CCB Financial Crime Prevention 4 — Questions and Answers
Question 1: Which red flag MOST strongly suggests potential terrorist financing rather than traditional money laundering?
- Large cash deposits followed by wire transfers
- Small transactions with no apparent economic purpose sent to high-risk regions (Correct answer)
- Frequent currency exchanges at multiple locations
- Purchases of high-value assets with cash
Correct answer: Small transactions with no apparent economic purpose sent to high-risk regions
Terrorist financing often involves small amounts with no clear business rationale transferred to conflict-affected or high-risk jurisdictions, unlike money laundering which typically involves large sums.
Question 2: Under the FCPA (Foreign Corrupt Practices Act), which of the following is a permissible payment to a foreign government official?
- A payment to speed up routine governmental actions (facilitating payment) (Correct answer)
- A gift to secure a new government contract
- A payment to influence a regulatory decision
- A commission to a local partner who shares it with officials
Correct answer: A payment to speed up routine governmental actions (facilitating payment)
The FCPA's 'facilitating payment' exception permits payments made to expedite or secure routine non-discretionary governmental actions, though many companies prohibit these anyway.
Question 3: A bank's transaction monitoring system generates an alert for a customer who regularly deposits $9,500 in cash. This pattern MOST likely indicates:
- Normal business activity
- Structuring to evade CTR reporting (Correct answer)
- Integration of laundered funds
- Terrorist financing
Correct answer: Structuring to evade CTR reporting
Repeated deposits just below the $10,000 CTR threshold is a classic structuring pattern, which is itself a federal crime regardless of the source of funds.
Question 4: Which sanction screening list maintained by OFAC includes individuals and entities with whom US persons are generally prohibited from doing business?
- FATF Black List
- Specially Designated Nationals (SDN) List (Correct answer)
- BIS Entity List
- FBI Most Wanted List
Correct answer: Specially Designated Nationals (SDN) List
The SDN List identifies persons and entities whose assets are blocked and with whom US persons are prohibited from transacting.
Question 5: In the context of beneficial ownership, the FinCEN Customer Due Diligence Rule requires covered financial institutions to identify beneficial owners who own what minimum percentage of a legal entity customer?
- 10%
- 15%
- 25% (Correct answer)
- 51%
Correct answer: 25%
Under the FinCEN CDD Rule, financial institutions must identify natural persons who own 25% or more of equity interests in a legal entity customer.
Question 6: Which term describes a financial institution that provides banking services to another financial institution, often cross-border, creating layered risk exposure?
- Shell bank
- Correspondent bank (Correct answer)
- Payable-through account
- Nested account
Correct answer: Correspondent bank
Correspondent banking involves one bank providing services on behalf of another, which can create risk if the respondent bank has weaker AML controls.
Question 7: An employee reports that a manager instructed them to NOT file a SAR on a large suspicious transaction because 'the customer is important.' The compliance officer should FIRST:
- Follow the manager's instruction to avoid conflict
- File the SAR and document the manager's instruction (Correct answer)
- Ask the customer to explain the transaction before deciding
- Transfer the account to a different branch
Correct answer: File the SAR and document the manager's instruction
SAR filing is a legal obligation; compliance officers must file required SARs regardless of internal pressure and should document such interference.
CCB Financial Crime Prevention 4
Which red flag MOST strongly suggests potential terrorist financing rather than traditional money laundering?