A bank located in New York has identified suspicious transactions at a correspondent bank in China. For one of the international customers, the correspondent bank is not following agreed upon protocols. Which factor indicates that the bank should terminate the relationship?

The correspondent bank has recently exceeded acceptable limits in the primary banks' recently developed risk model.

The correspondent bank has opened branches in a country on the Office of Foreign Assets Control list.

The compliance officer at the correspondent bank is currently being investigated due to bribery allegations.

The primary institution has requested transactional details from the correspondent bank to aide in their investigation.

Historically, a tour guide has made monthly cash deposits averaging $10,000. Over the past three months, the monthy deposits have averaged $100,000. When the financial institution questions the increased deposits, the tour guide explains that there have been numerous conventions in town so business has increased substantially. Which further action(s) should the financial institution take when a tour guide's monthly cash deposits have increased substantially?

Perform further investigation, if appropriate report the activity to the authorities and consider terminating the relationship

Immediately terminate the relationship

Schedule a periodic review of activity

Perform further investigation, if appropriate report the activity to the authorities and place a limit on future transactions.

To ensure compliance with economic sanctions established by governmental authorities in the jurisdictions where it operates, a financial institution requires that all new and existing customers be screened at onboarding and quarterly thereafter. Is this step sufficient to ensure compliance?

No, screening should occur promptly after list updates

Yes, this is recommended by the international guidance

No, it is necessary to screen and perform enhanced due diligence on new relationships

Yes, screening all existing customer relationships ensures the institution is not dealing with a sanctioned individual or entity

When must a United States (U.S.) bank block or reject an international funds transfer when there is an Office of Foreign Assets Control designated party to the transaction?

Only if the U.S. bank is involved in the funds transfer

Only if a U.S. person or entity is the ultimate beneficiary

Only if a non-U.S. person or entity is the ultimate beneficiary

Only if the U.S. bank's correspondent informs it of the involvement of the designated party

What is the suspicious behavior in the following scenario? A client is a wholesale auto business that operates as a used car lot. The client regularly ships vehicles internationally. In a four-month period, the client received wires totaling $1,250,000 from a dealer in Benin in West Africa. All wires originated from Benin and were in increments of $50,000. Account debits made to the account were payable to various transport companies. All incoming checks reference various vehicles purchased. Dock shipping receipts produced by the client to support account activity identify the vehicles but cannot easily be tied to the wires received. What is the suspicious behavior in the following scenario?

Wires received are in large, even dollar amounts

The dock shipping receipts match the vehicles

Vehicles are regularly shipped internationally

Account debits are payable to transport companies

A bank sells reloadable open-loop prepaid cards to both customers and non-customers. What is a red flag associated with these cards that may indicate money laundering?

B. A non-bank customer regularly loads large amounts of cash onto several prepaid cards.

A. A bank customer historically purchases several prepaid cards near year-end.

C. A non-bank customer consistently uses the bank to obtain cash advances using a prepaid card.

D. A bank customer routinely purchases five prepaid cards in small even-dollar amounts on a monthly basis.

A bank provides trade financing for a company whose primary export is steel. Which action by the company indicates possible money laundering?

B. The company regularly understates the value of goods exported.

A. The company often deals with foreign currency exchanges.

C. The company frequently sells above or below its competitors' price.

D. The company frequently transfers funds to other bank accounts located in other jurisdictions.

What does the Basel Committee's Customer Due Diligence for Banks paper suggest that a bank needs to have in place when establishing an account for a corporate business entity?

A. An understanding of the structure of the company

B. A policy requiring all identified beneficial owners to undergo a national police check

C. A process to ensure that the approval of senior management is obtained prior to opening the account

D. A fee structure that reflects the banks' costs in monitoring the risks associated with entity's business activities

At a small community bank, the compliance officer identifies unusual activity on a customer, who with his personal and company accounts, is the bank's largest depositor. The customer's companies have significant balances on their outstanding loans. The compliance officer notices that there is a lot of unusual movements of money between the customer's individual and business accounts. After filing a suspicious transaction report (STR), the compliance officer gets a call from law enforcement indicating that they want the bank to keep the account open while they conduct an investigation into the customer. How should the compliance officer escalate this information to the board of directors?

C. By providing a high level summary of the activity and the interactions with law enforcement

A. By providing a copy of the STR to the board

B. By informing the regulator to bring it up with their next meeting with the board

D. By providing a copy of the letter from law enforcement asking the bank to keep the account open.

An organization uses an automated surveillance system that generates a very large volume of anti-money laundering alerts. The monthly volume of alerts has increased over the last year causing the compliance staff to fall significantly behind reviewing the alerts. As a result, the system settings are under review to determine if they are appropriate. Which action should be included in the evaluation of system settings?

