CISI IoI Anti-Money Laundering and Financial Crime 3

Question 1

How does terrorist financing fundamentally differ from money laundering?

Accepted Answer

Terrorist financing may use legitimately sourced funds directed towards illegal purposes, whereas money laundering conceals criminally derived funds

Answer

Unlike money laundering which conceals the criminal origin of funds, terrorist financing may start with legitimately obtained money that is then channelled to fund illegal terrorist activities, making source-based detection less effective.

Question 2

What is the Financial Action Task Force (FATF)?

Accepted Answer

An intergovernmental body that develops and promotes international standards to combat money laundering and terrorist financing

Answer

FATF is an intergovernmental organisation that sets global standards — the FATF Recommendations — that countries implement into national law to protect the international financial system from abuse.

Question 3

What is an Unexplained Wealth Order (UWO) and who can apply for one?

Accepted Answer

A civil investigation order requiring a person to explain assets apparently disproportionate to their known income, applied for by law enforcement

Answer

Introduced by the Criminal Finances Act 2017, a UWO is a civil order obtained by law enforcement (such as the NCA or SFO) that compels a respondent to explain the origin of assets that appear disproportionate to their lawful income.

Question 4

What is the 'integration' stage of the money laundering process?

Accepted Answer

The stage at which laundered funds re-enter the legitimate economy and appear to be lawfully obtained

Answer

Integration is the final stage of money laundering where the now-disguised criminal proceeds are reintroduced into the legitimate economy — for example, through property purchases or business investments — appearing to be clean funds.

Question 5

Which of the following best describes how a 'shell company' is used in money laundering?

Accepted Answer

A legal entity with no real business operations used to create anonymity and conceal the beneficial ownership of funds

Answer

Shell companies are legal entities that exist mainly on paper with no genuine commercial operations, used by money launderers to insert layers of anonymity and obscure the true beneficial owner of criminal funds.

CISI Introduction to Investment Practice Test

CISI Introduction to Investment Practice Test

CISI IoI Anti-Money Laundering and Financial Crime 3