SCA AML/CFT in Capital Markets

Question 1

What does AML stand for in financial regulation?

Accepted Answer

Anti-Money Laundering

Answer

Asset Management Licensing

Answer

Automated Market Liquidity

Answer

Annual Market Leverage

Question 2

What does CFT stand for in the context of AML/CFT?

Accepted Answer

Countering the Financing of Terrorism

Answer

Central Financial Trading

Answer

Certified Financial Trader

Answer

Commodity Futures Trading

Question 3

What is money laundering?

Accepted Answer

The process of making illegally obtained money appear to come from a legitimate source

Answer

Physically cleaning banknotes

Answer

A legal banking service

Answer

A form of tax avoidance

Question 4

What are the three stages of money laundering?

Accepted Answer

Placement, layering, and integration

Answer

Earn, save, invest

Answer

Deposit, transfer, withdraw

Answer

Collection, distribution, laundering

Question 5

What is 'customer due diligence' (CDD) in AML compliance?

Accepted Answer

The process of verifying a customer's identity, understanding their business activities, and assessing the risk they pose for money laundering

Answer

Checking a customer's credit score only

Answer

A marketing process to attract new customers

Answer

An annual financial review of the firm

Question 6

What is 'enhanced due diligence' (EDD) and when is it applied?

Accepted Answer

More intensive verification and monitoring applied to higher-risk customers such as PEPs, complex structures, or high-risk jurisdictions

Answer

Routine CDD applied to all customers

Answer

A simplified version of CDD for low-risk customers

Answer

EDD is only for institutional investors