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AML & KYC Compliance Flashcards

7 cards from real CFA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 AML & KYC Compliance flashcards as text

  1. A customer opens multiple accounts at the same bank under different business names but with the same ultimate owner. This is BEST described as:

    Answer: Beneficial ownership concealment

    Using multiple entities with the same beneficial owner to obscure the true controller is a common money laundering red flag related to ownership concealment.

  2. Under FinCEN's Customer Due Diligence rule, covered financial institutions must identify beneficial owners who own what minimum percentage of a legal entity?

    Answer: 25%

    FinCEN's CDD rule requires identifying natural persons who own 25% or more of a legal entity customer.

  3. What is a 'Politically Exposed Person' (PEP) in the context of KYC compliance?

    Answer: An individual who holds or has held a prominent public position

    A PEP is an individual who holds or has held a prominent public function, making them higher risk for bribery and corruption.

  4. Which of the following is NOT typically a red flag for potential money laundering?

    Answer: Regular payroll deposits from a known employer

    Regular payroll deposits from a known employer represent normal, expected banking activity rather than a suspicious pattern.

  5. The 'travel rule' in AML compliance requires financial institutions to pass along specific information when processing wire transfers above what threshold?

    Answer: $3,000

    The BSA travel rule requires banks to pass along originator and beneficiary information for wire transfers of $3,000 or more.

  6. A customer deposits $9,800 in cash on Monday and $9,500 in cash on Tuesday. What AML concern does this raise?

    Answer: Structuring, since the deposits appear designed to avoid the $10,000 reporting threshold

    Deliberately splitting deposits to stay below the $10,000 CTR threshold is illegal structuring, regardless of whether the funds are legitimate.

  7. Which international body maintains the list of jurisdictions subject to increased AML monitoring?

    Answer: FATF

    FATF (Financial Action Task Force) publishes the 'grey list' and 'black list' of jurisdictions with strategic AML/CFT deficiencies.