Banking Anti-Money Laundering 4

Question 1

Which of the following best describes a 'shell company' in the context of money laundering?

Accepted Answer

A business entity with no active operations used to obscure the true owner of assets

Answer

Shell companies are legal entities with no genuine business activities and are commonly used in layering schemes to hide the beneficial owner of illicit funds.

Question 2

What is the primary purpose of a Customer Risk Rating in an AML program?

Accepted Answer

To assess the likelihood that a customer's activity poses a money laundering risk

Answer

Customer risk ratings help banks apply a risk-based approach, directing enhanced due diligence resources toward higher-risk customers.

Question 3

A Politically Exposed Person (PEP) is considered high-risk for AML purposes primarily because:

Accepted Answer

Their political position may provide opportunities for bribery or corruption

Answer

PEPs are considered high-risk because their public positions of power create opportunities for bribery, corruption, and embezzlement of public funds.

Question 4

Which of the following is an example of the 'integration' stage of money laundering?

Accepted Answer

Purchasing real estate with laundered funds and then selling it

Answer

Integration is the final stage where laundered funds re-enter the legitimate economy through purchases of assets like real estate, which can be sold to generate clean proceeds.

Question 5

Under the BSA, how long must banks retain records of wire transfers of $3,000 or more?

Accepted Answer

5 years

Answer

The BSA's Recordkeeping Rule requires banks to retain records of wire transfers of $3,000 or more for five years from the date of the transaction.

Banking Practice Test

Banking Practice Test

Banking Anti-Money Laundering 4