C4 Quality Assurance & Compliance 5

Question 1

A compliance officer notices a customer suddenly moves large amounts of crypto to a mixer service after months of normal activity. Which AML red flag category does this represent?

Accepted Answer

Transaction pattern anomaly

Answer

A sudden deviation from established transaction behavior — especially toward a high-risk service like a mixer — is a classic transaction pattern anomaly red flag requiring SAR consideration.

Question 2

What does the concept of 'travel rule compliance' require a sending VASP to transmit to the receiving VASP?

Accepted Answer

Originator and beneficiary name, account number, and physical address or national ID

Answer

The Travel Rule requires VASPs to pass along originator name, account number, and address/national ID, plus beneficiary name and account number, for transfers above the applicable threshold.

Question 3

Under MiCA (Markets in Crypto-Assets Regulation), which entity type must obtain a specific authorization before offering crypto-asset services in the EU?

Accepted Answer

Crypto-Asset Service Providers (CASPs)

Answer

MiCA requires Crypto-Asset Service Providers (CASPs) — including exchanges, custodians, and advisors — to obtain authorization from an EU member state's competent authority.

Question 4

A crypto custodian loses access to a client's private keys due to an employee error. Under which risk category would this incident be classified?

Accepted Answer

Operational risk

Answer

Loss of private keys due to human error, system failure, or process breakdown is classified as operational risk — losses arising from inadequate internal processes, people, or systems.

Question 5

Which principle of the C4 certification emphasizes that compliance programs must be proportionate to the risk level of the business's customer base and services?

Accepted Answer

Risk-based approach (RBA)

Answer

The Risk-Based Approach (RBA) allows businesses to allocate compliance resources proportionate to identified risks, applying stricter controls to higher-risk customers and transactions.

(C4) CryptoCurrency Certification Consortium Practice Test

(C4) CryptoCurrency Certification Consortium Practice Test

C4 Quality Assurance & Compliance 5