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. What is one of the Financial Service Authority's (UK) tasks?
have in place compulsory currency reporting requirements.
To reduce financial crime - including money laundering and terrorit financing.
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.
USD/EUR 3 -000 (Interpretive Note to Reommendations 5 - 12 and 16)


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

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3. MENAFATF
Goods such as food - grains and metals that are usually traded in large amounts on a commodities exchange - usually through future contracts.
Middle East and North Africa Financial Action Task Force
To allow for mutual assistance in legal proceedings and access to documents and witnesses and other legal and judicial assistance in the respective countries.
An account that does not show activity other than the posting of interest or account maintenance fees.


4. 'Coucil of Europe Convention on Laundering - Search - Seizure and Confiscation of the Proceeds from Crime' is known for what?
A merchant submits a saled transaction on his personal bankcard account to ontain cash advances through their business.
Extending the offense of money laundering to include money laundering associated with all serious offenses - not only with drug trafficking [Adopted 9/90].
The right - but not the obligation - to buy or sell a set amount of something - such as a share or commodity - at a set price after a set expiration date.
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]


5. Operational risks in KYC context relate to...
A prepaid card that is linked to the global funds network - which can allow for worldwide ATM with-drawls and purchases with many merchants.
weakness in the implementation of bank programs - ineffective control procedures and failure to practice due diligence.
Normally seen as non-violent or involving 'business-related' schemes rather than violent or threat or violence crimes.
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.


6. Derivatives
Financial instrument whose price is realted to the underlying commodity - currency - economic variable - financial istrument or security.
Provide mutual legal assistance.
The principal US money laundering law can apply to a non-US citizen if the 'conduct' occurs 'in part' of the US.
They can accrue value as the price of the underlying stock rises.


7. Why is a 'money order' attractive to a money launderer?
Because it represents funds drawn on the account of a financial institution and not on a particular individual.
The International Monetary Fund (IMF) and the world bank conduct the joint program.
Stored Value Cards - Mobile Payments - Internet Payments.
Competent authorities should be provided with adequate financial - human and technological resources. Personnel should be of high integrity.


8. Cash Equivalent

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9. FATF's designated transactional threshold for Casinos (including Internet Casinos) is _____.
USD/EUR 3 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
The CDD and record-keeping requirements (of Rec 5 - 6 - 8 & 11) apply to non-financial businesses and professions.
Casinos - real estate agents - precious metal/stone dealers - lawyers - notaries - accountants and trust & company service providers.
The financial institution can become subject to lawsuits from the failure to observe mandatory KYC standards or from the failure to practise due diligence.


10. 'Competent Authorities' refers to _____.
To take additional steps of examination and caution in identifying their customers and confirming that the customers' activities and funds are legitimate.
bear the mark 'APOSTILLE'
All admininstrative and law enforcemnt authorities concerned wiht combating money laundering and terrorist financing - including the FIU and supervisors.
Entities such as American Express - Master Card and VISA - which license member banks to issue bankcards - authorize merchants to accept those cards - or both.


11. FATF Recommendation 34
Countries should ensure that there is adequate - accurate and timely information on express trusts - including information on the settlor - trustee and beneficiaries.
Procedures used to determine the beneficial owners of a correspondent bank and the type of activity that wil be 'normal and expected' for the bank.
Preferred stocks that includes an option for the holder to convert it into common stock at a specified covnersion rate.
If one needs to transport currency across borders - one needs to have the smallest package possible to avoid detection.


12. FATF Recommendation 36
Because they are accounts through which funds are transferred and commingled without personally identifying the originator.
Competent authorities should provide guidelines in applying national AML/CFT measures - especially for detecting and reporting suspicious activity.
Provide mutual legal assistance.
Countries should establish national centers to receive and disseminate AML/CFT information and have access to law enforcement and others.


13. (Stock) Warrants
As a key tool in detecting suspicious or money laundering activity - it is important because correspondent accounts are often used as conduits to launder criminal proceeds in international settings.
Respondent banks may be used by other banks and customers to conduct transactions through a correspondent account.
A security that offers the owner the right to subscribe for ordinary shares of a company at a fixed date - usually at a fixed price. Equivalent to stock options.
Designated non-financial businesses and professions should be subject to regulatory and supervisory measures. Casinos should prevent criminal ownership - operations or management.


14. Who are the parties involved in a trust?
Confidentiality - complex beneficial ownership arrangements - offshore investment vehicles - tax shelters and credit extension services.
Through the use of experts - the program optimizes expert resources - reduces duplication of efforts and provides uniform advice in financial sector work.
Customer makes payments on account with bad checks - then takes cash advances before they clear - thereby expanding his credit.
The grantor (the owner of the property) - a beneficiary and the trustee (the manager of the property).


15. FATF Recommendation 9
Ensure that entities - in particular non-profit organizations - cannot be misused to finance terrorism.
Financial institutions may rely upon intermediaries to perform certain CDD elements provided the intermediary is supervised and regulated. However - ultimate responsibility remains with the financial institution.
A contractual provision that allows the contract owner the right to return the contract within a specified period for a refund.
Countries should ensure that there is adequate - accurate and timely information on the beneficial ownership and control of legal persons.


16. Vital Service Providers (VSPs)
People who help move the billions of dollars drug traffickers earn around the world.
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.
Financial institutions should have AML/CFT programs that include approved policies - employee screenings & ongoing training and an audit function to test it all.
Countries should ensure that there is adequate - accurate and timely information on the beneficial ownership and control of legal persons.


17. The 'Art Loss Register'

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18. What was the effect of the 1988 Vienna Convention as it relates to extradtition?
By acquiring personal information about the victim (e.g: DOB - address - CC numbers) through stealth and misrepresentations.
If provided for money laundering to be an internationally extraditable offense.
Use of electronic clearing houses to facilitate electronic transfers of money that complete transactions between two parties where the buyer receives securities - goods - services etc. in exchange for the money.
Confiscation


19. The Joint Money Laundering Steering Group (UK) has published a series of AML Guidance Notes for different sectors of the financial community. But - As a group of trade associations - it has...
Competent authorities should provide guidelines in applying national AML/CFT measures - especially for detecting and reporting suspicious activity.
no regulatory power or function
bear the mark 'APOSTILLE'
High-speed matching of known or suspected patterns in very large DB's using recognition algorithms.


20. FATF Sepcial Recommendation on Terrorist Financing -- SR Seven
Pouch activity.
Strengthen customer identification measures in iternational and domestic wire transfers.
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.
Operator or solicitor of funds for a commodity pool - which combines funds from members and trades futures or options contracts.


21. Counter Party
The FIU of Russia
The opposing part of a transaction or trade.
To profit all kinds of markets by pursuing leveraging and other speculative investment practises thay may increase the risk of investment loss.
The financial institution can become subject to lawsuits from the failure to observe mandatory KYC standards or from the failure to practise due diligence.


22. Cash Letter
Large companies often export their branded products at wholesale prices far below those at which those products are offered in that country.
Ad interbank transmittal form - resembling a deposit slip - used to accompany cash and cash equivalent items sent from one bank to another.
The US State Dept issues the report annually.
Council of European committee of Experts on the Evaluation of AML measures and the Financing of Terrorism


23. Where is the Art Loss Register found?
www.artloss.com
Should give special attention to relationships or transactions of people - companies or financial institutions from countries showing little regard for these Recommendations.
Competent authorities should provide guidelines in applying national AML/CFT measures - especially for detecting and reporting suspicious activity.
Under what authority? Among other things - it regulates brokers and dealers - under authority of the Securities Exchange Act of 1934.


24. How does the Egmont group help its members?
Countries should recognize money laundering as an extraditable offense.
They pool investors' money and invest those funds in financial instruments in an effort to turn a profit. They typically issue securities in 'private offerings' that are usually not required to be registered with sa securities or financial regulator.
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.
Countries should ensure policy makers - the FIU - law enforcement and supervisors have effective mechanisms to enable cooperation.


25. Transparency International
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.
Berlin- based - non-governmental organization with goal of improving government accountability and curbing national and international corruption.
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.
A US Federal Court


26. The Vienns Convention
The UN Convention against Illicit Trafficking in Narcotic drugs and Pyshotropic substances [Adopted 12/88].
A contractual provision that allows the contract owner the right to return the contract within a specified period for a refund.
Take expeditious action to requests by foreign countries to identify - freeze - seize and confiscate property that is proceeds of money laundering or a predicate crime.
Financial Action Task Force


27. A 'Cash Letter' can also be referred to as _____.
a chain-referral scheme.
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]
Pouch activity.
An account that does not show activity other than the posting of interest or account maintenance fees.


28. CFT
To create new overseas markets - dispose of excess goods - or otherwise recover their costs.
Countering the Financing of Terrorism (Counter Terrorist Financing).
October 1980. The instigation of Basel Committee on Banking supervision (with which the group maintains close contact).
The FIU of Russia


29. In Emerging Money Laundering Risks - what 3 methods are identified as 'Funds Transfers'?
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
Countering the Financing of Terrorism (Counter Terrorist Financing).
Stored Value Cards - Mobile Payments - Internet Payments.
Financial institutions should be required - by law or regulation - to report suspicious activity to their national FIU.


30. 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...
General recommendations for client acceptance - updating client files - practices when identifying unusual or suspicious activity - monitoring - control responsibilities - reporting - education and records retention.
The CDD and record-keeping requirements (of Rec 5 - 6 - 8 & 11) apply to non-financial businesses and professions.
a chain-referral scheme.
foreign correspondent banks


31. Characteristics of an 'Open System Stored Value Card'
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.
Competent authorities should have powers of subpoena - search and seizure.
Provide mutual legal assistance.
The CDD and record-keeping requirements (of Rec 5 - 6 - 8 & 11) apply to non-financial businesses and professions.


32. FATF Recommendation 18
Countries should ensure that there is adequate - accurate and timely information on the beneficial ownership and control of legal persons.
Procedures used to determine the identities of the account holders of a respondent bank in a correspondent banking relationship.
Countries should not allow shell banks. Financial institutions should not have correspondent banking relationships with shell banks or banks that allow shell banks to do business through their accounts.
Countries should apply Recommendations to any business or profession that poses a money laundering or terrorist financing risk.


33. What criterion does the US need to enforce its 'Extraterritorial Reach'?

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34. What do boiler room salespeople typically do?

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35. Guaranteed Introducing Broker

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36. Why do convertible bonds oftern have lower interest rates than non-convertible bonds?
A market is which securities are bought and sold outside of establisehd securities markets.
They can accrue value as the price of the underlying stock rises.
Stored Value Cards - Mobile Payments - Internet Payments.
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)


37. What is the Wolfsberg group?
No.
An association of global financial institutions that issues guidelines is such areas as correspondent banking - private banking - terrorist financing etc.
Countries should enable their competent authorities to freeze - seize and confiscate laundered property or proceeds.
A security that offers the owner the right to subscribe for ordinary shares of a company at a fixed date - usually at a fixed price. Equivalent to stock options.


38. FCPA (US)
Foreign Corrupt Practices Act
Financial Action Task Force
Have measures in place to detect the physical corss-border transportation of currency and bearer negotiable instruments - including a declaration system.
As 'felonies' or 'all offenses in the criminal code'.


39. Reverse Flip

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40. What was the target of UN Security Council Resolution 1373?
Financial institutions should have adequate supervision and regulation. Ensure no criminal element in position on control. Money transfer/exchangers should be registered and subjected to monitoring.
A fund setup by an investment trust in which the number of shares can fluctuate as investors' move in and out the fund. Share prices moves in direct proportion of the net asset value of the underlying investments (no premium or discount).
High-speed matching of known or suspected patterns in very large DB's using recognition algorithms.
Terrorism and Terrorist Financing


41. What does FIU do?
To promulgate good practices in countering money laundering and to give practical assistance in interpreting the UK Money Laundering Regulations and laws
Refers to where the agent is acting under a contractual arrangement with the insurer to carry out its CDD functions (i.e. the agent is regarded as synonymous with the insurer) [FATF Risk-Based approach - Guidance for the Life Insurance Sector - Oct 0
Assess any international correspondent's bank nature - ownership - management - reputation - supervision and AML & Terrorist Financing controls. Also. document relationship responsibilities.
It analyzes and processes information and disseminates it to appropriate government authorities in support of AML efforts and financial crime investigations.


42. Three stages of money laundering
Reliable - independent source of documents - data or information.
no regulatory power or function
Placement - Layering - Integration.
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.


43. Commodity Pool Operator
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.
Placement - Layering - Integration.
Operator or solicitor of funds for a commodity pool - which combines funds from members and trades futures or options contracts.
Stored Value Cards - Mobile Payments - Internet Payments.


44. Why is 'Know Your Correspondent Bank' important?
As a financial institution service that is very vulnerable to money laundering.
Countries should ensure that secrecy laws do NOT inhibit implementation of these Recommendations.
As a key tool in detecting suspicious or money laundering activity - it is important because correspondent accounts are often used as conduits to launder criminal proceeds in international settings.
Pouch activity.


45. FATF Sepcial Recommendation on Terrorist Financing -- SR Six
Solicits potential customers and issues the credit cards.
Casinos - real estate agents - precious metal/stone dealers - lawyers - notaries - accountants and trust & company service providers.
Countries should ensure that there is adequate - accurate and timely information on express trusts - including information on the settlor - trustee and beneficiaries.
Impose AML requirements on alternative remittance systems.


46. Commodity Trading Advisor
Render mutual legal assistance notwithstanding the absence of dual criminality. Where dual criminality is required - classification should not be an issue.
Countries should criminalize money laundering and apply it to all serious offenses - even if committed in another country.
They pool investors' money and invest those funds in financial instruments in an effort to turn a profit. They typically issue securities in 'private offerings' that are usually not required to be registered with sa securities or financial regulator.
Direct or indirect advisor on buying and selling futures or commodity options.


47. What was the target of UN Security Council Resolution 1267?
Adopted in 1999 - it imposed sanctions on Taliban-controlled Afghanistan for its support of Osama Bin Laden and the Al-Qaeda organization
Any item that a bank is wiling to accept for immediate - provisional credit to a customer's account - instantly increasing the account's balance.
Provide the widest possible range of assistance to other countries' law enforcement and regulatory authorities for terrorist financing investigations.
Non-Coperative countries and Territories. Country or territory that has been designated by the FATF as non-cooperative with international AML principles and procedures.


48. FATF Recommendation 15
Render mutual legal assistance notwithstanding the absence of dual criminality. Where dual criminality is required - classification should not be an issue.
Financial institutions should have AML/CFT programs that include approved policies - employee screenings & ongoing training and an audit function to test it all.
Canada
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


49. UK courts view on 'Suspicion'
It was the first law in any country to make money laundering a crime.
A prepaid card that is linked to the global funds network - which can allow for worldwide ATM with-drawls and purchases with many merchants.
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.
They pool investors' money and invest those funds in financial instruments in an effort to turn a profit. They typically issue securities in 'private offerings' that are usually not required to be registered with sa securities or financial regulator.


50. How do 'Hedge Funds' operate?

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