Certified Financial Crime Specialist CFCS Practice Test Engine: Try These 175 Exam Questions
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NEW QUESTION # 53
A company is concerned that its prepaid cards could be used by identity thieves seeking to launder funds.
You have been asked to examine its card program and designate features to reduce the risks of the cards being abused.
Which policy would MOST reduce the risk ol money laundering?
- A. The cards hold a low maximum value and can be reloaded by the customer several times a day
- B. The cards can be used al merchants' points of sale to get cash back on purchases
- C. The cards expire one year after their issue date and the funds revert to the customer
- D. The cards must be reloaded at the original point of sale using a debit or credit card
Answer: D
NEW QUESTION # 54
You arethe ChiefAnti-Money Laundering Officer for a large multinational financial institution and you are building your risk-based Enhanced Due Diligence (EDO) program.
Which business would LEAST likely be targeted tor EDD?
- A. A charitable organization
- B. A law firm
- C. A storage facility
- D. A travel agency
Answer: C
NEW QUESTION # 55
You are a manager in Ihe fraud department of a regional bank Upon returning from a three-day weekend one of your analysts informs you that in the last 48 hours a high volume of suspicious activity has been detected in a number of a small business accounts.
The accounts are showing a similar pattern - first a small funds transfer to institutions in other countries followed by a series of larger transactions to the same institutions initiated in rapid succession.
Concerned about the activity you contact your senior compliance managers and recommend these transactions be suspended or clawed back pending further investigation. Based on the information available which additional steps should you recommend?
Choose 2 answers
- A. Require the bank to call a known number to confirm all international transactions from small business accounts
- B. Contact the cybersecurity department to alert them that your institution may have been the victim of a data breach
- C. Suspend all active credit cards currently issued to small business accounts and issue new ones
- D. Contact small business accountholders to alert them that they may have been the victims of a ransomware attack
Answer: A,B
NEW QUESTION # 56
You are an investigator for a U S -based financial institution and have identified suspicious wire activity in an account at your institution Over the last 16 months $18 million was sent from the main account into three linked accounts a bank account located in Germany an International Business Company (IBC) located in the Bahamas and a trust account in Panama During your investigation you noticed two major residential property purchases were made over the last 16 months by the IBC in the Bahamas.
Where should you start your investigation to identify the beneficial owners of the IBC?
- A. Identity of the trustee lor the trust account in Panama
- B. Letters of Incorporation for the IBC
- C. Signature card from the bank in Germany
- D. Identity of persons residing in properties in Bahamas
Answer: D
NEW QUESTION # 57
You are an examiner for a financial industry regulator One of your smaller firms has shown a dramatic increase in wire activity that you think may be indicative of them facilitating money laundering. You request their outgoing wire transactionsfor the past six months and they provide you a spreadsheet with nearly 10,000 wires.
Which two criteria would be the MOST effective way to narrow down your sample for investigation? Choose
2 answers
- A. The client(s) with the highest number of foreign wires
- B. The client(s) with an address outside the country where your firm is domiciled
- C. The client(s) with multiple wires just below the reporting threshold
- D. The client(s) with multiple third-party wires to different foreign beneficiaries
Answer: C,D
NEW QUESTION # 58
You work in financial crime compliance for a money services business (MSB) with an international network of agents whose core business is handling remittance transactions. As part of your periodic update to your risk assessment you are reviewing payment corridors and customer types.
Which payment corridor is MOST likely to present the highest risk?
- A. Payments by domestic workers from theUnitedArab Emirates to the Philippines
- B. Payments by seasonal agricultural workers from Canada to the Caribbean
- C. Payments by temporary visa holders in the tech industry from countries in the European Union to India
- D. Payments by small business owners from the US to Yemen
Answer: D
NEW QUESTION # 59
Which activity would likely be involved in the integration stage ofmoney laundering?
