Finastra Assessment Financial Crime and Compliance Questions and Answers

Question 1

A bank's transaction monitoring system flags a series of cash deposits into a single account. Each deposit is for $9,500 and occurs on three consecutive days at different branches. This pattern is most indicative of which type of financial crime?

Accepted Answer

Structuring

Answer

Structuring, also known as 'smurfing,' is the act of making multiple small financial transactions to avoid regulatory reporting thresholds. In the U.S., financial institutions must file a Currency Transaction Report (CTR) for cash transactions exceeding $10,000. By keeping each deposit under this threshold, the individual is likely attempting to evade this reporting requirement.

Question 2

Which of the following is the primary responsibility of a Money Laundering Reporting Officer (MLRO) within a financial institution?

Accepted Answer

Receiving and assessing internal suspicious activity reports and filing SARs with authorities.

Answer

The core function of an MLRO is to act as the central point for anti-money laundering (AML) compliance. This involves receiving reports of suspicious activity from employees, evaluating them, and, if necessary, filing a Suspicious Activity Report (SAR) with the relevant national authority, such as FinCEN in the United States.

Question 3

A financial institution is onboarding a new corporate client. The client is a privately held company operating in a high-risk jurisdiction known for corruption. Which level of due diligence should be applied?

Accepted Answer

Enhanced Due Diligence (EDD)

Answer

Enhanced Due Diligence (EDD) is required for high-risk customers. Factors that trigger EDD include operating in a high-risk country, complex ownership structures, or being involved in industries susceptible to money laundering. EDD involves gathering more detailed information, such as the source of wealth and funds, to mitigate the increased risk.

Question 4

The Financial Action Task Force (FATF) sets international standards for combating money laundering and terrorist financing. What is the foundational principle of the FATF Recommendations?

Accepted Answer

A risk-based approach (RBA) tailored to national circumstances.

Answer

The cornerstone of the FATF standards is the risk-based approach (RBA). This approach requires countries to identify, assess, and understand their specific money laundering and terrorist financing risks, and then apply anti-money laundering and counter-terrorist financing (AML/CFT) measures that are proportionate to those risks.

Question 5

A compliance officer at a bank is using a screening tool to check a new customer's name against various sanctions lists, including the OFAC SDN list. This process is a critical component of:

Accepted Answer

Sanctions compliance and KYC procedures

Answer

Screening customers against sanctions lists from bodies like the Office of Foreign Assets Control (OFAC) is a fundamental part of Know Your Customer (KYC) and sanctions compliance programs. It ensures the institution does not conduct business with individuals, entities, or countries that are subject to economic sanctions, thereby preventing terrorist financing and other illicit activities.

Finastra Assessment Test Practice Test

Finastra Assessment Test Practice Test

Finastra Assessment Financial Crime and Compliance Questions and Answers