Which step should financial institutions take when complying with sanctions requirements?
A. Freeze the funds or assets of designated persons and entities once this decision is approved by the Board.
B. Change the risk profile to "high-risk" if an existing customer becomes a sanctioned entity and continue monitoring further transactions.
C. Conduct enhanced due diligence for prohibited entities on the sanctions list.
D. Adopt automatic screening systems to detect designated persons and entities.
Money laundering red flags associated with money service businesses include: (Choose two.)
A. an employee lives a lavish lifestyle supported by his or her salary.
B. the same customer conducts transactions in multiple locations in a short time period.
C. repeated receipt of funds transfers from virtual currency exchanges.
D. cash payments on insurance policies by a third party.
E. two or more customers use the same identification for separate and unrelated transactions.
Which risk factors are considered when assessing risk rating of customers? (Choose three.)
A. Employment risk
B. Geographic risk
C. Customer risk
D. Credit risk
E. Fraud risk
F. Product risk
A customer's registered business activity is a domestic carpet cleaning company. Besides domestic receipts, there are incoming weekly transactions from an international reputable auction house starting at 15,000 USD and averaging 30,000 USD. The matching cash outgoings amount to 90% of the incoming deposits to non-related individuals. Which is most concerning for potential money laundering?
A. The customer's initial international receipt has increased from 15,000 USD to an average of 30,000 USD per transaction per week.
B. The customer's international incomings are from an international reputable antique auction house.
C. The customer is a domestic carpet cleaning company.
D. The customer is paying 90% of the incoming proceeds to non-related individuals in cash.
According to Basel Committee guidelines, which level of the organization should determine whether or not to enter business relationships with higher risk customers?
A. First-level management
B. Senior management
C. Middle management
D. Account opening staff
Before providing suspicious activity report documentation to an authorized requestor, the institution should first:
A. contact a local financial intelligence unit for authorization.
B. notify outside counsel.
C. request a subpoena.
D. independently verify the requestor.
Which activities conducted by a lawyer could be a red flag for money laundering? (Choose two.)
A. The lawyer was paid substantially higher than usual fees.
B. The lawyer worked unusual hours to perform case duties.
C. The lawyer does not have experience in providing the particular services requested.
D. The lawyer spent two days working a case.
E. The lawyer does not document case notes for the services provided.
What should a financial institution (FI) do in response to a formal law enforcement request to produce documents?
A. Verify the officer's identification and ask for the law enforcement request to be served when the Chief Executive Officer is available to sign for it.
B. Keep senior management informed at all times to strategically organize a defense to terminate the law enforcement request.
C. Ask for an extension to review the FI's privacy policy and confidentiality policy before providing any information under the law enforcement request.
D. Designate a person responsible for the internal investigation in preparation of documents for the request.
Based on the AML principles outlined by the Wolfsberg Group, what do private and correspondent banks have in common when monitoring for terrorist financing?
A. Cash access from a pre-paid card increases the potential that the card will be used for money laundering purposes.
B. Account and transactional activity are monitored after the proper identification and verification of customers.
C. Transaction monitoring examines the relationship between due diligence information and account closings.
D. Numbered or alternate name accounts will only be accepted if the bank has established the identity of the client and beneficial owner.
In order to demonstrate commitment to AML compliance within a bank, the Board of Directors should:
A. ensure senior management maintains accountability for the effectiveness of the AML program implementation.
B. establish a written AML policy that contains the basic principles to be followed by staff from the top down.
C. keep senior management apprised of key developments in the AML regime and the impact of applicable laws and legislations.
D. monitor the fulfilment of AML compliance duties within the bank.
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