Instructions:

• Answer 50 questions in 15 minutes.
• If you are not ready to take this test, you can study here.
• Match each statement with the correct term.
• Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.

1. FATF Recommendation 27
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.
If one needs to transport currency across borders - one needs to have the smallest package possible to avoid detection.
A US Federal Court
Person who - for compensation - provides advice on securities and investments and manages client assets.


2. What do boiler room salespeople typically sell?
A co-operative property seller agrees to sell home at a well-below market reported price - then accepts the difference 'under the table'. When launderer later sells house - he recognizes 'gain' and all funds appear legitimate as it sold at market.
Penny Stocks
The FIU of Russia
To promulgate good practices in countering money laundering and to give practical assistance in interpreting the UK Money Laundering Regulations and laws


3. FATF Recommendation 7

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4. Futures Commission Merchant (FCM)
Countries should maintain comprehensive statistics to gauge effectiveness of their AML and CTF efforts.
A firm or person that solicits or accepts orders on futures contracts or commodity options and accepts funds for their execution.
A record that financial institutions must retain for each cash sale of bank checks - drafts - money orders - cashier's checks and traveller's checks between $3 -000 and $10 -000.
Harmful or Preferrential Tax Regimes.


5. A public perception that a bank is not able to manage its operational risk effectively can...
Charles Ponzi - an Italian immigrant to the US who spent 10 years in jail for a scheme that defrauded 40 -000 people out of $15 million.
The process of agreeing to purchase a new issue of securities from an issuer and distribute it to investors. The underwriter makes a profit between the price paid to the issuer and the public offering price.
A fund setup by an investment trust that issues a fixed number of shares to its investors. As such - the market price of the shares fluctuates - often selling at a premium or discount to the fund's net asset value (NAV).
disrupt or adversely afftect the business of the bank.


6. Wire Transfers
Provide the widest possible range of assistance to other countries' law enforcement and regulatory authorities for terrorist financing investigations.
Any item that a bank is wiling to accept for immediate - provisional credit to a customer's account - instantly increasing the account's balance.
FATF principles should apply to all branches and subsidiaries of a financial institution - even those abroad. Inability to do should re reported to parent institution's regulatory/supervisory authority.
Electronic transmissions of funds between financial institutions on behalf of themselves or their customers.


7. (Credit Card) Third-Party processor
Helps to identify financial system strengths and vulnerabilities and to reduce the potential for crisis.
Canada
Firm that contracts with issuing or acquiring banks to provide transaction processing and other credit-card related services for the banks.
As a financial institution service that is very vulnerable to money laundering.


8. What is the FCPA primarily known for?
Direct money of Criminal A is sent to foreign bank account of company B. Investment company C is formed as A's country. A is appointed as director of C. C borrows money from B and buys building which is rented to 3rd parties. with rent - C pays off B
Typical mass-market banking where individual customers use local branches of larger commercial banks.
Passed in 1977 - the US law is primarily known for its anti-bribery provisions (it also applies to foreign companies with stocks covered by the Securities and Exchange Act of 1934).
Countries should have effective criminal - civil and administrative sanctions for money laundering or terrorist financing violations.


9. Guaranteed Introducing Broker

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10. Downstream Correspondent Clearer
Have measures in place to detect the physical corss-border transportation of currency and bearer negotiable instruments - including a declaration system.
Financial institutions should be required - by law or regulation - to report suspicious activity to their national FIU.
A Correspondent Banking Client who receives Corresponding Banking services from an institution and itself provides Correspondent Banking services to other financial institutions in the same currency as the account it maintains with the institution.
May involve movement or large sums of money going cross-border and often through multiple casinos - all by a third party (the operator). Sometime operator does not identify funds owners.


11. What does the 'SEC' (US Securities and Exchange Commission) do?
Supervisors should have powers to monitor and ensure compliance - including the ability to compel production of information and to impose sanctions.
They are businesses such as ariplane - automobile and boat dealers - lawyers - jewelers - real estate brokers and others that are subjec to BSA regulations (US).
The process of agreeing to purchase a new issue of securities from an issuer and distribute it to investors. The underwriter makes a profit between the price paid to the issuer and the public offering price.
Under what authority? Among other things - it regulates brokers and dealers - under authority of the Securities Exchange Act of 1934.


