CFA Legal Compliance & Ethical Standards 3

Question 1

The Bank Secrecy Act (BSA) requires financial institutions to file a Suspicious Activity Report (SAR) within how many days of initially detecting a suspicious transaction?

Accepted Answer

45 days

Answer

Financial institutions must file a SAR within 30 calendar days of the date of the initial detection of facts constituting a suspicious transaction, with a 60-day extension if no suspect is identified initially — but the standard window is 30 days.

Question 2

Which of the following BEST describes the 'tipping off' prohibition under anti-money laundering laws?

Accepted Answer

Prohibits informing a subject that a SAR has been filed about them

Answer

Tipping off prohibits financial institutions from notifying a subject that a SAR has been filed or that an investigation is underway, to protect the integrity of investigations.

Question 3

An attorney who discovers fraud while providing legal services to a client is subject to which unique ethical constraint not applicable to other professionals?

Accepted Answer

Attorney-client privilege may prevent disclosure of client confidences

Answer

Attorney-client privilege can restrict an attorney's ability to disclose client fraud, creating a tension between ethical duties that other fraud examiners do not face.

Question 4

The concept of 'constructive knowledge' in fraud law means that a party:

Accepted Answer

Is presumed to know facts that a reasonable inquiry would have revealed

Answer

Constructive knowledge is legal notice of facts that a person should have known because a reasonable investigation would have revealed them, even if actual knowledge is absent.

Question 5

Under the ACFE's Code of Professional Ethics, a CFE who is offered a gift by a client during an engagement should:

Accepted Answer

Disclose the gift to their supervisor and decline it

Answer

CFEs must avoid conflicts of interest and should decline gifts that could impair or appear to impair their objectivity, disclosing the offer to maintain transparency.

CFA Practice Test

CFA Practice Test

CFA Legal Compliance & Ethical Standards 3