Treasury Enforcement Agent Exam Risk Assessment & Management 3

Question 1

A customer who is a politically exposed person (PEP) opens a new account at a bank. Under risk-based AML principles, the institution should:

Accepted Answer

Apply enhanced due diligence and ongoing monitoring

Answer

PEPs present elevated corruption and bribery risks and therefore require enhanced due diligence (EDD) and continuous monitoring under risk-based AML frameworks.

Question 2

In the context of Treasury enforcement, 'de-risking' by financial institutions refers to:

Accepted Answer

Terminating relationships with entire customer categories deemed high-risk

Answer

De-risking is the practice of financial institutions exiting entire customer segments or geographic markets rather than managing the associated risks on a case-by-case basis.

Question 3

Which document established the Bank Secrecy Act (BSA) recordkeeping and reporting requirements that Treasury enforcement agents primarily enforce?

Accepted Answer

Currency and Foreign Transactions Reporting Act of 1970

Answer

The Currency and Foreign Transactions Reporting Act of 1970, commonly known as the Bank Secrecy Act, established the foundational CTR and recordkeeping requirements.

Question 4

A risk assessment reveals that a bank's wire transfer department has no dual-control procedures. This finding represents:

Accepted Answer

An internal control weakness that increases operational and fraud risk

Answer

The absence of dual-control procedures is an internal control weakness that exposes the institution to fraud, errors, and unauthorized transactions.

Question 5

When a Treasury agent identifies a 'high-risk' geographic location, which international body's guidance is most commonly referenced to define such areas?

Accepted Answer

Financial Action Task Force (FATF)

Answer

FATF publishes lists of jurisdictions with strategic deficiencies in their AML/CFT regimes, which Treasury enforcement agents use to classify geographic risk.

Treasury Enforcement Agent Exam Practice Test

Treasury Enforcement Agent Exam Practice Test

Treasury Enforcement Agent Exam Risk Assessment & Management 3