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CFA Corruption & Bribery Schemes Flashcards

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

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  1. Under the Foreign Corrupt Practices Act (FCPA), it is illegal for U.S. companies to bribe:

    Answer: Foreign government officials to obtain or retain business

    The FCPA prohibits U.S. persons and companies from paying, offering, or authorizing payments to foreign government officials to obtain or retain business advantages.

  2. A kickback scheme differs from a bribery scheme primarily in that kickbacks:

    Answer: Involve a payment made in return for a benefit already received, often by a vendor to a purchasing employee

    Kickbacks are secret payments made by a vendor to an employee in exchange for directing business to that vendor, creating a corrupt quid pro quo.

  3. Which of the following is a PRIMARY red flag indicating a potential bribery scheme in procurement?

    Answer: A vendor winning multiple large contracts despite submitting higher bids than competitors

    A vendor consistently winning contracts despite higher pricing suggests that non-price factors — potentially corrupt payments — are influencing the award decisions.

  4. The UK Bribery Act 2010 is considered stricter than the FCPA primarily because it:

    Answer: Covers commercial (private-to-private) bribery and imposes corporate liability for failure to prevent bribery

    The UK Bribery Act covers both public and private sector bribery and creates a strict corporate liability offense for failing to prevent bribery by associated persons.

  5. An employee who accepts lavish gifts, meals, and entertainment from a vendor seeking a contract renewal may be engaging in:

    Answer: A conflict of interest that could constitute corruption

    Accepting gifts, meals, or entertainment of significant value from vendors can constitute a corrupt conflict of interest, especially when contract decisions are pending.

  6. What is 'bid rigging' in a corruption context?

    Answer: Colluding with competitors to predetermine the winner of a competitive bidding process

    Bid rigging is a form of collusive fraud where competing bidders coordinate to control who wins a contract, eliminating genuine competition and violating antitrust laws.