CMFAS Anti-Money Laundering 2 — Questions and Answers
Question 1: What is Enhanced Due Diligence (EDD)?
- Regular customer verification
- Additional scrutiny applied to higher-risk customers and transactions (Correct answer)
- A simpler version of CDD
- A marketing technique
Correct answer: Additional scrutiny applied to higher-risk customers and transactions
EDD involves additional verification measures and ongoing monitoring applied to customers or transactions that present a higher risk of money laundering.
Question 2: What is a Politically Exposed Person (PEP)?
- A celebrity
- An individual who holds or has held a prominent public function (Correct answer)
- A wealthy business person
- Any government employee
Correct answer: An individual who holds or has held a prominent public function
A PEP is someone who currently holds or has recently held a prominent public function (e.g., head of state, senior politician, military leader), posing a higher risk due to their position.
Question 3: Why are PEPs considered higher risk for money laundering?
- They earn more money
- Their position of power makes them more susceptible to corruption and bribery (Correct answer)
- They travel more frequently
- They have more bank accounts
Correct answer: Their position of power makes them more susceptible to corruption and bribery
PEPs are considered higher risk because their positions of influence and power may make them more vulnerable to corruption, bribery, and the laundering of ill-gotten gains.
Question 4: What is the 'tipping off' offence?
- Giving a tip at a restaurant
- Alerting a person that they are being investigated for money laundering (Correct answer)
- Reporting suspicious transactions
- Providing investment tips
Correct answer: Alerting a person that they are being investigated for money laundering
Tipping off is a criminal offence where someone informs a person that a suspicious transaction report has been filed or that an investigation is underway.
Question 5: What is the role of the Suspicious Transaction Reporting Office (STRO)?
- To approve bank transactions
- To receive, analyse, and disseminate STRs to law enforcement (Correct answer)
- To audit financial institutions
- To issue banking licences
Correct answer: To receive, analyse, and disseminate STRs to law enforcement
STRO receives STRs from reporting entities, analyses them for patterns and connections, and disseminates intelligence to relevant law enforcement agencies.
Question 6: What is terrorism financing?
- Funding legitimate businesses
- Providing or collecting funds intended for terrorist activities (Correct answer)
- Government military spending
- Charitable donations
Correct answer: Providing or collecting funds intended for terrorist activities
Terrorism financing involves raising, moving, or providing funds or assets that are intended to be used to support terrorist activities or organisations.
CMFAS Anti-Money Laundering 2
What is Enhanced Due Diligence (EDD)?