Finastra Assessment Test Finastra Assessment Financial Crime and Compliance 3 — Questions and Answers
Question 1: A financial institution's AML program must include all of the following EXCEPT:
- Internal controls and policies
- Independent testing of the AML program
- Designation of a BSA compliance officer
- Guaranteed zero tolerance for false positives in transaction monitoring (Correct answer)
Correct answer: Guaranteed zero tolerance for false positives in transaction monitoring
The four pillars of a BSA/AML program are internal controls, independent testing, a designated compliance officer, and training — not a guarantee on false positive rates.
Question 2: What does the term 'de-risking' refer to in financial crime compliance?
- Reducing operational risk through automation
- Financial institutions exiting relationships with entire customer categories perceived as high-risk (Correct answer)
- Lowering AML thresholds to reduce regulatory exposure
- Implementing risk-based transaction monitoring only
Correct answer: Financial institutions exiting relationships with entire customer categories perceived as high-risk
De-risking occurs when financial institutions terminate or avoid entire categories of customers or correspondent relationships deemed too risky, raising financial inclusion concerns.
Question 3: Which financial crime typology involves criminals using legitimate businesses to commingle illicit funds with lawful revenues?
- Hawala
- Commingling (Correct answer)
- Correspondent banking abuse
- Shell company exploitation
Correct answer: Commingling
Commingling involves mixing illegal proceeds with legitimate business revenue to obscure the origin of criminal funds.
Question 4: Under the Corporate Transparency Act (CTA), what information must beneficial owners report to FinCEN?
- Annual revenue and tax filings
- Full legal name, date of birth, address, and identification document number (Correct answer)
- Business credit scores and banking relationships
- Employee headcount and payroll information
Correct answer: Full legal name, date of birth, address, and identification document number
The CTA requires reporting companies to submit beneficial owners' legal name, date of birth, current address, and a unique identifying document number to FinCEN's BOI database.
Question 5: In transaction monitoring, a 'typology' refers to:
- A classification of customer account types
- A recognized pattern or method used to commit financial crime (Correct answer)
- A regulatory filing category under BSA
- A risk scoring algorithm used by compliance software
Correct answer: A recognized pattern or method used to commit financial crime
A typology is a documented pattern, scheme, or method commonly used by criminals to launder money or commit financial crimes, used to inform monitoring rules.
Question 6: Which of the following best describes a 'shell company' in the context of financial crime?
- A company that manufactures plastic and polymer products
- A legal entity with no active business operations, used to hold assets or obscure ownership (Correct answer)
- A temporary company formed for a single project
- A subsidiary of a multinational corporation
Correct answer: A legal entity with no active business operations, used to hold assets or obscure ownership
Shell companies are legal entities with no genuine business operations, frequently used to conceal beneficial ownership and facilitate money laundering or tax evasion.
Question 7: A bank's transaction monitoring system generates an alert on a customer. After review, the analyst determines the activity is consistent with the customer's known profile. This is called:
- True positive
- False positive (Correct answer)
- Suspicious activity
- Enhanced due diligence trigger
Correct answer: False positive
A false positive occurs when a transaction monitoring alert is generated but review reveals the activity is legitimate and consistent with the customer's expected behavior.
Finastra Assessment Test Finastra Assessment Financial Crime and Compliance 3
A financial institution's AML program must include all of the following EXCEPT: