CFE Money Laundering 2

Question 1

Which international body sets global AML/CFT standards and issues the Forty Recommendations on money laundering?

Accepted Answer

The Financial Action Task Force (FATF)

Answer

The Financial Action Task Force (FATF) is the intergovernmental body that establishes international standards for combating money laundering and terrorist financing.

Question 2

Which of the following is considered a 'red flag' indicator of potential money laundering?

Accepted Answer

A customer who is reluctant to provide information about the source of funds

Answer

Reluctance to provide information about the source of funds is a classic red flag indicating possible money laundering activity.

Question 3

The primary anti-money laundering legislation in the United States that requires financial institutions to assist government agencies in detecting and preventing money laundering is the:

Accepted Answer

Bank Secrecy Act (BSA)

Answer

The Bank Secrecy Act of 1970 is the primary U.S. AML law requiring financial institutions to maintain records and file reports to help detect money laundering.

Question 4

Know Your Customer (KYC) programs at financial institutions are primarily designed to:

Accepted Answer

Verify customer identity and assess the risk of illicit financial activity

Answer

KYC programs require institutions to verify client identities and understand the nature of their financial activity to detect and prevent money laundering and fraud.

Question 5

Which term describes the use of cash-intensive businesses (such as car washes or restaurants) to mix criminal proceeds with legitimate revenue?

Accepted Answer

Commingling

Answer

Commingling involves mixing illegal proceeds with legitimate business revenues to disguise their illicit origin.

Certified Fraud Examiner Exam Practice Test

Certified Fraud Examiner Exam Practice Test

CFE Money Laundering 2