Practice Test Geeks(ACAMS) Association of Certified Anti-Money Laundering Specialists Practice Test
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Beneficial Ownership and Politically Exposed Persons (PEPs) Flashcards

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  1. Under FinCEN's Customer Due Diligence (CDD) Rule, what ownership threshold triggers beneficial ownership identification for legal entity customers?

    Answer: 25% or more

    FinCEN's CDD Rule requires covered financial institutions to identify natural persons owning 25% or more of a legal entity customer and one person with significant managerial control.

  2. In addition to identifying equity owners, FinCEN's beneficial ownership rule also requires identification of which individual?

    Answer: A single person with significant responsibility to control, manage, or direct the entity

    The CDD Rule's two-prong approach requires identifying equity owners at 25%+ and one control person with significant responsibility for managing or directing the entity.

  3. Which of the following is NOT considered a Politically Exposed Person (PEP) under FATF guidance?

    Answer: A mid-level tax administrator with no policy-making authority

    FATF defines PEPs as individuals entrusted with prominent public functions; a mid-level tax administrator without policy-making authority does not meet this elevated risk threshold.

  4. Under FATF Recommendation 12, for how long after an individual leaves a prominent public position should enhanced due diligence measures continue?

    Answer: A risk-based period, often cited as 12–18 months or longer

    FATF recommends applying a risk-based approach for former PEPs, and many jurisdictions and industry guidance suggest monitoring for at least 12–18 months or longer depending on risk.

  5. Which category of PEP is defined as 'domestic PEP' under US AML rules?

    Answer: Senior officials of US federal, state, or local government entrusted with prominent public functions

    Domestic PEPs are individuals entrusted with prominent public functions within the US, such as senior elected or appointed government officials.

  6. Which of the following best describes the 'layering' risk associated with complex beneficial ownership structures?

    Answer: Multiple layers of legal entities obscuring the true natural person ultimately owning or controlling assets

    Layered corporate structures—chains of holding companies, trusts, and nominee arrangements—are used to obscure beneficial ownership, making it difficult to identify the ultimate natural person behind accounts.