Financial Crime Prevention Flashcards
7 cards from real CCB practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Crime Prevention flashcards as text
Which of the following best describes the 'loan-back' money laundering technique?
Answer: Depositing illicit funds offshore then borrowing them back as a legitimate loan
The loan-back scheme places illicit funds in an offshore account, then borrows the money back to create a seemingly legitimate paper trail.
Under the USA PATRIOT Act, financial institutions are required to establish Customer Identification Programs (CIP). What is the minimum information required for individual customers?
Answer: Name, date of birth, address, and identification number
CIP regulations require collection of name, date of birth, address, and identification number (e.g., SSN or passport number) for individual customers.
Which type of Politically Exposed Person (PEP) poses the HIGHEST risk and typically requires enhanced due diligence by default?
Answer: Foreign PEPs
Foreign PEPs are classified as highest risk under FATF and US regulations because they may use US financial systems to hide corruption proceeds.
A financial institution's AML program must include which four core elements under the BSA/AML framework?
Answer: Internal controls, independent testing, a designated AML officer, and training
The BSA requires the 'four pillars': written internal controls, independent testing (audit), a designated compliance officer, and an ongoing employee training program.
Which federal agency is the primary financial intelligence unit (FIU) in the United States that receives and analyzes SARs and CTRs?
Answer: FinCEN
The Financial Crimes Enforcement Network (FinCEN), a bureau of the US Treasury, is the US FIU responsible for collecting and analyzing BSA filings.
The term 'de-risking' in the financial crime context refers to:
Answer: Financial institutions exiting entire customer categories to avoid AML risk
De-risking occurs when financial institutions terminate or restrict relationships with entire categories of customers rather than managing individual risks.
When conducting Enhanced Due Diligence (EDD) for a high-risk customer, which additional step is most appropriate?
Answer: Obtaining senior management approval for the relationship
EDD for high-risk customers typically requires senior management approval before onboarding or continuing the relationship, in addition to enhanced monitoring.