Finastra Assessment Test Finastra Assessment Trade Finance 3

Question 1

What distinguishes a 'confirmed' Letter of Credit from an 'unconfirmed' one?

Accepted Answer

The confirming bank adds its own payment undertaking, providing the beneficiary with a second independent guarantee

Answer

Confirmation means a second bank (usually in the exporter's country) adds its own independent payment undertaking, protecting the beneficiary against issuing bank and country risk.

Question 2

In trade-based money laundering (TBML), which red flag is most commonly associated with over- or under-invoicing schemes?

Accepted Answer

Significant discrepancy between the declared value of goods and their fair market value

Answer

Over- and under-invoicing involves deliberately misstating the value of goods to transfer value across borders, making price-value discrepancies the primary red flag for TBML.

Question 3

Finastra's trade finance solutions support which industry initiative aimed at digitizing trade documents such as bills of lading and reducing paper-based fraud?

Accepted Answer

The ICC Digital Standards Initiative (DSI) and electronic Bills of Lading (eBL)

Answer

The ICC Digital Standards Initiative and eBL platforms (such as BOLERO and essDOCS) are the primary industry efforts Finastra supports to digitize trade documents and reduce fraud.

Question 4

Under a Documents Against Payment (D/P) collection, the buyer receives the shipping documents:

Accepted Answer

Only after making full payment to the collecting bank

Answer

In a D/P collection (also called 'sight collection'), the collecting bank releases documents to the buyer only upon receipt of immediate full payment.

Question 5

Which risk does 'credit insurance' in trade finance primarily protect against?

Accepted Answer

Non-payment by the buyer due to insolvency or protracted default

Answer

Trade credit insurance protects exporters and lenders against the risk that buyers will fail to pay due to insolvency, default, or political events preventing payment.

Finastra Assessment Test Practice Test

Finastra Assessment Test Practice Test

Finastra Assessment Test Finastra Assessment Trade Finance 3