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NEW QUESTION # 58
Your company acquires new mortgage loans through a network of independent brokers and you have experienced losses attributed to one of your brokers You suspect that the broker did not act alone You are revisiting your institution's policies and procedures to effectively mitigate the risks of collusion.
Which specific task would NOT be effective in mitigating the risk of collusion?
- A. Restrict the use ot property appraisers to those who have been approved by your institution
- B. Have the mortgagor provide documentary evidence of employment and income
- C. Ensure that your brokers are subjected to rigorous on-boarding standards
- D. Provide mortgage underwriters and administrative staff with training on how to recognize suspicious transactions
Answer: D
NEW QUESTION # 59
During a sanctions compliance training session, an employee asks about the implications of conducting transactions with individuals or entities on the OFAC Sectoral Sanctions Identifications (SSI) list. What is the most accurate response to the employee's inquiry?
- A. Conducting transactions with individuals or entities on the OFAC SSI list may result in reputational damage but not regulatory penalties.
- B. Conducting transactions with individuals or entities on the OFAC SSI list may result in both regulatory penalties and reputational damage.
- C. Conducting transactions with individuals or entities on the OFAC SSI list is permissible if authorized by senior management.
- D. Conducting transactions with individuals or entities on the OFAC SSI list is permissible if the transactions are below a certain monetary threshold.
Answer: B
NEW QUESTION # 60
You are a law enforcement agent who has received an anonymous tip about suspicious financial activities at Labor Way Inc. a company in your jurisdiction. Labor Way contracts with large corporations internationally to provide temporary employees, and handles payroll processing and lax withholding lor its temporary employees.
You begin an investigation into Labor Way and discover the following information:
* Labor Way's corporate bank account was opened in the name of a law firm that is acting as nominee
* Labor Way's financial records show a sharp increase in revenues and a corresponding increase in temporary employment contracts over the past two years
* Labor Way's transaction history shows periodic withdrawals of large amounts of cash that correspond with its payroll coming due
* Labor Way has recently gained a number of clients in other countries (where it is not located) including several in which it did not previously operate Based on (his information which is your MOST likely conclusion?
- A. Labor Way may be committing internal accounting fraud due to the substantial and unexplained increase in revenues
- B. Labor Way may be involved in a money laundering scheme due to the presence of a beneficial owner who is hiding behind the nominee account
- C. Labor Way may be involved m a terrorist financing scheme because it has recently entered into contracts in overseas indications to which it has no prior business connections
- D. Labor Way may be committing employment tax fraud because its transaction records indicate it is paying all of US temporary employees in cash
Answer: B
NEW QUESTION # 61
Which is the MOST effective way to verify a company's registration information?
- A. Access the jurisdiction's company registry repository and search lor the company name and retrieve the company's information
- B. Access the jurisdiction's court system and search for any court cases against the company which will include the company's registration number and information
- C. Examine the company's website
- D. Conduct a Google advanced search using the keyword registration details to find articles or other pieces of information about the company
Answer: A
NEW QUESTION # 62
Your bank is considering entering into a correspondent relationship with a respondent bank Your bank does not have any existing business relationship with this respondent bank and has never worked with the respondent bank in the past.
Based upon FATF Recommendations which statement is true?
- A. Your bank is required to apply the same due diligence measures to this respondent bank that it has applied when evaluating respondent banks in other jurisdictions lo avoid inequitable practices
- B. Your bank is required to conduct enhanced due diligence on the respondent bank which includes conducting due diligence on customers of the respondent bank
- C. Your bank is required to gather information to understand the respondent's business reputation quality of its supervision and anti-money laundering and counter-terrorist financing controls
- D. Your bank should not enter into a correspondent relationship with the respondent bank if it is a small local or regional bank because of the inherent risk concerns with these institutions
Answer: C
NEW QUESTION # 63
During a sanctions compliance review, a financial institution discovers that one of its clients has conducted transactions with individuals and entities on a sanctions list. What is the most appropriate action for the institution to take?
- A. Report the findings to the relevant authorities and seek guidance on next steps.
