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. 'Loan Back' method. Give example of how it works.

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2. Commodity Trading Advisor
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).
Direct or indirect advisor on buying and selling futures or commodity options.
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.
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.


3. 'Coucil of Europe Convention on Laundering - Search - Seizure and Confiscation of the Proceeds from Crime' is known for what?
Financial Action Task Force
General recommendations for client acceptance - updating client files - practices when identifying unusual or suspicious activity - monitoring - control responsibilities - reporting - education and records retention.
Extending the offense of money laundering to include money laundering associated with all serious offenses - not only with drug trafficking [Adopted 9/90].
Provide mutual legal assistance.


4. Who issues the Internationa Narcotics Control Strategy Report (INCSR) and how often?
The US State Dept issues the report annually.
Processes transactions for merchants who accept credit cards.
Refers to dishonest broker-dealers who set up a group of high pressure salespeople who use banks of telephones to make cold calls to as many potential investors as possible.
When residents are prevented from benefiting from a tax-regime or when non-residents are prevented from accessing the domestic market.


5. Portfolio Manager
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 market is which securities are bought and sold outside of establisehd securities markets.
disrupt or adversely afftect the business of the bank.
foreign correspondent banks


6. FATF Recommendation 23
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.
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.
Competent authorities should be provided with adequate financial - human and technological resources. Personnel should be of high integrity.
Financial institutions should have AML/CFT programs that include approved policies - employee screenings & ongoing training and an audit function to test it all.


7. Margin
An arrangement whereby an investor pays for part of a securities purchase and borrows the rest from a securities intermediary.
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.
have in place compulsory currency reporting requirements.
Electronic transmissions of funds between financial institutions on behalf of themselves or their customers.


8. Short Sale

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9. Examples of VSP's
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.
Countries should criminalize money laundering and apply it to all serious offenses - even if committed in another country.
The grantor (the owner of the property) - a beneficiary and the trustee (the manager of the property).


10. In what country is the Egmont Group Secretariat now located?
a chain-referral scheme.
Canada
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.
Customer makes payments on account with bad checks - then takes cash advances before they clear - thereby expanding his credit.


11. White-Collar crime

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12. Futures Commission Merchant (FCM)
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).
To take additional steps of examination and caution in identifying their customers and confirming that the customers' activities and funds are legitimate.
A firm or person that solicits or accepts orders on futures contracts or commodity options and accepts funds for their execution.
Normally seen as non-violent or involving 'business-related' schemes rather than violent or threat or violence crimes.


13. Under the US Bank Secrecy Act - SAR filings are confidential and the institutions employees cannot ____?

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14. What is a 'Trust'?
Report suspicious transactions linked to terrorism.
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.
Countries should enable their competent authorities to freeze - seize and confiscate laundered property or proceeds.
no regulatory power or function


15. What does an Extradition Treaty specify?
Money Laundering and Tax Evasion
The terms of such exchanges - the persons subject to being exchanged - and the crimes for which exchanges will be permitted.
Financial instrument whose price is realted to the underlying commodity - currency - economic variable - financial istrument or security.
The exempt accounts must be documented and the financial institution that secures the exemptions must still monitor their financial transactions.


16. Scheme
Countries should ensure that their competent authorities provide the widest possible range of international cooperation to their foreign counterparts.
Countries should enable their competent authorities to freeze - seize and confiscate laundered property or proceeds.
Quite simply - a plan. While in the US - this term is often associated with a nefarious plan - it should NOT be assumed to be evil - especially as it may appear on the ACAMS exam.
The exempt accounts must be documented and the financial institution that secures the exemptions must still monitor their financial transactions.


17. FATF Recommendation 8
Financial institutions should pay to any threats from new or developing technologies - especially with non f2f relationships.
Helps to identify financial system strengths and vulnerabilities and to reduce the potential for crisis.
Competent authorities should be provided with adequate financial - human and technological resources. Personnel should be of high integrity.
Banking services between merchant banks and other financial institutions.


18. Derivatives
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).
Financial instrument whose price is realted to the underlying commodity - currency - economic variable - financial istrument or security.
Represents a profession and is made up of member professionals; has a role in regulating the persons who are qualified to enter and who practise the profession; performs cetain supervisory or monitoring type function.
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)


19. Why does a launderer try to run transactions through a concentration account of a financial institution?
Provide mutual legal assistance.
To take additional steps of examination and caution in identifying their customers and confirming that the customers' activities and funds are legitimate.
If one needs to transport currency across borders - one needs to have the smallest package possible to avoid detection.
Because they are accounts through which funds are transferred and commingled without personally identifying the originator.