C. Review parameter settings based on latest risk assessment

A. Compare settings to organizations within its peer group

B. Flag filters with no history of generating an alert for removal

D. Calibrate parameters based on staffing capabilities to clear alerts

Since its last regulatory examination, a financial institution has aggressively grown by adding profitable new products and services. The institution has not historically received regulatory criticism regarding its anti-money laundering compliance program. However, a recent regulatory examination cited significant deficiencies in the anti-money laundering program that were attributed primarily to the lack of oversight by the institution's leadership in implementing adequate controls over the new products and services. Which area of international control should leadership first address to correct the weaknesses in the program?

Money laundering risk assessment

Anti-money laundering compliance staff

Which three definitions of money laundering are included in the expanded definition of the European Union Fourth Directive? (Choose three.)

The conversion or transfer of property with knowledge that it is derived from criminal activity

The acquisition or use of property knowing, when it was received, that it was derived from criminal activity

Concealing or disguising the nature, source, location, disposition, movement, rights with respect to, or ownership of property, knowing that the property is derived from criminal activity

The creation of shell companies to disguise the identity of its owners

The transfer of cash in excess of 15,000 euros across country borders regardless of whatever the cash was derived from criminal activity

What does the Financial Action Task Force (FATF) urge its members and all other jurisdictions to do when a jurisdiction is identified as having lax anti-money laundering / counter financing of terrorism controls?

Apply counter-measures to that jurisdiction

Consider customers from that jurisdiction as high risk

Cease doing business with that jurisdiction immediately

Apply economic sanctions until otherwise notified by FATF

How can violations of anti-money laundering laws be a risk to individuals?

Violations can result in civil and criminal fines and penalties against the individuals.

Violations can result in additional legislation that the individuals have to comply with.

Violations can result in enforcement actions that damage the reputation of the individual's employer.

Violations can result in the loss of business licenses for the individuals.

Which two critical pieces of information could be missed by taking the approach of delivering annual refresher training unchanged to all employees?

Any new trends, developments, or risks

Changes to internal policies, procedures, and processes

Results of the previous year's risk assessment

Links to enforcement actions identifying violations in other financial institutions.

A compliance officer receives a report from the institutions's monitoring system. One account was identified in multiple alerts for the amount of cash deposited and international wires sent. Which two sources of information held within the institution will enable the compliance officer to determine whether the activity should be reported?

The customer due diligence information on file

Transaction records for the period during which the unusual activity occurred

The signature card for the account

The monitoring system parameters for identifying unusual activity

A compliance officer is reviewing the activity of the wire transfer department for the previous month and identifies an unusual wire transfer from a customer's account. Which information should be included in the review of the customer's activity when a compliance officer identifies an unusual wire transfer from a customer's account?

Records of the recent deposit activity

Wire transfer requests initiated by phone and internet

Total number of wires processed each month over the previous year

Whether the bank processes wire transfers through a correspondent bank

A startup virtua currency exchange has registered as a monty services business and will commence operations in six months. The company will provide digital wallets to customers to hold their virtual currency after purchase. Customers will have the option to conduct purchases of the virtual currency and transfer the currency to and from the digital wallet. The startup must develop an anti-moey laundering compliance program prior to launch. Which two anti-money laundering responsibilities should be considered before the launch of a startup virtual currency exchange?

Transaction limits consistent with risk appetite

Employees to handle complaints in a timely fashion

Mechanisms to monitor and protect customers' digital wallets from cyber-attacks

A bank maintains a number of United States (U.S.) dollar correspondent accounts for foreign financial institutions. Upon a routine review of a U.S. dollar correspondent account owned by Foreign Bank A, a number of transactions appear to have been originated by Foreign Bank B outside the expected activity for this account. These transactions appear suspicious and a suspicious transaction report was filed by the compliance officer. Which step should the compliance officer take?