- A. Wiringlandsto off-shore banks
- B. Buying or selling properly by a shell company
- C. Depositing international money orders
- D. Transferring funds between multiple shell corporations
Answer: B
NEW QUESTION # 60
Mr. X is a business consultant who specializes in helping European companies expand their operations into Latin America. You are part of a law enforcement unit investigating Mr. X who is under suspicion of assisting his clients to conceal bribe payments made to government officials in Latin American countries.
Mr. X is knowntocontrol a numberofdifferent companies andtheirrelated subsidiaries within severalLamAmerican countries. You are tracing (fundsthat originated from an account held by one of Mr.X's companies in the UK in an effort to establish that he is involved in the corruption and money laundering scheme.
Which would provide the BEST indicatorThatMr.X is helping to launder funds connected to bribery?
- A. Funds that are being used in the operation of a business in ahigh-riskjurisdiction
- B. Funds transferred into the account from a nondescript business with little information available about it
- C. Funds transferred to business associates of Mr.X located in the European Union
- D. Funds whose source can be traced to a corporate account in a country located in the European Union
Answer: B
NEW QUESTION # 61
As part of a risk assessment of its investment advisory services, a financial institution discovers that some of its clients engage in high-frequency trading strategies that may pose market manipulation risks. What is the most appropriate action for the institution to take?
- A. Seek legal advice before taking any action regarding clients engaged in high-frequency trading.
- B. Implement enhanced monitoring and surveillance measures for clients engaged in high-frequency trading.
- C. Ignore the issue as long as the clients' trading activities comply with regulatory requirements.
- D. Immediately terminate all client relationships involved in high-frequency trading.
Answer: B
NEW QUESTION # 62
As an internal auditor for a commercial financial institution you are reviewing fixed term loans to a commercial customer that you are convinced were used to launder proceeds of crime.
Which three situations support your suspicion of money laundering? Choose 3 answers
- A. Loan proceeds were partly disbursed by wire to a higher risk country with strict customer privacy laws
- B. The customer is now classified as higher credit risk and would no longer qualify for a loan
- C. Repayment firms were not followed and the loan was fully repaid early
- D. The company's CFO is Ihe son-in-law of the Minister of Defense for a neighboring country
Answer: A,C,D
NEW QUESTION # 63
You are investigating a multi-national company for financial fraud As part of your investigation, you would like to determine whether the company has complied with applicable tax laws in the jurisdictions in which it operates As a preliminary starting point you need to know the applicable laws relating to exchange of tax information.
Other than contacting the governments of each jurisdiction which organization's website would have the MOST effective resources for obtaining such information?
- A. United Nations Office of Drugs and Crime (UNODC)
- B. World Bank Doing Business Project
- C. Internal Revenue Service (IRS)
- D. Organization for Economic Cooperation and Development (OECD)
Answer: D
NEW QUESTION # 64
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. Wolfsberg International Due Diligence Repository
- B. World Bank Doing Business Database
- C. Bankers Almanac
- D. The bank's home jurisdiction corporate registry
Answer: A
NEW QUESTION # 65
Jane is a dual citizen of the United Stales and Country B a known lax haven, she has permanently relocated to Country B The lax authorities in the U.S. and Country B have a well-established cooperation agreement to reduce tax evasion.
Upon relocating in Country B she legally changed her name and obtained government identification in Country B's official language. She used this new identification to establish bank accounts in Country B. She created new shell companies and opened new business ventures which generated millions of dollars of income for her.
Jane files proper tax returns in Country B and discontinues filing U.S. income tax returns. Which statement is true?
- A. She broke Country B's tax laws by changing her name prior to opening new accounts since Country B now cannot match her records with the U.S. tax authorities
- B. As a dual citizen she is responsible for filing tax returns in both the U.S. and Country B until she renounces her U.S. citizenship
- C. She broke U.S. tax laws by not notifying the institutions of her name change when opening new bank accounts in Country B
- D. Considering she permanently moved to Country B she is only responsible for filing tax returns in Country B
Answer: B
NEW QUESTION # 66
A law enforcement agent is pursuing an asset recovery case against a defendant accused of running a multimillion-dollar securities fraud scam. The defendant is thought to have moved more than $25 million through a corporate brokerage account held by a corporation formed in Las Vegas. Nevada.