20. May a shell bank maintain a correspondent account with a US bank?
Confidentiality - complex beneficial ownership arrangements - offshore investment vehicles - tax shelters and credit extension services.
No.
Firm that contracts with issuing or acquiring banks to provide transaction processing and other credit-card related services for the banks.
Helps to identify financial system strengths and vulnerabilities and to reduce the potential for crisis.


21. Structuring is a common technique in jurisdictions that...
Confiscation
have in place compulsory currency reporting requirements.
Canada
By acquiring personal information about the victim (e.g: DOB - address - CC numbers) through stealth and misrepresentations.


22. Underwriting
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.
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
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.
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.


23. SRO (Self-Regulatory Organizations)
Countries should apply Recommendations to any business or profession that poses a money laundering or terrorist financing risk.
Represents a profession and is made up of member professionals; has a role in regulating the persons who are qualified to enter and who practise the profession; performs cetain supervisory or monitoring type function.
Open and Closed system
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.


24. Nostro

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25. What is meant by 'Know Your Customer's customer'?
The International Monetary Fund (IMF) and the world bank conduct the joint program.
High-speed matching of known or suspected patterns in very large DB's using recognition algorithms.
Expatriates sending money back to their home country or by other individuals sending money abroad.
Procedures used to determine the identities of the account holders of a respondent bank in a correspondent banking relationship.


26. Who conducts the Financial Sector Assessment Program (FSAP)?
Through the use of experts - the program optimizes expert resources - reduces duplication of efforts and provides uniform advice in financial sector work.
The International Monetary Fund (IMF) and the world bank conduct the joint program.
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.
Adopted in 1999 - it imposed sanctions on Taliban-controlled Afghanistan for its support of Osama Bin Laden and the Al-Qaeda organization


27. Behaviour detection

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28. A 'panzi' scheme is named for whom?
The financial institution can become subject to lawsuits from the failure to observe mandatory KYC standards or from the failure to practise due diligence.
The FIU of Russia
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 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]


29. Why is 'refining' critical to a money launderer's efforts?
Represents a profession and is made up of member professionals; has a role in regulating the persons who are qualified to enter and who practise the profession; performs cetain supervisory or monitoring type function.
If one needs to transport currency across borders - one needs to have the smallest package possible to avoid detection.
The nature of the request - the relevant criminal charges in the requesting country - the legal provision under which the request is made - and the information that is sought.
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.


30. Operational risks in KYC context relate to...
The US State Dept issues the report annually.
weakness in the implementation of bank programs - ineffective control procedures and failure to practice due diligence.
General recommendations for client acceptance - updating client files - practices when identifying unusual or suspicious activity - monitoring - control responsibilities - reporting - education and records retention.
Customer makes payments on account with bad checks - then takes cash advances before they clear - thereby expanding his credit.


31. What are some of the AML dangers of casino junkets?
It was the first law in any country to make money laundering a crime.
If one needs to transport currency across borders - one needs to have the smallest package possible to avoid detection.
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.
A firm or person that solicits or accepts orders on futures contracts or commodity options and accepts funds for their execution.


32. Why is understanding 'Product Diversion' important to the AML investigator?
Direct or indirect advisor on buying and selling futures or commodity options.
Solicits potential customers and issues the credit cards.
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.
A federal regulator in the US - responsible for auditing risk and compliance measuers of federally chartered banks.


33. What does FIU do?
Typical mass-market banking where individual customers use local branches of larger commercial banks.
It analyzes and processes information and disseminates it to appropriate government authorities in support of AML efforts and financial crime investigations.
Financial Action Task Force
bear the mark 'APOSTILLE'


34. CFT
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
Real Estate - Insurance Transactions - Trade-Based Money Laundering.
Countering the Financing of Terrorism (Counter Terrorist Financing).
To allow for mutual assistance in legal proceedings and access to documents and witnesses and other legal and judicial assistance in the respective countries.


