Treasury Enforcement Agent Exam Risk Assessment & Management 4

Question 1

A Treasury Enforcement Agent is reviewing a casino's AML program. Which customer activity would MOST warrant a closer review under a risk-based approach?

Accepted Answer

Multiple individuals pooling cash to purchase chips exceeding $10,000 collectively

Answer

Multiple individuals collectively purchasing chips exceeding $10,000 in cash is a classic structuring and aggregation scenario that triggers CTR and SAR review obligations.

Question 2

The concept of 'know your customer' (KYC) is fundamentally a risk management tool because it:

Accepted Answer

Enables institutions to identify and verify customers and assess their risk profile

Answer

KYC allows financial institutions to understand who their customers are, establish a risk baseline, and detect anomalies that may indicate illicit activity.

Question 3

A risk-based approach to AML compliance requires financial institutions to allocate their compliance resources based on:

Accepted Answer

Higher allocation to customers and transactions presenting greater risk

Answer

The risk-based approach directs proportionally more resources, scrutiny, and controls toward higher-risk customers, products, and geographies.

Question 4

Which of the following is an example of a 'red flag' indicating potential terrorist financing rather than traditional money laundering?

Accepted Answer

Small, frequent wire transfers to conflict-affected regions with no apparent business purpose

Answer

Small transfers to conflict regions without a legitimate business rationale are a hallmark terrorist financing indicator, as such funds are often used rather than laundered for profit.

Question 5

An inherent risk assessment at a financial institution should be conducted:

Accepted Answer

Before considering existing controls, to measure the raw level of risk

Answer

Inherent risk is assessed without regard to controls to establish the baseline risk level before mitigation measures are factored in.

Treasury Enforcement Agent Exam Practice Test

Treasury Enforcement Agent Exam Practice Test

Treasury Enforcement Agent Exam Risk Assessment & Management 4