CFE Conducting Investigations 4

Question 1

When a fraud examiner is asked to conduct a covert investigation, the MOST critical consideration is:

Accepted Answer

Obtaining proper authorization and maintaining strict confidentiality

Answer

Covert investigations must be properly authorized and kept confidential to remain legally defensible and protect the integrity of the inquiry.

Question 2

The 'fraud theory' approach to investigating requires the examiner to:

Accepted Answer

Formulate a hypothesis about how the fraud was committed and test it with evidence

Answer

The fraud theory approach involves developing a hypothesis about the scheme and then systematically gathering evidence to confirm or refute it.

Question 3

A fraud examiner reviewing bank statements notices several round-dollar transactions just below the $10,000 CTR reporting threshold. This pattern is MOST indicative of:

Accepted Answer

Structuring, which is itself a federal crime

Answer

Structuring (also called 'smurfing') involves deliberately breaking up transactions to avoid Currency Transaction Report requirements and is a federal crime.

Question 4

Which of the following BEST describes the purpose of a 'Suspicious Activity Report' (SAR) in a fraud investigation context?

Accepted Answer

A mandatory report filed by financial institutions to FinCEN for suspected money laundering

Answer

SARs are required reports that financial institutions must file with FinCEN when they detect suspected money laundering or other financial crimes.

Question 5

During an investigation, a fraud examiner obtains evidence through an illegal search. This evidence is MOST likely to be:

Accepted Answer

Admissible if the examiner is a private party, not law enforcement

Answer

The exclusionary rule primarily applies to government actors; evidence obtained by private investigators through illegal searches may still be admissible in court, though the investigator may face separate liability.

Certified Fraud Examiner Exam Practice Test

Certified Fraud Examiner Exam Practice Test

CFE Conducting Investigations 4