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QUESTION 41
Which example describes the vulnerability of the securities sector for money laundering?
| A. | A non-U.S. person seeks to open a brokerage account with a U.S. broker-dealer |
| B. | A broker-dealer must have a customer identification program in place |
| C. | Broker-dealers generally have a higher percentage of inexperienced staff |
| D. | Compensation for broker-dealers is generally based on commissions |
Correct Answer: D
QUESTION 42
In addition to monitoring for suspicious activity, what are electronic monitoring systems also valuable for?
| A. | Identifying how customers are using products |
| B. | Highlighting the skills of the system analysts |
| C. | Proving to the Board of Directors that the FIU is doing its job |
| D. | Meeting mandatory regulatory requirements for system implementation |
Correct Answer: D
QUESTION 43
In which three situations is correspondent banking most vulnerable to money laundering? Choose 3 answers
| A. | When allowing foreign banks to use the correspondent account to conduct large financial transactions on behalf of their customers |
| B. | When allowing the correspondent bank account to be used as a payable through account (PTA) |
| C. | When allowing the correspondent bank account to be used by other banks |
| D. | When allowing financial institutions, without proper due diligence, to access correspondent network for routing their financial transactions |
Correct Answer: ABC
QUESTION 44
How does a regulatory body typically obtain international assistance in a money Laundering inquiry?
| A. | By filing a request under Egmont guidelines |
| B. | By submitting a request for overseas assistance to the corresponding supervisory body |
| C. | By contacting the FATF, Organization for Economic Co-operation and Development, or other international organizations and seeking their intervention |
| D. | By communicating with the Head of Compliance for the financial institution |
Correct Answer: B
QUESTION 45
Federal law requires all U.S. financial institutions to secure and maintain all records and supporting documentation used m suspicious activity reporting for how many years?
| A. | 2 years |
| B. | 5 years |
| C. | 10 years |
| D. | No requirement |
Correct Answer: B
QUESTION 46
What is a major money laundering risk associated with a number of prepaid cards as opposed to credit or debit cards?
| A. | The risk of losing the prepaid cards |
| B. | The inability to load the card with cash |
| C. | The global access to cash through ATMs |
| D. | The anonymous access to funds |
Correct Answer: D
QUESTION 47
An audit completed the previous week revealed that a private banking customer submitted incomplete documents when establishing an account earlier m the year. The customer received weekly electronic fund transfers from a narcotic-producing jurisdiction. While the relationship manager who opened the account is on leave for 5 weeks, the customer requests that the institution remit a substantial sum to a country that represents a high risk of money laundering. The relationship manager is a friend of the anti-money laundering specialist. What should the anti- money laundering officer do first?
| A. | File a suspicious transaction report with the competent authority |
| B. | Investigate the transfer of funds |
| C. | Suspend the transfer until the relationship manager returns |
| D. | Postpone the follow-up on the audit finding |
Correct Answer: A
QUESTION 48
Why would a credit card account likely not be used in the placement stage of money laundering?
| A. | Customer identification is required |
| B. | Cash payments are generally restricted |
| C. | Credit refunds have a waiting period |
| D. | Credit cards can access ATMs globally |
Correct Answer: B
QUESTION 49
What are some red flags financial institutions should be aware of when trying to verify the identity of a customer? Choose 3 answers
| A. | Customer having unusual documents from a foreign country |
| B. | Customer being new to the community |
| C. | Customer having no permanent address |
| D. | Customer not having a connected phone |
Correct Answer: ACD
QUESTION 50
A compliance officer is looking to modify procedures covering correspondent banking relationships. Which three would be recommended under the Wolfsburg Principles on Correspondent Banking? Choose 3 answers
| A. | Prohibition on offering products or services to shell banks |
| B. | Risk-based rating of central banks and regional development banks |
| C. | Periodic risk-based reviews of cents |
| D. | Assessing the regulatory status and history of the client |
Correct Answer: ACD
QUESTION 51
When an institution conducts an internal investigation into an account following a law enforcement inquiry, it should consider a number of factors to independently determine if the account should be dosed. Which three considerations should be made when making the determination about closing an account? Choose 3 answers
| A. | The institution’s policies and procedures for closing an account |
| B. | Oral requests by a law enforcement agency or prosecutor for the account to be dosed |
| C. | signed written requests by a law enforcement agency or prosecutor on official letterhead for the account to remain open |
| D. | The level of seriousness of the underlying conduct |
Correct Answer: ABC
QUESTION 52
A profitable commercial customer who operates an import-export business has multiple accounts with the same institution at branches m different locations. The customer receives funds from a jurisdiction perceived as highly corrupt according to Transparency International ratings. The customer makes frequent transfers among the accounts and prefers to manage the accounts separately. What should the institution do to mitigate the risk associated with these accounts?
| A. | File a suspicious transaction report |
| B. | Diminish the importance of the subjective Transparency International rating |
| C. | Conduct a trade-pnce manipulation analysis |
| D. | Develop a system to monitor all the activity |
Correct Answer: A
QUESTION 53
What should be part of an institution’s monitoring and STR filing process? Choose 3 answers
| A. | Review on a regular basis of all high-risk accounts and transactions |
| B. | Review of STR filing trends and typologies |
| C. | Periodic training on the identification of red flags |
| D. | Requirement that the Board of Directors approve the filing of an STR |
Correct Answer: ABC
QUESTION 54
A commission regotorie would be used in which gateway to obtain information from another country?
| A. | An FIU request under the Egmont principles |
| B. | An MLAT request |
| C. | A supervisory channel request with the Basel Committee |
| D. | A FATF request |
Correct Answer: A
QUESTION 55
The purpose of an anti-money laundering program should be to do what?
| A. | Detect all illegal activity perpetrated by customers |
| B. | Avoid criticism and sanctions from government regulators |
| C. | Focus monitoring efforts on riskier transactions and customers |
| D. | Detect and report cash structuring and suspicious wire transactions |
Correct Answer: C
QUESTION 56
What facilitates law enforcement agent obtaining evidence from authorities in a foreign country relating to criminal activity?
| A. | Mutual Legal Assistance Treaties (MLAT) |
| B. | Patriot Act Communications System |
| C. | The World Wide Network of Information Sharing |
| D. | MLAT Executive Agreement |
Correct Answer: A
QUESTION 57
Which three entities does the Third European Union Money Laundering Directive apply to?
| A. | Financial Institutions |
| B. | Defense Attorneys |
| C. | Casinos |
| D. | Real Estate Agents |
Correct Answer: ACD
QUESTION 58
Which two statements about the Wolfsberg Group are true?
| A. | It is composed of representatives of financial intelligence units from around the world |
| B. | It focuses primarily on Know Your Customer, AML and CTF guidance |
| C. | It based its original guidance around combating the laundering of proceeds of narcotics trafficking |
| D. | It has no power to impose its principles/guidance |
Correct Answer: BD
QUESTION 59
After evaluating recent changes to international standards, an anti-money laundering specialist should consider enhanced due diligence on accounts held by which three groups of people?
| A. | Lawyers |
| B. | Foreign Exchange Dealers |
| C. | Retail Account Holders |
| D. | Precious Metal Dealers |
Correct Answer: ABD
QUESTION 60
Which of the following is the most common risk with a Personal or Private Investment Company (PIC)?
| A. | They are almost always owned by politically exposed persons |
| B. | They are usually established in financial secrecy havens |
| C. | They often lack transparent ownership |
| D. | They are not publicly traded |
Correct Answer: C