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NEW QUESTION # 44
Which documents rates countries based on their money laundering controls and corruption? (SELECT 2)
- A. Financial Action Task Forces red flags related to jurisdiction risk
- B. United Nations report on Money Laundering Controls
- C. Transparency International's Corruption Perceptions Index
- D. US State Department's annual International Narcotics Control Strategy Report
- E. Transparency International's Corruption Perceptions Index
Answer: C,D
NEW QUESTION # 45
A corporate client changes directors and the address of its registered office. Which documentation would be sufficient to verify these changes?
- A. Notes from a phone call with client representatives who mention the changes
- B. Printout of the client's website where the changes are announced
- C. Government-issued documents indicating the changes
- D. Signed letter from the client's secretary describing the changes
Answer: C
Explanation:
Government-issued documents, such as updated company registry extracts, provide authoritative and verifiable proof of changes to directors and registered office details, ensuring compliance with CDD requirements.
NEW QUESTION # 46
Which situation would most likely increase the inherent risk of a corporate customer?
- A. A junior-level employee of the customer becomes politically exposed.
- B. The customer's business expands beyond its home country.
- C. The customer opens an additional cash management account.
- D. A beneficial owner of the customer goes public on a US stock exchange.
Answer: B
Explanation:
Expanding business operations beyond the home country increases inherent risk due to cross-border transactions, exposure to multiple jurisdictions, and potential dealings with regions of higher money laundering or terrorism financing risk.
NEW QUESTION # 47
What a is supranational organization below? (SELECT 3)
- A. United Nations
- B. Australian Transaction Reports and Analysis Centre.
- C. European Union.
- D. World Trade Organization
- E. Singapore's Ministry of Law.
Answer: A,C,D
NEW QUESTION # 48
Shell and Shelf Companies are usually what level of customer risk?
- A. High.
- B. Low.
- C. Immediately Rejected due to their business profile.
- D. Medium.
Answer: A
NEW QUESTION # 49
Which is the best technique to effectively document a customer profile?
- A. Document customer information in a standardized way that is defined by the customer's jurisdiction
- B. Record customer information using abbreviations, explain adjectives, and provide a narrative to follow.
- C. Have the profile start with a picture of the customer followed by key numbers, such as expected turnover.
- D. Avoid adjectives and exaggerations, put the information into context, and be precise and unambiguous
Answer: D
Explanation:
Effective customer profile documentation should be clear, precise, and free from subjective language. Providing context and avoiding ambiguity ensures the information is reliable, verifiable, and usable for risk assessment and compliance purposes.
NEW QUESTION # 50
Which is a preferred source of non-documentary verification?
- A. Driver's license
- B. University student identification
- C. Employer records
- D. Credit report
Answer: D
Explanation:
A credit report is a reliable non-documentary verification source because it is generated by an independent, trusted agency and contains validated personal and financial information that can help confirm a customer's identity.
NEW QUESTION # 51
What is the Second Line of Defense? (SLOD)
- A. The _______ line of defense is the compliance and internal control functions. That includes the chief money laundering reporting officer, or MLRO, in charge of managing and monitoring AML and CFT activities.
- B. The _______ line of defense is also known as the front line, these customer-facing employees are best-equipped to get the information you need for your customer due diligence. Can include Operations, risk, and control teams.
- C. The ________ line of defense is internal audit. They perform an independent review of the controls applied by the lines of defense.
Answer: A
NEW QUESTION # 52
Which factor would be a reason for concern when corroborating the source of wealth of an individual client?
- A. The client is unable to provide bank statements relating to a redundancy pay-out 15 years ago.
- B. The client has no online presence, despite significant wealth.
- C. The client's online career profile does not mention their significant property investments.
- D. The client amends their narrative as they are unable to provide supplementary information.
Answer: D
Explanation:
Inconsistent or changing explanations from a client when asked for supplementary information about their wealth can indicate potential misrepresentation or concealment, making it a key red flag during source of wealth verification.
NEW QUESTION # 53
In regards to ongoing CDD, financial institutions should ensure:
- A. a yearly review of information they maintain on all customers for consistency and efficiency.
- B. a thorough CDD process during customer onboarding so that periodic reviews are unnecessary.
- C. they apply a risk-based approach on the frequency of customer profile reviews.
- D. the customer profile is reviewed prior to every transaction in order to make sure the information is unchanged or current.