12. According to FATF - financial transactions above a designated threshold may include situations where the transaction takes place in a single operation or in several operations...
that appear to be linked
General recommendations for client acceptance - updating client files - practices when identifying unusual or suspicious activity - monitoring - control responsibilities - reporting - education and records retention.
The principal US money laundering law can apply to a non-US citizen if the 'conduct' occurs 'in part' of the US.
a Sr Management level


13. FATF Recommendation 2
A co-operative property seller agrees to sell home at a well-below market reported price - then accepts the difference 'under the table'. When launderer later sells house - he recognizes 'gain' and all funds appear legitimate as it sold at market.
It was the first law in any country to make money laundering a crime.
2% - 5% ($590B - $1.5T)
Countries should ensure that knowledge can be inferred. Additionally - legal persons should be subject to theses laws.


14. What are the two types of Stored Value Cards?
a chain-referral scheme.
Competent authorities should provide guidelines in applying national AML/CFT measures - especially for detecting and reporting suspicious activity.
Urge investors to buy 'house stocks' - stocks that the firm buys and sells as a market maker or has in its inventory. Oftentimes - they are running a 'pump-and-dumo' scheme.
Open and Closed system


15. Distribution Channels (Insurance Industry)
The means through which the insurance products and services are provided to a customer [FATF Risk-Based approach - Guidance for the Life Insurance Sector - Oct 09]
Corporate bond that includes an option for the holder to convert it into other securities after a specified period at the discretion of the bondholder.
A contractual arrangement whereby the trustee manages the property for the benefit of the beneficiary in accordance with the contractual terms set by the grantor.
Review customer files and conduct random sampling of accounts.


16. FATF Recommendation 20
Countering the Financing of Terrorism (Counter Terrorist Financing).
The process of agreeing to purchase a new issue of securities from an issuer and distribute it to investors. The underwriter makes a profit between the price paid to the issuer and the public offering price.
The FIU of the UK
Countries should apply Recommendations to any business or profession that poses a money laundering or terrorist financing risk.


17. Why do companies export their goods at prices far below those in their home country?
Financial Action Task Force on Money Laundering in South America
Combines funds from various members and users them to trade in futures or options contracts.
To create new overseas markets - dispose of excess goods - or otherwise recover their costs.
The US State Dept issues the report annually.


18. Penny Stocks
The opposing part of a transaction or trade.
Securities with very low marker price - volume and/or liquidity that are traded on a securities exchange or on the OTC markets. They tend to be more volatile than those on the major exchanges.
Open and Closed system
To take additional steps of examination and caution in identifying their customers and confirming that the customers' activities and funds are legitimate.


19. FATF Sepcial Recommendation on Terrorist Financing -- SR Six
Financial institutions should be required - by law or regulation - to report suspicious activity to their national FIU.
Often co-branded by financial institution; may have VISA or MasterCard logos; can be reloadable; usually can access ATMs for withdrawls globally; non-customers can buy them.
Impose AML requirements on alternative remittance systems.
Open and Closed system


20. What normal business practise makes 'Product Division' possible?
Goods such as food - grains and metals that are usually traded in large amounts on a commodities exchange - usually through future contracts.
Terrorism and Terrorist Financing
Large companies often export their branded products at wholesale prices far below those at which those products are offered in that country.
To promulgate good practices in countering money laundering and to give practical assistance in interpreting the UK Money Laundering Regulations and laws


21. What is the goal of the Egmont group?

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22. What was the effect of the 1988 Vienna Convention as it relates to extradtition?
Respondent banks may be used by other banks and customers to conduct transactions through a correspondent account.
Customer makes payments on account with bad checks - then takes cash advances before they clear - thereby expanding his credit.
If provided for money laundering to be an internationally extraditable offense.
A bank which uses the services of another bank - such as check clearing - wire transfers - etc. The bank providing the service is the 'Correspondent Bank'


23. A notary can issue a Apostille but it must be in a country that signed The Hague Convention (1961) and it must ___________. If the notary doesn't understand - find another one.

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24. What is one of the Financial Service Authority's (UK) tasks?
The possibility that lawsuits adverse judgements or contracts that turn out to be unenforceable can disrupt or adversely affect the operatinos or condition of a financial siutation.
Report suspicious transactions linked to terrorism.
To reduce financial crime - including money laundering and terrorit financing.
The FIU of the UK


25. 'Kiting' via credit card
It analyzes and processes information and disseminates it to appropriate government authorities in support of AML efforts and financial crime investigations.
People who help move the billions of dollars drug traffickers earn around the world.
A merchant submits a saled transaction on his personal bankcard account to ontain cash advances through their business.
While it is normally known as a Personal Investment Company (PIC) - in some jurisdictions - the international business company or exempt company is also the same.


26. The Palemo Convention
A fund - offered by an investment company - that offers shares while investing the capital in diversified securities of other companies.
The UN Convention against Transnational Organized Crime [Adopted 12/2000].
An arrangement whereby an investor pays for part of a securities purchase and borrows the rest from a securities intermediary.
Processes transactions for merchants who accept credit cards.