- B. Ignore the issue if the transactions were unintentional and the client is cooperative.
- C. Immediately terminate all business relationships with the client.
- D. Conduct enhanced due diligence on the client and continue monitoring their activities.
Answer: A
NEW QUESTION # 64
Your country has received a spontaneous transmittal of information from Switzerland indicating lhal Person A the Director of Procurement from your country's Ministry of Internal Development maintains a bank account in Zurich with an average balance of $7,000 000. Previously there have been numerous allegations that Person A has received bribes in return tor favorable contract awards.
Which activity should be done FIRST to maximize the probability that these lunds are repatriated to your country?
- A. lndict Person A for money laundering in violation of Article 23 of the UNCAC
- B. Directly contact the bank in Zurich to determine the source of the funds
- C. Initiate a criminal investigation of Person A in your country
- D. Submit a formal mutual legal assistance request to Switzerland requesting return of all funds in the account
Answer: C
NEW QUESTION # 65
A hacker gains access to aclient'semail. The hacker, posing as the client contacts the real client's financial advisor and requests a wire transfer of S50,000 The advisor sells stock to generate cash and wires the funds to the account at ABC Bank provided by the hacker Has money laundering occurred?
- A. No; there was no placement of funds in the account
- B. No; the hacker has committed fraud but not money laundering
- C. Yes; the hacker committed fraud and then wired money out to hide its origin
- D. Yes; the advisor sold stock and generated cash
Answer: C
NEW QUESTION # 66
You are conducting customer due diligence and enhanced due diligence for a correspondent bank with offices in several countries that are suspected of significant money laundering activity. You want to obtain information about the compliance and anti-money laundering programs of the bank as well as general information about its organization and risk management policies.
Which resource is MOST likely to provide this type of information?
- A. World Bank Doing Business Database
- B. Bankers Almanac
- C. Wolfsberg International Due Diligence Repository
- D. The bank's home jurisdiction corporate registry
Answer: C
NEW QUESTION # 67
A casino needs to hire an auditor (or sensitive financial operations where the employee will have access to large amounts of cash The interviewer needs to be sure that this employee is scrupulously honest lo protect the company.
Which is the MOST effective technique to vet this prospective employee?
- A. Review your internal records to determine if the prospective employee has any record of excessive gambling
- B. Conduct a background check on the prospective employee
- C. Collect documentation to confirm the prospective employee s educational history
- D. Require Ihe prospective employee to provide personal references
Answer: B
NEW QUESTION # 68
A prosecutor in Country X needs to obtain the legally admissible testimony of Person A who resides in the United States, related to an ongoing criminal investigation Person A is incapable ol traveling and will only provide testimony if compelled by a court order in the U.S. There is no bilateral or multilateral treaty or convention that facilitates mutual legal assistance between these two countries.
Which should the prosecutor submit to obtain the testimony of Person A?
- A. A Mutual Legal Assistance Treaty request
- B. A request for a production order
- C. A request for a litigation hold
- D. A Letters Rogatory request
Answer: D
NEW QUESTION # 69
Old Stuff Inc is a high-end antique dealer They regularly have large sales to customers from around the globe.
Recently its account has been receiving several high-value fund transfers from a single overseas company and most of the money is substantially remitted back to the customer in a single transaction as refunds.
This is a red flag for which type of money laundering scheme?
- A. Trade-based
- B. Round tripping
- C. Wash trading
- D. Informal value transfer
Answer: B
NEW QUESTION # 70
According to the Basel's Committee's Customer Due Diligence Paper how should a customer's first payment be carried out?
- A. Through an established money service business with a correspondent relationship with the financial institution
- B. Through a lawyer or other gatekeeper account with another bank subject to similar customer due diligence standards
- C. Through an account in the customers name with another bank subject to similar customer due diligence standards
- D. Through an account in the customer's name in an established bank within the financial action task force zone
Answer: C
NEW QUESTION # 71
You are investigating a steel company that is under suspicion of being used by a mafia organization as a conduit for illicit funds transfers and commodities transactions You come across documents of a len-ton shipment of low-grade industrial steel bars for Thailand divided into one-ton containers.