Answer: C
Explanation:
Ongoing CDD should follow a risk-based approach, meaning higher-risk customers are reviewed more frequently, while lower-risk customers are reviewed at longer intervals, optimizing resources and maintaining compliance.
NEW QUESTION # 54
Non-documentary verification is checking the information the customer provides against? (SELECT 3)
- A. Public records.
- B. Credit reports.
- C. Audited Statements.
- D. Email confirmation.
- E. Proprietary databases.
Answer: A,B,E
NEW QUESTION # 55
In automated screening, a "false positive" match is a match which:
- A. is generated by the screening tool and confirmed to be a hit.
- B. after review is found to be incorrect.
- C. was not flagged by the screening tool.
- D. during review is incorrectly dismissed as being a hit.
Answer: B
Explanation:
In automated screening, a "false positive" occurs when the system flags a potential match to a sanctions list, PEP list, or adverse media, but upon manual review it is determined that the match is incorrect.
NEW QUESTION # 56
Trade finance, which is the provision or credit for domestic and international trade transactions is likely?
- A. It depends on the Anti-Money Laundering program.
- B. Usually a Medium Risk Produce.
- C. Usually a Low Risk Product.
- D. Usually a High Risk Product
Answer: D
NEW QUESTION # 57
What are the two types of Politically Exposed Persons (PEPS) that are identified by The Financial Action Task Force? (SELECT 2)
- A. Domestic PEPs are individuals who are or have been entrusted domestically with prominent public functions.
- B. Domestic PEPs are individuals who are or have been entrusted domestically with prominent non-public functions.
- C. Foreign PEPs are individuals who are or have been entrusted with prominent public functions by a foreign country.
- D. Foreign PEPs are individuals who are or have been entrusted with prominent public functions by a domestic country.
Answer: A,C
NEW QUESTION # 58
The minimum level of Customer Due Diligence that is required when opening a new account includes the following? (SELECT 2)
- A. What type of people does the customer associate with?
- B. What type of locations is the account going to be transacting with.
- C. Why this account is being opened?
- D. What sorts of transactions you should anticipate?
- E. The frequency and expected amounts of those transactions?
Answer: B,C
NEW QUESTION # 59
Most Organizations Use the three risk classifications for customers.
What are they? (SELECT 3)
- A. High.
- B. EDD-High.
- C. Moderate.
- D. Low.
- E. Medium.
- F. Very High.
Answer: A,D,E
NEW QUESTION # 60
What is the advantage of Bearer Shares? (SELECT 3)
- A. Tax haven countries and their strict secrecy laws can further conceal the true ownership.
- B. They can be held under agreement by professionals as another layer of secrecy.
- C. They are a more affordable way of setting up a business in certain countries in the Caribbean.
- D. They are an excellent, quick effective way to set up a business in Delaware, Nevada, and Wyoming
- E. They can't be traced to a central registry because whoever carries them is the purported owner.
Answer: A,B,E
NEW QUESTION # 61
The first step in the CDD of a legal person is to?
- A. Discover the type of business your customer undertakes.
- B. Understand the ownership structure and to track back to the ultimate beneficial owners and controllers.
- C. Find out what the account will be used for, and the level of activity your organization should expect to see.
Answer: B
NEW QUESTION # 62
Shell companies can only be established as single purpose entities?
- A. Yes.
- B. No.
Answer: B
NEW QUESTION # 63
If a customer is a PEP and they are using private wealth services from banks, and also appear to have obtained a fair amount of wealth is this a red flag?
- A. Depends on the exact circumstances.
- B. Yes.
- C. No.
Answer: B
NEW QUESTION # 64
Is collecting identification a legal requirement in jurisdictions?
- A. Yes.
- B. Most.
- C. No.
Answer: B
NEW QUESTION # 65
For benefitial ownership, the exact account-opening procedures and customer acceptance policies will depend on the type of? (SELECT 3)
- A. Geography.
- B. Risk.
- C. Customer.
- D. Local Regulations.
- E. Product.
Answer: B,C,D
NEW QUESTION # 66
Financial institutions should ensure that a customer's risk weighting:
- A. is identical throughout the business sector.
- B. takes into account economic or profit considerations.
- C. does not exceed automatically generated risk indicators.
- D. is not unduly influenced by just one factor.
Answer: D
Explanation:
A proper customer risk assessment must consider multiple factors - such as geography, products, services, and customer profile - so that the overall risk rating is balanced and not disproportionately influenced by any single criterion.
NEW QUESTION # 67
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