CrFA Money Laundering & Asset Tracing 2

Question 1

In asset tracing, the 'net worth method' is used to:

Accepted Answer

Calculate unexplained increases in a subject's wealth over time

Answer

Estimate the total assets laundered through real estate

Answer

Determine the fair market value of seized assets

Answer

Reconcile a company's balance sheet with its cash flows

Question 2

Which of the following best describes 'tracing' as used in forensic accounting asset investigations?

Accepted Answer

Following the movement of specific funds through financial transactions to establish their origin or destination

Answer

Estimating the value of hidden assets using industry benchmarks

Answer

Reconstructing destroyed financial records from secondary sources

Answer

Interviewing witnesses to establish ownership of disputed assets

Question 3

A shell company used in a money laundering scheme is best characterized as:

Accepted Answer

A legal entity with no significant assets or operations used to obscure ownership

Answer

A business that primarily deals in cash transactions

Answer

A foreign bank account held under a nominee's name

Answer

A trust established to protect assets from creditors

Question 4

When tracing assets through real estate transactions, forensic accountants should pay particular attention to:

Accepted Answer

All-cash purchases and rapid property flipping

Answer

Mortgage interest deduction schedules

Answer

Property tax assessment records

Answer

Homeowner association fee payment histories

Question 5

The 'expenditures method' in asset tracing involves:

Accepted Answer

Calculating total unexplained expenditures to infer unreported income

Answer

Tracing how seized assets were spent by law enforcement

Answer

Auditing a company's capital expenditure budget

Answer

Estimating damages based on lost spending power

Question 6

International asset tracing often relies on Mutual Legal Assistance Treaties (MLATs). What is the primary function of an MLAT?

Accepted Answer

To allow governments to request and share evidence and assistance in criminal investigations across borders

Answer

To standardize accounting rules across jurisdictions

Answer

To establish dual-taxation agreements between countries

Answer

To permit extradition of financial criminals

Question 7

Which red flag is most indicative of trade-based money laundering (TBML)?

Accepted Answer

Significant over- or under-invoicing of goods and services in international trade transactions

Answer

A company purchasing insurance policies with cash premiums

Answer

A business frequently converting currency at multiple locations

Answer

A customer making large wire transfers to domestic accounts