will utilize newly established products: Expanding customer segments to utilize new products can also impact the AML program, as new products may have different risk profiles and require additional due diligence measures. However, this activity is also unlikely to require an update to the first line training program, as the training provided to front-line staff typically covers the overall AML program and their role in implementing it, rather than specific product-related requirements.

C. The maintenance of regulatory requirements for onboarding documentation collections of a customer base: Maintaining regulatory requirements for onboarding documentation collection is a critical part of an organization’s AML program, and failure to comply with these requirements can result in severe penalties. Front-line staff are typically responsible for collecting the required documentation from customers during onboarding. Therefore, any updates or changes to these requirements would require an update to the first line training program to ensure that front-line staff are aware of the new requirements and how to implement them correctly.

Question 114

Financial Intelligence Units (FIUs) are responsible for:

A. the timely dissemination of cases to law enforcement agencies.
B. responding to requests from law enforcement agencies for information contained in regulatory reports.
C. sharing evidence with other FIUs.
D. receiving confirmed reports about committed crimes from accountable and reporting institutions.

Answer 114

A

Question 115

Which activities could be considered a potential spear phishing scam? (Choose three.)

A. Members of a religious organization receive a donation request by email claiming to be from their leader.
B. Payroll receives an external email from an employee looking to update their bank account information.
C. A courier delivers a business a duplicate invoice that contains updated payment details of an existing supplier.
D. An employee receives an email that asks to download an attachment, but the attachment is a malware.
E. An employee receives a phone call requesting that money be sent to assist someone in trouble.
F. A business sends its employees an email warning that email passwords must be changed to prevent cyber-fraud.

Answer 115

ABD

Definition on Notes P270

Question 116

A financial institution (FI) is fined for failure to implement an effective AML program. Which consequences could the regulator impose on the bank’s Chief AML Officer? (Choose three.)

A. Recommend termination of employment from the FI
B. Civil and criminal prosecution, fines, and imprisonment
C. Loss of professional accounting and legal designations
D. Add to the OFAC Specially Designated Nationals (SDNs) list
E. Ban from employment in the financial services industry
F. Prohibition from dealing with goods on the Wassenaar List

Answer 116

ABE

Question 117

Which should the authorities do to safeguard AML information exchanged with other countries?

A. Protect exchanged information as they would protect similar information received from domestic sources
B. Require the use of non-disclosure agreements with anyone accessing the exchanged information
C. Use the court system to ensure confidentiality of exchanged information through court order
D. Destroy the information once the investigation is completed

Answer 117

A

please refer to FATF 40

https://cfatf-gafic.org/index.php/documents/fatf-40r/406fatf-recommendation-40-other-forms-of-international-cooperation

Question 118

401. The AML compliance officer of a financial institution (FI) has been advised that the institution is being investigated by the country’s financial intelligence unit (FIU). What should the AML compliance officer do? (Choose two.)

Answers
A. Monitor the progress of the investigation by keeping clear records.
B. Share investigation results with other FIs to help them prepare.
C. Send an informative communication to all employees about the investigation.
D. Provide all information to the FIU as soon as possible to avoid delays.
E. Inform senior leadership and the board of the investigation.

Answer 118

AE