It is believed that funds were sent to accounts held by shell companies in the Netherlands and the Bahamas. It is also suspected that the defendant purchased luxury goods including several high-end sports cars with proceeds of the fraud. The vehicles are registered and tilled to a trust company with a mailing address that is a post office box in Delaware. The agent is attempting to connect the vehicles to the defendant to make the case that they should be seized.
Which item below would BEST support this effort?
- A. An invoice from the shipping company for the cars that is addressed to the defendant
- B. Contact information for a registered agent acting as trustee of the trust company that holds the vehicle titles
- C. Records of incoming funds transfers received by the corporate brokerage account held by the Nevada corporation
- D. Records of outgoing funds transfers from the accounts of the shell companies in the Netherlands and Bahamas
Answer: A
NEW QUESTION # 67
A customer wishes to open a personal account at Bank A with a cashier's check A representative at Bank A has the customer fill out a questionnaire including questions about the source of wealth as well as the primary purpose of the account.
To perform appropriate due diligence which three activities should Bank A perform? Choose2answers
- A. Confirm the customers source of wealth including verification of employment
- B. Take into account factors such as whether the customer lives in a high-risk jurisdiction
- C. Conduct enhanced due diligence due to the account being opened with a cashier's check
- D. Verity the customer's personal details such as the customer's address both via his provided identification and independently through public record searches
Answer: A,D
NEW QUESTION # 68
Bob a representative of Company A meets with a representative from the State Ministry of Country X to discuss a construction project in the country. The Ministry representative states that it is highly unlikelyfor a foreign firm to win such a bid without additional efforts" on the part of the foreign firm Bob s job is on the line and he pays the representative.
This is an example of which offense?
- A. Coercion
- B. Duress
- C. Bribery
- D. Extortion
Answer: C
NEW QUESTION # 69
Mr. Patel, the head of compliance at a financial institution, is considering the use of technology to enhance sanctions compliance. Which of the following technological solutions would be most beneficial for improving the institution's sanctions screening process?
- A. Integrating machine learning algorithms to enhance the accuracy of sanctions screening systems.
- B. Implementing artificial intelligence (AI) algorithms to automatically approve low-risk transactions.
- C. Utilizing blockchain technology to track and verify the identity of counterparties in real-time.
- D. Deploying biometric authentication systems to verify the identity of customers during transactions.
Answer: A
NEW QUESTION # 70
During a training session on OFAC compliance, an employee asks about the consequences of processing transactions involving individuals or entities designated under OFAC sanctions programs. What is the most accurate response to the employee's inquiry?
- A. Processing transactions involving individuals or entities designated under OFAC sanctions programs may result in civil penalties but not criminal charges.
- B. Processing transactions involving individuals or entities designated under OFAC sanctions programs may result in both civil and criminal penalties.
- C. Processing transactions involving individuals or entities designated under OFAC sanctions programs is permissible if conducted through offshore accounts.
- D. Processing transactions involving individuals or entities designated under OFAC sanctions programs is permissible if authorized by senior management.
Answer: B
NEW QUESTION # 71
You operate a convenience store that also sells and cashes money orders and offers wire transfer services.
Which three activities on their own are sufficient red flags to warrant further due diligence into whether a transaction may be related to terrorist financing? Choose 3 answers
- A. On a weekly basis a customer wires S2 500 to the charity Middle Eastern Orphans and Refugees Relief Association with a post office box address in New York City
- B. Every week immediately upon receiving a money transfer the customer purchases a series of money orders, prepaid debit and phone cards to be sent to other individuals
- C. A customer who has recently immigrated to the country sends funds to a high-nsk jurisdiction, where they used to live
- D. Several customers receive a monthly wire transfer of funds from the same business which has an address in a high-risk jurisdiction
Answer: A,B,D
NEW QUESTION # 72
One of the tasks for an employee of a U S bank is to administer overseas large value drafts. The employee receives a draft from Country X that is identified as a high-risk and non-cooperative jurisdiction by the FATF According lo the FATF 40 Recommendations, which action should the employee take?
