#1
Which of the following is NOT a common type of financial fraud?
Product innovation
ExplanationFinancial fraud typically involves deceptive practices to gain financial advantages, while product innovation is a legitimate business activity.
#2
What does AML stand for in the context of financial regulation?
Anti-Money Laundering
ExplanationAML refers to Anti-Money Laundering, which involves implementing measures to detect and prevent the illegal process of making large amounts of money generated by a criminal activity.
#3
Which of the following is NOT a typical step in the money laundering process?
Circulation
ExplanationCirculation is not a recognized step in money laundering; common steps include placement, layering, and integration.
#4
Which of the following is a common red flag for potential money laundering?
A customer making large transactions with no discernible pattern
ExplanationUnusual large transactions without an apparent pattern may indicate money laundering, prompting further investigation.
#5
What is the role of the Financial Action Task Force (FATF) in combating money laundering?
Promoting international cooperation to combat financial crimes
ExplanationFATF works to enhance global cooperation and sets standards for anti-money laundering and counter-terrorist financing efforts.
#6
What is the primary purpose of conducting due diligence in the context of AML?
To identify and mitigate risks associated with financial transactions
ExplanationDue diligence aims to uncover and address potential risks, ensuring compliance with AML regulations.
#7
Which of the following is an example of a 'Politically Exposed Person' (PEP)?
A government minister
ExplanationPEPs are individuals with prominent public roles, like government ministers, and are at higher risk for corruption and money laundering.
#8
Which regulatory body is responsible for enforcing AML laws in the United States?
Financial Crimes Enforcement Network (FinCEN)
ExplanationFinCEN is a U.S. government agency responsible for combating money laundering and enforcing AML laws.
#9
Which of the following is an example of a 'Know Your Customer' (KYC) requirement?
Verifying a customer's identity and address
ExplanationKYC requires businesses to verify and understand the identity of their customers, including verifying addresses to prevent financial crimes.
#10
What is the role of the SAR (Suspicious Activity Report) in AML compliance?
To report potential instances of suspicious activity to authorities
ExplanationSARs are filed to report activities that may indicate money laundering or other financial crimes, helping authorities investigate.
#11
What is the primary objective of the Bank Secrecy Act (BSA)?
To require banks to maintain certain records and report certain transactions
ExplanationBSA mandates banks to keep records and report transactions to prevent money laundering and other financial crimes.
#12
Which of the following is an example of a 'Layering' technique used in money laundering?
Transferring funds between multiple bank accounts
ExplanationLayering involves complex transactions to obscure the origin of funds, such as moving money between different accounts.
#13
What is the primary purpose of the USA PATRIOT Act in relation to AML efforts?
To enhance surveillance and enforcement measures to combat money laundering and terrorism financing
ExplanationThe USA PATRIOT Act strengthens measures against money laundering and terrorist financing through enhanced surveillance and enforcement.