Notify senior management of the money laundering risks by allowing Foreign Bank A to maintain its U.S. dollar correspondent account

File a report with the appropriate tax authorities in the jurisdictions of Foreign Bank A and Foreign Bank B

Notify Foreign Bank A of the discovery and seek documentation supporting Foreign Bank A was collusive and a willing partner with Foreign Bank B in the activity

Notify other U.S. financial institutions who maintain U.S. dollar correspondent accounts for Foreign Bank A and Foreign Bank B in an effort to shut down the activity

A New York-based lawyer is interested in purchasing a luxury condo in Manhattan listed at $30 million for a client based in the Caribbean. The client does not want to be named on the deed and wants the purchase to be made under the name of a limited liability company (LLC). The client states that the reason for this arrangement is that he is a high level government official who is concerned about his privacy if the purchase were to be made in his name. The funds for the purchase are to be wired from several accounts in various countries. Which two facts lead to gathering more information about this potential client before moving forward with the transaction? (Choose two.)

The client is a high level government official

The funds are coming from several accounts in various countries

The client is from a Caribbean country

The use of an LLC to make the purchase

The local manager of a remote mortgage origination department of a financial institution has just discovered that sanctions screening of new customers is not being performed. Which action should the local manager take in this situation?

Immediately inform senior management

Immediately inform the regulators

Do nothing because the department only handles a very small number of mortgages

Which are two aspects of the Wolfsberg Anti-Money Laundering (AML) Principles following statements are true regarding the approval of a correspondent relationship?

At least one person, aside from the person sponsoring the relationship, should approve the correspondent relationship.

Factors such as politically exposed person involvement and downstream (nested) correspondents increase the risk inherent in a correspondent relationship.

Correspondent banking is an inherently high risk business and all correspondent bank relationships should be reviewed on an annual basis.

An Institution may assign a low risk rating to a correspondent bank located in a jurisdiction deemed to have an adequate AML environment without needing to consider other factors.

A financial institution has expanded its scope of srvices so that it is attracting the business of politically exposed persons (PEPs) who had previously never been part of the customer base. Which two courses of action should the compliance officer include in the institution's procedures for considering PEPs as customers? (Choose two.)

Conduct enhanced ongoing monitoring of the business relationship

Take adequate measures to establish the source of wealth and source of funds which are involved in the business relationship or occasional transaction

Expedite due diligence when a PEP is pre-approved by a member of senior management

Obtain appropriate senior management approval for establishing a business relationship with a PEP from a high risk country

How can gatekeepers like lawyers, notaries, and company service providers play a key role in the fight against money laundering?

Implementing an internal AML program, which includes the detection and reporting of suspicious transactions

Identifying challenges in keeping current and accurate beneficial ownership information depending upon the nature and activities of their client

Facilitating tax optimization schemes by establishing trust and company structures in offshore locations

Providing a public fiduciary function by performing the role of trusted third parties

OFAC-issued regulations apply to which entities? (Choose two.)

Foreign subsidiaries of US banks

Intermediaries transacting with US banks

Foreign banks with US customers

Foreign import-export companies

When a financial institution (FI) is requested to provide data and information to a law enforcement agency for matters related to financing of terrorism, assistance:

cannot be refused on the ground of bank secrecy.

can be refused on the ground of bank secrecy.

can be refused on the ground of tipping-off.

cannot be refused on the ground of tipping-off.

Which customer action would an insurance company consider to be a red flag for money laundering?

Concern over the cancellation of the policy

Lack of concern about the cost of the policy

Repayments are consistent with the source of income

Identifying beneficiaries of the policy

Which statement best describes a key aspect of the AML Directive of the EU regarding business relationships and transactions with high-risk third countries?

Obliged entities should implement additional mitigating measures complementary to the enhanced customer due diligence procedures, in accordance with a risk based approach.

Obliged entities should voluntarily consider the implementation of increased external audit requirements for branches and subsidiaries located in high-risk countries.

Obliged entities, in accordance with the member state regulations, should determine at a national level the measures that can be used for enhanced due diligence.

Obliged entities should not take into account specific circumstances when performing enhanced due diligence measures.

When a financial institution (FI) receives a court production order from law enforcement, it should:

be responsive, provide customer information and be able to provide information from branches and subsidiaries if necessary.

be responsive and provide pseudonymized customer information to make sure it's compliant with data privacy regulations.

raise this matter with the Data Protection Officer to ask for data exchange approval prior to sharing the customer's personal data with the law enforcement.

raise this matter with the Board to ask for data exchange approval and include corporate lawyers to make sure there is a legal basis for such exchange.

When implementing a risk-based approach related to casinos, which risks are related to the customer as an individual? (Choose two.)

Improper use of third parties as customers

Use of casino deposit accounts by the customer

Customer from a high-risk country

Which should be provided to the board of directors or designated specialized committee when reporting SARs/STRs?