- A. Conduct an investigation according to the money laundering and the financing of terrorism norms/rules enforced and adopted by Country X
- B. Since the draft was issued in a non-cooperative country block the transaction
- C. Verify the transaction's basic data according to the bank's international operations manual
- D. Request additional documentation to get a deeper understanding about the payer and the origin of the funds
Answer: D
NEW QUESTION # 73
In your job as an analyst with a securities regulator you are reviewing the movement and volatility in penny stocks. As part of your daily work, you review reports and you encounter this chart in the chart the dotted line represents the closing price and the bars represent average daily volume.
Which type of securities fraud should you begin investigating?
- A. Insider trading
- B. Cherry picking
- C. Market manipulation
- D. Front running
Answer: C
NEW QUESTION # 74
A small but very successful construction company is expanding rapidly Having quickly gone from just a few employees to a larger staff the company's managers have become concerned about the possibility for internalTheftand fraud, and are implementing compliance measures.
The company promotes one of its current HR employees to be the new head of compliance It institutes a new whistleblower policy in which all employees are required to report suspicious behavior or transactions directly to their immediate supervisor who will escalate as necessary.
The company also institutes a gifts and entertainment policy that restricts promotional expenses for the company's sales staff and any managersthatinteract with clients and vendors Finally the company starts a selective review process for all invoices above a certain threshold subjecting them to senior management review.
Based on this scenario which is the MOST significant weakness in the company's efforts to detect and prevent internal financial crime?
- A. The Policy ofinvoice review - All invoices should be subject to senior management approval not only those above a certain level
- B. The gifts and entertainment policy - The policy is not comprehensive enough and should include all company employees not only sales staff and management
- C. The promotion of a current employee as head of compliance - Compliance officers should always be hired externally to minimize the chances of internal fraud
- D. Thewhistleblowerpolicy - Reporting should never go through the company's business lines it should lake place anonymously
Answer: D
NEW QUESTION # 75
A financial institution operates in multiple jurisdictions and encounters challenges in ensuring consistent compliance with OFAC sanctions across its global operations. What would be the most effective approach for the institution to enhance cross-border sanctions compliance?
- A. Conducting regular risk assessments to identify jurisdiction-specific sanctions risks and adjust compliance measures accordingly.
- B. Implementing jurisdiction-specific sanctions compliance policies tailored to the regulatory requirements of each country.
- C. Establishing a centralized sanctions compliance team responsible for overseeing compliance efforts in all jurisdictions.
- D. Outsourcing sanctions compliance responsibilities to third-party service providers specialized in global compliance solutions.
Answer: C
NEW QUESTION # 76
How are trade price manipulation schemes used to launder criminal proceeds?
- A. By transferring value between related criminal enterprises through the fraudulent misrepresentation of the value of exported commodities
- B. By serving as a balancing mechanismtosettle payments between unregistered hawalas and other informal value transfer systems
- C. By obscuring the money trail through offshore bond swaps and fraudulent letters of credit
- D. By transferring funds offshore through invoicing schemes for non-existent good and services
Answer: B
NEW QUESTION # 77
According to the Basel's Committee's Customer Due Diligence Paper how should a customer's first payment be carried out?
- A. Through an account in the customers name with another bank subject to similar customer due diligence standards
- B. Through an account in the customer's name in an established bank within the financial action task force zone
- C. Through a lawyer or other gatekeeper account with another bank subject to similar customer due diligence standards
- D. Through an established money service business with a correspondent relationship with the financial institution
Answer: A
NEW QUESTION # 78
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