Which is the BEST indicator that this shipment is suspicious and requires additional investigation?
- A. Because Thailand is well known as a high-risk country for trade-based money laundering
- B. Because it was most likely destined for trans-shipment to multiple nations or jurisdictions
- C. Because documents show payment for high-grade steel
- D. Because metals are a known avenue for money laundering
Answer: C
NEW QUESTION # 72
During a risk assessment of its trade finance operations, XYZ Bank identifies a high volume of transactions involving shell companies with obscure ownership structures. What is the most appropriate action for XYZ Bank to take in response to this finding?
- A. Conduct enhanced due diligence on transactions involving shell companies.
- B. Immediately terminate all trade finance operations involving shell companies.
- C. Ignore the issue as long as the transactions are compliant with regulatory requirements.
- D. Seek approval from senior management to continue trade finance operations.
Answer: A
NEW QUESTION # 73
You are part of a law enforcement learn reviewing remittances from global money service businesses (MSBs) over a several year period including a time of severe economic recession During this time period there was a regulatory change that drastically lowered the transaction amount al which ihe MSBs were required lo record identity documentation (e.g., driver's license passport) (or any wire transfers crossing international boundaries.
Which result suggests criminal actors have previously been using the system to transfer funds and avoid the reporting requirement?
- A. The aggregate amount of money transferred from one country to another reduced sharply immediately prior to and after the new reporting requirements were enacted
- B. There was an increase in Suspicious Transaction Reports (SARs/STRs) filed to the Financial Intelligence Unit (FIU)
- C. There was an increase in the number of cross-border transmissions with an increased average value
- D. The aggregate amount of money transferred from one country to another decreased sharply immediately prior to and increased sharply after the new reporting requirements were enacted
Answer: A
NEW QUESTION # 74
Which suggests that countries review the adequacy of laws and regulations that relate to non-profit organizations because they are vulnerable to misuse that may further financing ol terrorism?
- A. Wolfsberg Principles
- B. FATF Recommendations
- C. OECD Guidelines
- D. UN Security Council Resolution 1373
Answer: B
NEW QUESTION # 75
You are an investigator at a small bank Your transaction monitoring system alerts you to unusual activity happening in a business account for a consulting firm ABC Consulting.
The account activity consists of incoming wires from a personal account at another institution there are three to four incoming wires each week from one individual. The next day an outgoing check would be issued to the same person for a slightly larger amount with the memo "Wire reimbursement + fee " Web searches indicate that this person is employed by your customer ABC Consulting Additional activity consists of small cash deposits.
Which are Ihe red flags in this scenario? Choose 2 answers
- A. The customer does not appear to be operating a legitimate business
- B. Money being wired into this account from a personal account may constitute complying of funds
- C. The customer is a marketing consulting firm which is always considered a high-risk industry
- D. The customer may be layering transactions to conceal the source or purpose of funds
Answer: A,D
NEW QUESTION # 76
Mr. Johnson, a compliance officer at ABC Corporation, is conducting due diligence on a potential business partner based in a foreign country. During the due diligence process, Mr. Johnson discovers that the potential partner's principal shareholder is a politically exposed person (PEP) from a country subject to OFAC sanctions. What is the most appropriate action for Mr. Johnson to take?
- A. Reject the business partnership due to the involvement of a PEP from a sanctioned country.
- B. Proceed with the business partnership but conduct enhanced monitoring of transactions involving the PEP.
- C. Seek guidance from OFAC on the permissibility of engaging with the potential partner.
- D. Proceed with the business partnership but disclose the involvement of the PEP to OFAC.
Answer: C
NEW QUESTION # 77
A mid-size bank receives a S35 000 wire transfer request in an email from the chief financial officer (CFO) of one of the bank's business clients. The client's head of accounting was copied on the message An employee at the bank replied to the email with a wire transfer form and agreement for the client to complete.
The CFO replied with the signed and completed forms the bank began processing the wire transfer and as a routine measure called the number in the CFO's email signature to validate request. The bank received verbal confirmation to complete the transfer.