27. Dormant Account
tipped off that they are being investigated.
a chain-referral scheme.
An account that does not show activity other than the posting of interest or account maintenance fees.
Reliable - independent source of documents - data or information.


28. How does 'Product Diversion' work?
A trust clearly created by the settlor - usually in the form of a document - such as a written deed or trust.
Letters Rogatory
Product is purchsed with terms that it is going to foreign country A. While in transit - the product is diverted back to originating country or to another foreign market where the greatly discounted price provides for extreme profits.
Respondent banks may be used by other banks and customers to conduct transactions through a correspondent account.


29. What is a Financial Intelligence Unit?
An intelligence gathering law enforcement or regulatory body that receives financial information form covered financial institutions - businesses and persons in tis respective country.
Placement - Layering - Integration.
foreign correspondent banks
Terrorism and Terrorist Financing


30. Market Manipulation
A deliberate attempt to interfere with the free and fair operation of the market and create artificial - false or misleading appearances with respect to the price of - or market for a security - commodity or currency.
Financial Action Task Force
Solicits potential customers and issues the credit cards.
Court order directing a law enforcement officer to seize and detain a particular person and require them to provide an answer to a compliant or otherqise appear in court.


31. FATF Recommendation 13
Financial institutions should be required - by law or regulation - to report suspicious activity to their national FIU.
A contractual arrangement whereby the trustee manages the property for the benefit of the beneficiary in accordance with the contractual terms set by the grantor.
Provide the widest possible range of assistance to other countries' law enforcement and regulatory authorities for terrorist financing investigations.
Because it represents funds drawn on the account of a financial institution and not on a particular individual.


32. EAG
Money Laundering and Tax Evasion
Product is purchsed with terms that it is going to foreign country A. While in transit - the product is diverted back to originating country or to another foreign market where the greatly discounted price provides for extreme profits.
EurAsian Group
Intergovernmental Action Group against Money Laundering in Africa


33. Basel committee's 'Customer Due Diligence for Banks' when verifying a unit's compliance with KYC policies and procedures - the home country supervisors or auditors should do what?
Urge investors to buy 'house stocks' - stocks that the firm buys and sells as a market maker or has in its inventory. Oftentimes - they are running a 'pump-and-dumo' scheme.
Attorneys - accountants - broker-dealers - communication and transportation providers - bankers and other financial service providers - concealment trap (hiding places) builders etc.
Type of foreign bank that is incorporated in the host country but is considered to be owned by a foreign parent bank. It only needs to operarted under the host country's regulations.
Review customer files and conduct random sampling of accounts.


34. Behaviour detection

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35. Who are the parties involved in a trust?
The grantor (the owner of the property) - a beneficiary and the trustee (the manager of the property).
Countries should recognize money laundering as an extraditable offense.
They can accrue value as the price of the underlying stock rises.
Non-Coperative countries and Territories. Country or territory that has been designated by the FATF as non-cooperative with international AML principles and procedures.


36. What is the Serious Organised Crime Agency (SOCA)?
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.
The FIU of the UK
A federal regulator in the US - responsible for auditing risk and compliance measuers of federally chartered banks.
foreign correspondent banks


37. FATF Sepcial Recommendation on Terrorist Financing -- SR Five

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38. FATF Recommendation 33
Countries should ensure that their competent authorities provide the widest possible range of international cooperation to their foreign counterparts.
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
a Sr Management level
Countries should ensure that there is adequate - accurate and timely information on the beneficial ownership and control of legal persons.


39. FATF Recommendation 34
Provide mutual legal assistance.
Refers to express trusts or other similar legal arrangements - such as fiducie - treuhand and fideicomiso [FATF Risk-Based approach - Guidance for the Life Insurance Sector - Oct 09]
Adopted in 1999 - it imposed sanctions on Taliban-controlled Afghanistan for its support of Osama Bin Laden and the Al-Qaeda organization
Countries should ensure that there is adequate - accurate and timely information on express trusts - including information on the settlor - trustee and beneficiaries.


40. What is a 'NCCT'?
Designated non-financial businesses and professions should be subject to regulatory and supervisory measures. Casinos should prevent criminal ownership - operations or management.
Non-Coperative countries and Territories. Country or territory that has been designated by the FATF as non-cooperative with international AML principles and procedures.
A person who tranfers stolen money (or merchandise) from one country to another - often as a result of online scams. Transfers - can be done electronically - via mail or courier service or in person.
PEP accounts need to be identified - approved by senior management - and have ongoing enhanced monitoring. Sources of Wealth and funds must also be established.


