CCE Regulatory and Legal Frameworks 3

Question 1

FATF stands for which international organization that sets AML standards for crypto?

Accepted Answer

Financial Action Task Force

Answer

FATF (Financial Action Task Force) is the intergovernmental body that sets international standards for combating money laundering and terrorist financing, including for virtual assets.

Question 2

What does 'KYC' require cryptocurrency exchanges to verify?

Accepted Answer

The identity of customers before providing services

Answer

KYC (Know Your Customer) requires exchanges to verify customer identity through documents like government IDs to prevent fraud and money laundering.

Question 3

Under US tax law, how does the IRS classify Bitcoin and other cryptocurrencies?

Accepted Answer

As property

Answer

The IRS treats cryptocurrency as property for federal tax purposes, meaning capital gains rules apply to crypto transactions.

Question 4

Which scenario would most likely trigger a Suspicious Activity Report (SAR) filing obligation for a US crypto exchange?

Accepted Answer

A customer conducting multiple transactions just below $10,000 to avoid reporting

Answer

Structuring transactions to stay below reporting thresholds (called 'structuring' or 'smurfing') is a classic red flag requiring SAR filing.

Question 5

What is the key distinction between a 'custodial' and 'non-custodial' crypto wallet from a regulatory perspective?

Accepted Answer

Custodial wallet providers hold private keys and face more regulatory obligations

Answer

Custodial wallet providers hold customer private keys and are typically classified as money services businesses subject to KYC/AML regulations, while non-custodial wallet providers generally face fewer direct obligations.

(CCE) Certified Cryptocurrency Expert Practice Test

(CCE) Certified Cryptocurrency Expert Practice Test

CCE Regulatory and Legal Frameworks 3