CMFAS Anti-Money Laundering 4 — Questions and Answers
Question 1: What are the red flags for potential money laundering?
- Regular salary deposits
- Unusual transaction patterns, reluctance to provide information, and use of shell companies (Correct answer)
- High credit scores
- Frequent use of credit cards
Correct answer: Unusual transaction patterns, reluctance to provide information, and use of shell companies
Red flags include unusual or inconsistent transaction patterns, reluctance to provide identification, use of shell companies, and transactions with no apparent economic purpose.
Question 2: What is a shell company in the context of money laundering?
- A seafood company
- A company with no significant assets or operations used to disguise the source of funds (Correct answer)
- A startup company
- A technology company
Correct answer: A company with no significant assets or operations used to disguise the source of funds
A shell company has no significant operations, assets, or employees but exists on paper. It can be used to hide the true ownership or source of funds.
Question 3: What is the 'travel rule' in AML regulations?
- Rules for business travel
- Requirements to share originator and beneficiary information in cross-border wire transfers (Correct answer)
- Rules for transporting cash
- Regulations for travel agencies
Correct answer: Requirements to share originator and beneficiary information in cross-border wire transfers
The travel rule requires financial institutions to include and transmit originator and beneficiary information with cross-border wire transfers for traceability.
Question 4: What is the role of the Money Laundering Reporting Officer (MLRO)?
- To approve all transactions
- To oversee the AML programme and handle suspicious transaction reporting (Correct answer)
- To manage customer accounts
- To conduct marketing
Correct answer: To oversee the AML programme and handle suspicious transaction reporting
The MLRO is responsible for overseeing the institution's AML compliance programme, receiving internal suspicious reports, and filing STRs with STRO.
Question 5: What is beneficial ownership?
- Owning stocks that pay dividends
- The natural person(s) who ultimately own or control a legal entity (Correct answer)
- The registered owner of a property
- The primary account holder
Correct answer: The natural person(s) who ultimately own or control a legal entity
The beneficial owner is the natural person who ultimately owns or controls a customer entity, or on whose behalf a transaction is conducted, even if the legal ownership is in another name.
Question 6: What is trade-based money laundering?
- Trading stocks on the exchange
- Using international trade transactions to move value and disguise proceeds of crime (Correct answer)
- Setting up a trading company
- Importing goods legally
Correct answer: Using international trade transactions to move value and disguise proceeds of crime
Trade-based money laundering involves manipulating trade transactions (through over/under-invoicing, false descriptions, or phantom shipments) to transfer value and disguise criminal proceeds.
CMFAS Anti-Money Laundering 4
What are the red flags for potential money laundering?