Finastra Assessment Test Finastra Assessment Financial Crime and Compliance 5 — Questions and Answers
Question 1: Which of the following best describes 'layering' in the money laundering process?
- Physically moving cash across international borders
- Conducting complex financial transactions to distance funds from their illegal source (Correct answer)
- Investing criminal proceeds in real estate
- Opening multiple bank accounts under different names
Correct answer: Conducting complex financial transactions to distance funds from their illegal source
Layering involves executing a series of complex financial transactions designed to obscure the audit trail and distance illegal funds from their criminal origin.
Question 2: Under the EU's Anti-Money Laundering Directives (AMLD), what is the threshold for customer due diligence on occasional cash transactions?
- €5,000
- €10,000 (Correct answer)
- €15,000
- €25,000
Correct answer: €10,000
Under EU AML directives, customer due diligence is required for occasional cash transactions of €10,000 or more, whether conducted in a single operation or several linked operations.
Question 3: What is the primary purpose of a 'Know Your Customer' (KYC) program?
- To maximize cross-selling opportunities for financial products
- To verify customer identity and assess the risk of potential money laundering or terrorist financing (Correct answer)
- To comply with consumer protection regulations on product disclosure
- To gather marketing data for customer segmentation
Correct answer: To verify customer identity and assess the risk of potential money laundering or terrorist financing
KYC programs are designed to verify the identity of customers and assess associated risks of illegal intentions, forming the foundation of an AML compliance program.
Question 4: A customer sends multiple international wire transfers to a country with no apparent business connection. Which AML concept best describes this situation?
- Correspondent banking risk
- Unusual geographic activity (Correct answer)
- Domestic structuring
- Beneficial ownership concealment
Correct answer: Unusual geographic activity
Unusual geographic activity — transactions to countries with no logical connection to the customer's known business — is a classic AML red flag requiring further investigation.
Question 5: In the context of financial crime, what is 'cyber-enabled fraud'?
- Using cyberspace to conduct legal trading activities
- Using digital technology or the internet to commit or facilitate traditional fraud schemes at scale (Correct answer)
- Installing AML monitoring software on bank servers
- Conducting compliance audits through digital platforms
Correct answer: Using digital technology or the internet to commit or facilitate traditional fraud schemes at scale
Cyber-enabled fraud uses digital technologies — such as phishing, malware, or social engineering — to commit traditional fraud schemes more efficiently and at greater scale.
Question 6: Which of the following describes a 'risk-based approach' to AML compliance?
- Applying the same level of due diligence to all customers uniformly
- Allocating compliance resources proportionally based on assessed money laundering risk (Correct answer)
- Using automated systems to replace manual transaction review
- Filing SARs on all transactions above a fixed monetary threshold
Correct answer: Allocating compliance resources proportionally based on assessed money laundering risk
A risk-based approach means directing the most intensive AML controls and resources toward customers and activities presenting the greatest money laundering risk.
Question 7: Which scenario best illustrates the misuse of real estate in money laundering?
- Taking out a mortgage at market interest rates to purchase a primary residence
- Paying cash for a property through a shell company, then reselling at a slightly lower price (Correct answer)
- Renting a commercial property to a long-established local business
- Refinancing a property to take advantage of lower interest rates
Correct answer: Paying cash for a property through a shell company, then reselling at a slightly lower price
Purchasing real estate with illicit cash through anonymous shell companies and reselling — even at a loss — converts criminal proceeds into apparently legitimate assets.
Finastra Assessment Test Finastra Assessment Financial Crime and Compliance 5
Which of the following best describes 'layering' in the money laundering process?