35. What does theInternationa Narcotics Control Strategy Report (INCSR) entail?
Penny Stocks
A detailed report on the narcotics trade and a lengthy narrative on the status of the related money laundering issues in most nations.
Financial institutions should have AML/CFT programs that include approved policies - employee screenings & ongoing training and an audit function to test it all.
www.artloss.com


36. FATF Recommendation 25
If provided for money laundering to be an internationally extraditable offense.
The sale of a stock that the investor does not own. To do so - a securities intermediary 'loans' the stock to the investor - which comes from the intermediary's own inventory - another client's margin account or another intermediary.
Competent authorities should provide guidelines in applying national AML/CFT measures - especially for detecting and reporting suspicious activity.
Customer makes payments on account with bad checks - then takes cash advances before they clear - thereby expanding his credit.


37. Fraud
In many major money laundering operations - it is not unusual to find a complicit employee in financial institution.
Strengthen customer identification measures in iternational and domestic wire transfers.
Intentional misrepresentation - concealment or omission of the truth for the purpose of deception or manipulation to ther detriment of a person or organization.
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.


38. FATF Recommendation 22

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39. Foriegn Shell Banks are vehicles for ______ & ______?
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).
Money Laundering and Tax Evasion
The transfer of physical - hard-copy security certificates to book entry credits of a security holder's interest.
To allow for mutual assistance in legal proceedings and access to documents and witnesses and other legal and judicial assistance in the respective countries.


40. FATF Recommendation 26
Countries should establish national centers to receive and disseminate AML/CFT information and have access to law enforcement and others.
To take additional steps of examination and caution in identifying their customers and confirming that the customers' activities and funds are legitimate.
weakness in the implementation of bank programs - ineffective control procedures and failure to practice due diligence.
Solicits potential customers and issues the credit cards.


41. FATF Recommendation 3
To allow for mutual assistance in legal proceedings and access to documents and witnesses and other legal and judicial assistance in the respective countries.
Countries should criminalize money laundering and apply it to all serious offenses - even if committed in another country.
To create new overseas markets - dispose of excess goods - or otherwise recover their costs.
Countries should enable their competent authorities to freeze - seize and confiscate laundered property or proceeds.


42. Reverse Flip

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43. Many jurisdictions have legislation to ensure that suspects are not ____?
tipped off that they are being investigated.
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
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]
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.


44. EAG
The nature of the request - the relevant criminal charges in the requesting country - the legal provision under which the request is made - and the information that is sought.
disrupt or adversely afftect the business of the bank.
EurAsian Group
Because it represents funds drawn on the account of a financial institution and not on a particular individual.


45. What was the target of UN Security Council Resolution 1267?
The transfer of physical - hard-copy security certificates to book entry credits of a security holder's interest.
To promulgate good practices in countering money laundering and to give practical assistance in interpreting the UK Money Laundering Regulations and laws
Adopted in 1999 - it imposed sanctions on Taliban-controlled Afghanistan for its support of Osama Bin Laden and the Al-Qaeda organization
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.


46. Examples of White-collar crime
Money Laundering - bribery - health care - tax - bankruptcy - securities or environmental frauds etc.
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 corporation - often established in an offshore jurisdiction with tight secrecy laws to protect the financial privacy of its owners.
Ad interbank transmittal form - resembling a deposit slip - used to accompany cash and cash equivalent items sent from one bank to another.


47. Why is it imperative to have a strong Know Your Employee program?
Pouch activity.
High-speed matching of known or suspected patterns in very large DB's using recognition algorithms.
In many major money laundering operations - it is not unusual to find a complicit employee in financial institution.
It was the first law in any country to make money laundering a crime.


48. Counter Party
Harmful or Preferrential Tax Regimes.
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]
An order from government authority requiring a financial institution to provide transaction information on a suspect account for a specified period of time.
The opposing part of a transaction or trade.


49. (Credit card) Acquiring Bank
Processes transactions for merchants who accept credit cards.
Competent authorities should provide guidelines in applying national AML/CFT measures - especially for detecting and reporting suspicious activity.
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.
Letters Rogatory


50. 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...
Foreign Corrupt Practices Act
The UN Convention against Illicit Trafficking in Narcotic drugs and Pyshotropic substances [Adopted 12/88].
no regulatory power or function
The grantor (the owner of the property) - a beneficiary and the trustee (the manager of the property).