CCO Anti-Money Laundering and Financial Crimes 2

Question 1

What is Customer Due Diligence (CDD) in AML compliance?

Accepted Answer

The process of identifying and verifying customer identity and assessing the nature of their business relationship to detect suspicious activity

Answer

A credit review process

Answer

A process for resolving customer complaints

Answer

Annual account rebalancing

Question 2

What is Enhanced Due Diligence (EDD) and when is it required?

Accepted Answer

Additional scrutiny applied to high-risk customers, such as politically exposed persons or customers from high-risk jurisdictions

Answer

Standard due diligence for all customers

Answer

A simplified process for low-risk customers

Answer

A one-time review at account opening

Question 3

What is a Politically Exposed Person (PEP)?

Accepted Answer

An individual who holds or has held a prominent public function, making them higher risk for bribery and corruption

Answer

A customer who donates to political campaigns

Answer

Any foreign national doing business in the US

Answer

A customer who trades in commodities

Question 4

What does OFAC stand for and what is its role?

Accepted Answer

Office of Foreign Assets Control; administers US economic and trade sanctions

Answer

Office of Financial Accounting and Compliance; sets GAAP standards

Answer

Office of Federal Audit Control; oversees bank examinations

Answer

Office of Foreign Acquisitions and Commerce; reviews mergers

Question 5

What is the purpose of a transaction monitoring system in AML compliance?

Accepted Answer

To automatically detect unusual patterns of activity that may indicate money laundering or other financial crimes

Answer

To maximize transaction fees

Answer

To process payments faster

Answer

To generate customer account statements

Question 6

What is 'de-risking' and what concern does it raise for regulators?

Accepted Answer

Financial institutions exiting entire customer segments to avoid AML compliance burden, raising financial inclusion concerns

Answer

Reducing credit risk in loan portfolios

Answer

Lowering interest rates to reduce defaults

Answer

Eliminating high-risk investments from portfolios