41. The USA Patriot Act enacted a number of statutory provisions that bear directly on the procedures US financial institutions must follow in connection with their...
foreign correspondent banks
Processes transactions for merchants who accept credit cards.
Financial Action Task Force on Money Laundering in South America
Type of foreign bank that is incorporated in the host country but is considered to be owned by a foreign parent bank. It only needs to operarted under the host country's regulations.


42. What is the significance of 'Non-Financial Trades and Businesses' in realtion to Money Laundering?
Large companies often export their branded products at wholesale prices far below those at which those products are offered in that country.
They are businesses such as ariplane - automobile and boat dealers - lawyers - jewelers - real estate brokers and others that are subjec to BSA regulations (US).
Because they are accounts through which funds are transferred and commingled without personally identifying the originator.
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.


43. What is the goal of FSAP?
An introducing broker-dealer with an exclusive written agreement with a Futures Commission Merchant (FCM) that obligates the FCM to assume responsibility for the introducing broker's performance.
Market participants intentionally restrict a security's liquidity. May lead to increased profits when the security's price rises due to the lack of 'supply'.
Helps to identify financial system strengths and vulnerabilities and to reduce the potential for crisis.
Countries should criminalize money laundering and apply it to all serious offenses - even if committed in another country.


44. What was the target of UN Security Council Resolution 1373?
A person who tranfers stolen money (or merchandise) from one country to another - often as a result of online scams. Transfers - can be done electronically - via mail or courier service or in person.
Terrorism and Terrorist Financing
Issue and cancel securities certificates to reflect chagnes in ownership - act as an intermediary for the issuing company - and hanlde lost - stolen or destroyed certificates.
While it is normally known as a Personal Investment Company (PIC) - in some jurisdictions - the international business company or exempt company is also the same.


45. 'Commission Rogatoire' known in English as?
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
Letters Rogatory
Countries should recognize money laundering as an extraditable offense.
An order from government authority requiring a financial institution to provide transaction information on a suspect account for a specified period of time.


46. FATF Recommendation 10
Reliable - independent source of documents - data or information.
Record retention: 5 years - data to recreate any individual transaction; 5 years after relationship ends - all customer identification data
Assess any international correspondent's bank nature - ownership - management - reputation - supervision and AML & Terrorist Financing controls. Also. document relationship responsibilities.
Product is purchsed with terms that it is going to foreign country A. While in transit - the product is diverted back to originating country or to another foreign market where the greatly discounted price provides for extreme profits.


47. Three stages of money laundering
Transportation/transfer of funds (even clean) to/from the US - if done to promote unlawful activity - or with knowledge that the funds are illicit - or to conceal/disguise the nature - location - source - ownership - etc. of funds - or to avoid feder
All admininstrative and law enforcemnt authorities concerned wiht combating money laundering and terrorist financing - including the FIU and supervisors.
Large companies often export their branded products at wholesale prices far below those at which those products are offered in that country.
Placement - Layering - Integration.


48. Why is understanding 'Product Diversion' important to the AML investigator?
Countries should ensure that their competent authorities provide the widest possible range of international cooperation to their foreign counterparts.
Attorneys - accountants - broker-dealers - communication and transportation providers - bankers and other financial service providers - concealment trap (hiding places) builders etc.
To take additional steps of examination and caution in identifying their customers and confirming that the customers' activities and funds are legitimate.
Their financial institution may - wittingly or unwittingly - handle the proceeds of this crime while believing it is serving a legitimate client with major account balances.


49. FATF Recommendation 30
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
Competent authorities should be provided with adequate financial - human and technological resources. Personnel should be of high integrity.
Expanding/Systemising the exchange of financial intelligence - improving expertise/capabilities of their personnel - fostering better communication by applying new technologies and sharing financial crimes investigations information.
Supervisors should have powers to monitor and ensure compliance - including the ability to compel production of information and to impose sanctions.


50. 'Coucil of Europe Convention on Laundering - Search - Seizure and Confiscation of the Proceeds from Crime' is known for what?
A professional responsible for the securities portfolio of an individual or institutional investor. In return for a fee - the manager has the responsibility of choosing and managing assets.
A degree of satisfaction not necessarily amounting to belief but extending beyond specualtionas to whether an event has occured or not. Though suspicion requires a lesser factual basis than a belief - it must be built upon some foundation.
Extending the offense of money laundering to include money laundering associated with all serious offenses - not only with drug trafficking [Adopted 9/90].
Confidentiality - complex beneficial ownership arrangements - offshore investment vehicles - tax shelters and credit extension services.