The next day a bank employee receives a call from the head of the clients accounting department inquiring about the $35,000 transfer believing it to be an error. The bank employee says that the transfer was initiated by the company CFO and produces the wire transfer forms. The head of accounting says that no such transfer was authorized and connects the bank with the CFO to confirm this Now believing the transaction to be fraudulent the bank starts an attempt to reverse the wire transfer.
Based on this information which is a weakness in the bank's cybersecurity program?
- A. The bank should have required a hard copy of the wire transfer agreement to be returned via fax before processing the wire
- B. The bank should have authenticated the request using contact information on file with the bank before processing the wire
- C. The bank should have scanned the completed wire transfer forms that the CFO attached to her email for malware used in account takeover schemes
- D. The bank should have replied to the email and requested confirmation from the head of accounting in addition to the CFO
Answer: B
NEW QUESTION # 78
You are the head of fraud risk management for a company that provides telecommunications services to business customers Recently an employee in the customer service department has approached you with concerns about a rise in customer complaints concerning overbilling.
In the past three months an increasing number of clients have complained they have been charged for unspecified "administrative fees beyond their contracted rates. You inquire with your company s operations department about these administrative fees but they are not aware of any changes to services or policies that would have led to new fees for customers After conducting an audit of customer billings you discover that the issue is widespread and you suspect it may be part of an internal fraud scheme on the part of one or more employees.
You initiate an internal investigation of company employees. Which employee should you investigate FIRST?
- A. An employee who is one of the leading sales learn members and is known for upselling existing customers on larger more profitable contracts
- B. An employee who led the periodic audit of customer billing last year but has since been promoted to a different role within your company's internal audit unit
- C. An employee who has oversight over accounts payable and is responsible for reviewing customer inquiries related to billing
- D. An employee who has recently been disciplined lor chronic absenteeism and was placed on a performance improvement plan
Answer: D
NEW QUESTION # 79
An offshore energy company is attempling to make payment to Iran for a bulk oil purchase The payment is routed through the offshore bank's New Y affiliate bank where the funds are converted to USD to be forwarded to Iranian Oil LTD, Tehran, Iran.
Which forward payment scheme is MOST likely to be used by banks to defeat the U.S. Office of Foreign Assets Control (OFAC) Sanctions?
- A. Redirection - sending funds to an Iranian oil shell company in a non-sanctioned country and then wiring them to Iranian Oil LTD Tehran
- B. Intermediated Delivery Service (IDS) - forwarding funds to a non-sanctioned affiliate bank not in the US lo be forwarded to a correspondent bank account inside Iran
- C. Alternate Delivery Service (ADS) - referring to an automated clearing house service to forward payment to a service provider in a non-sanctioned country for final payment to Iranian Oil LTD
- D. Stripping - removing the name and destination from the SWIFT messaging to mask the client's identity and location
Answer: A
NEW QUESTION # 80
An Eastern Europeancybercrimeorganization utilizes customer credit card information to steal funds which are deposited in a North American account To transfer the funds out of North America the cyber thieves transfer the funds into numerous prepaid debit cards from a bank.
The funding of the prepaid debit cards is indicative of which stage of money laundering?
- A. The placement stage
- B. The layering stage
- C. The referral stage
- D. The integration stage
Answer: B
NEW QUESTION # 81
A U.S. citizen opens an account in an offshore bank in a country that has a bilateral Model II FATCA agreement with an initial deposit of $10,000. USD Over the course of time the kinds in the account exceed
$60,000 USD.
Which obligation under FATCA applies?
- A. The bank is required to report U.S. account holders to the U.S. Internal Revenue Service
- B. The bank is requiredtofile a Suspicious Activity Report or Suspicious Transaction Report (SAR or STR)
- C. The bank would be subject to a mandatory withholding tax on income Irom U S financial assets it holds
- D. None the bank may accept Ihe deposited funds and is under no further obligation than to follow applicable local law
Answer: A
NEW QUESTION # 82
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