CISI IoI Anti-Money Laundering and Financial Crime 2

Question 1

Which of the following best describes a Politically Exposed Person (PEP) in AML terms?

Accepted Answer

An individual who holds or has held a prominent public function, considered higher risk due to potential for corruption

Answer

A PEP is someone who holds or has held a prominent public position — such as a head of state, senior politician, or senior military official — and is treated as higher risk due to potential exposure to corruption and bribery.

Question 2

In which circumstances is Enhanced Due Diligence (EDD) required under UK AML regulations?

Accepted Answer

For customers identified as higher risk, such as PEPs and those from high-risk third countries

Answer

EDD is required in higher-risk situations, including dealings with PEPs, customers connected to high-risk third countries identified by FATF, and other circumstances indicating elevated money laundering risk.

Question 3

What is 'smurfing' (also known as structuring) as used by money launderers?

Accepted Answer

Breaking large sums of money into smaller deposits to avoid transaction reporting thresholds

Answer

Smurfing or structuring involves deliberately breaking down large sums into smaller transactions, typically below reporting thresholds, to avoid detection by financial institutions and authorities.

Question 4

What is the primary role of the UK Financial Intelligence Unit (UKFIU) in the AML framework?

Accepted Answer

Receiving, analysing, and disseminating financial intelligence derived from SARs submitted to the NCA

Answer

The UKFIU sits within the National Crime Agency and is the central body responsible for receiving, analysing, and sharing SAR intelligence with law enforcement and other relevant agencies.

Question 5

Which of the following is a placement technique rather than a layering technique in money laundering?

Accepted Answer

Depositing cash through a currency exchange bureau

Answer

Using a currency exchange bureau to convert cash is a placement technique, introducing physical currency into the financial system; the other options involve disguising existing electronic funds, which is layering.

CISI Introduction to Investment Practice Test

CISI Introduction to Investment Practice Test

CISI IoI Anti-Money Laundering and Financial Crime 2