Statistical data regarding SARs/STRs filed during the reported period

All possible details of SARs/STRs filed during the reported period

Names of all customers subject to SARs/STRs filed during the reported period

Copies of all SARs/STRs filed during the reported period

How should law enforcement obtain documentation from an institution when suspicious activity was identified? (Choose two.)

Request copies of the relevant documents from the accountable institution

Acquire a search warrant to obtain the documents

Request a Financial Intelligence Unit (FIU) share copies of suspicious transaction reports

Pay an employee of the accountable institution to make copies of the documents.

Request the documents from the FIU.

Which three conduits for moving terrorist-related funds do terrorist financing generally favor? Choose 3 answers.

Banks and/or other formal financial systems

Anti-Money Laundering Quiz 291-388 pt 1-41 questions

Authored by Jossie Charneco

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Anti-Money Laundering Quiz 291-388 pt 1-41 questions

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41 questions

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MULTIPLE SELECT QUESTION

45 sec • 1 pt

What are the regulatory risks to a bank employee who willfully violates anti-money laundering laws?
(Select 2)

Investigation and reputational damage

Suspension from the industry

Criminal investigation and imprisonment

Enforcement actions including fines against the financial institution

Fines from the industry

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A foreign politically exposed person (PEP) requests to add a beneficiary to a life insurance policy. How should the request be processed to mitigate risk?

Perform due diligence on the beneficiary

Determine the source of wealth and source of funds

Decline the request if the beneficiary is a foreign PEP

Decline the request to add a beneficiary due to increased risk

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Law enforcement submitted a request to a bank for information regarding one of its customers. How should the bank respond according to Financial Action Task Force Guidance?

Provide all information requested to support the investigation

Ensure that the request will not violate any local privacy regulations or legislation

Ensure the information is necessary to the investigation before responding to the request

Contact the customer informing the person of the investigation to ensure the bank provides correct information

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A bank is preparing for its anti-money laundering independent review, which is performed every two years under the direction of the compliance officer. The bank's corporate audit department will conduct the review. The compliance officer will review the final report before it is released to the Board of Directors. What is the issue with this situation?

Independent reviews must be performed annually

The review must be performed by a group outside of the bank

The final report must be presented directly to the board of directors

There is a conflict of interest with the management of the review process

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which red flag indicates high potential for money laundering in a real estate purchase?

The purchaser is a nominee

The purchaser had a previous bankruptcy

The purchaser owns a cash intensive business

The purchaser is not a resident where the property is located

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A recent anti-money laundering audit revealed several regulatory reporting violations and lapses with the organization's anti-money laundering policy. As a result, the compliance officer has created a follow up matrix to document progress in correcting the identified deficiencies.
To whom should the compliance officer provide regular updates of corrective action to help ensure the appropriate oversight?

Audit management

Human Resources

Business line managers

Designated board committee

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The anti-money laundring compliance officer for a small money transitter has several agent locations in the same geographic area in the US. The customers are immigrants from Country A and the majority of the funds ar remitted to Country A. In a meeting with one of the agents, it is recetly discovered that two new customers have been coming in three times a week and sending funds to the same recipient in Country B. Each cash transaction always totals exactly $8,000.
What should alert the agent to possible money laundering activity by the two customers?

They remit funds to the same person

They have been coming in three times a week

It is unusual for customers to remit to Country B

Each of their transactions is just below the cash reporting threshold

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Anti-Money Laundering Quiz 291-388 pt 1-41 questions

What are the regulatory risks to a bank employee who willfully violates anti-money laundering laws?(Select 2)

A foreign politically exposed person (PEP) requests to add a beneficiary to a life insurance policy. How should the request be processed to mitigate risk?

Law enforcement submitted a request to a bank for information regarding one of its customers. How should the bank respond according to Financial Action Task Force Guidance?

Which red flag indicates high potential for money laundering in a real estate purchase?

A bank located in New York has identified suspicious transactions at a correspondent bank in China. For one of the international customers, the correspondent bank is not following agreed upon protocols.Which factor indicates that the bank should terminate the relationship?

To ensure compliance with economic sanctions established by governmental authorities in the jurisdictions where it operates, a financial institution requires that all new and existing customers be screened at onboarding and quarterly thereafter. Is this step sufficient to ensure compliance?

Access all questions and much more by creating a free account

Popular Resources on Wayground

What are the regulatory risks to a bank employee who willfully violates anti-money laundering laws?
(Select 2)

A bank located in New York has identified suspicious transactions at a correspondent bank in China. For one of the international customers, the correspondent bank is not following agreed upon protocols.
Which factor indicates that the bank should terminate the relationship?