Finastra Assessment Test Finastra Assessment Financial Crime and Compliance 2 — Questions and Answers
Question 1: A bank customer frequently structures cash deposits just below $10,000 to avoid CTR filing. This practice is legally known as:
- Layering
- Smurfing
- Structuring (Correct answer)
- Placement
Correct answer: Structuring
Structuring (also called smurfing) is the illegal practice of breaking transactions into smaller amounts to evade Currency Transaction Report requirements.
Question 2: Under FATF Recommendation 10, what is the enhanced due diligence requirement for high-risk customers?
- Simplified verification procedures
- Annual transaction monitoring only
- More intensive KYC measures and senior management approval (Correct answer)
- Standard CDD with no additional steps
Correct answer: More intensive KYC measures and senior management approval
FATF Recommendation 10 requires enhanced due diligence for high-risk customers, including more robust identification, understanding of business relationships, and senior management approval.
Question 3: Which of the following best describes the 'integration' stage of money laundering?
- Depositing illegal cash into the financial system
- Moving funds through multiple accounts to obscure origin
- Reintroducing laundered money into the legitimate economy (Correct answer)
- Converting cash into monetary instruments
Correct answer: Reintroducing laundered money into the legitimate economy
Integration is the final stage where laundered funds are reintroduced into the legitimate economy, making them appear as lawful income.
Question 4: A compliance officer receives a subpoena for customer records as part of a government investigation. The officer should:
- Immediately notify the customer about the subpoena
- Consult legal counsel before responding and follow applicable law (Correct answer)
- Destroy records to protect customer privacy
- Refuse the request without a court order
Correct answer: Consult legal counsel before responding and follow applicable law
Compliance officers must consult legal counsel and follow applicable law when responding to subpoenas, balancing legal obligations with privacy requirements.
Question 5: In the context of sanctions compliance, what is an OFAC SDN list?
- A list of approved correspondent banks
- A registry of Specially Designated Nationals and Blocked Persons (Correct answer)
- A database of high-net-worth individuals
- A catalog of approved investment vehicles
Correct answer: A registry of Specially Designated Nationals and Blocked Persons
The OFAC SDN (Specially Designated Nationals) list identifies individuals and entities with whom US persons are generally prohibited from transacting.
Question 6: Which red flag is most indicative of trade-based money laundering (TBML)?
- A customer requesting wire transfers to multiple countries
- Significant over- or under-invoicing of goods or services (Correct answer)
- A business with multiple authorized signatories
- Frequent ATM withdrawals near account opening
Correct answer: Significant over- or under-invoicing of goods or services
Over- or under-invoicing of goods or services is a hallmark red flag of TBML, used to transfer value across borders under the guise of legitimate trade.
Question 7: Under the USA PATRIOT Act Section 312, US financial institutions must apply enhanced due diligence to:
- All domestic retail customers
- Foreign correspondent bank accounts and private banking accounts for non-US persons (Correct answer)
- Every customer with over $1 million in assets
- All online banking customers regardless of nationality
Correct answer: Foreign correspondent bank accounts and private banking accounts for non-US persons
Section 312 of the USA PATRIOT Act requires enhanced due diligence for foreign correspondent bank accounts and private banking accounts held for non-US persons.
Finastra Assessment Test Finastra Assessment Financial Crime and Compliance 2
A bank customer frequently structures cash deposits just below $10,000 to avoid CTR filing.
This practice is legally known as: