Money Laundering Flashcards
7 cards from real CFE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Money Laundering flashcards as text
Which analytical technique involves tracing the flow of funds from the point of origin through all transactions to identify the ultimate destination?
Answer: Follow-the-money analysis
Follow-the-money analysis traces financial flows from their source through each transaction to identify where illicit proceeds ultimately end up.
The term 'beneficial owner' in AML compliance refers to:
Answer: The natural person who ultimately owns or controls a legal entity or account
A beneficial owner is the natural person who ultimately owns or controls an entity, or on whose behalf a transaction is conducted, regardless of who appears on official documents.
Which of the following best describes 'trade-based money laundering' (TBML)?
Answer: Laundering money through over- or under-invoicing of goods and services in international trade
TBML exploits international trade by manipulating the price, quantity, or quality of goods/services in invoices to transfer value across borders and obscure the origin of funds.
When a fraud examiner detects a pattern where large cash deposits are made just below reporting thresholds over multiple days at different branches, the most likely violation is:
Answer: Structuring under 31 U.S.C. § 5324
31 U.S.C. § 5324 specifically prohibits structuring transactions to evade currency reporting requirements, which is exactly what this pattern describes.
Real estate is often used as a money laundering vehicle because:
Answer: Large amounts of money can be absorbed, and properties can be resold to generate seemingly legitimate proceeds
Real estate allows launderers to absorb large sums, inflate or deflate prices, and ultimately sell the property to produce apparently legitimate proceeds.
Which of the following is the primary purpose of a risk-based approach (RBA) in AML compliance programs?
Answer: To allocate compliance resources proportionally to the level of money laundering risk posed by customers and products
The risk-based approach focuses enhanced scrutiny and compliance resources on higher-risk customers, products, and geographies rather than applying uniform controls to all.
In a money laundering investigation, the 'net worth method' is used to:
Answer: Establish unreported income by comparing increases in net worth to known legitimate income
The net worth method detects unreported income by documenting that a suspect's increase in net worth exceeds their reported legitimate income, suggesting illicit funds.