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.
It conducts investigations in support of a government's confiscation or seizure efforts.
EurAsian Group
Casinos - real estate agents - precious metal/stone dealers - lawyers - notaries - accountants and trust & company service providers.


2. Why do companies export their goods at prices far below those in their home country?
Countries should have effective criminal - civil and administrative sanctions for money laundering or terrorist financing violations.
Banking services between merchant banks and other financial institutions.
Provide mutual legal assistance.
To create new overseas markets - dispose of excess goods - or otherwise recover their costs.


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

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4. FATF Recommendation 30
Procedures used to determine the identities of the account holders of a respondent bank in a correspondent banking relationship.
With respect to STR/SAR reporting - financial institutions should be afforded safe harbor - yet barred from any unauthorized disclosures.
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.
Competent authorities should be provided with adequate financial - human and technological resources. Personnel should be of high integrity.


5. FATF Recommendation 36
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.
A corporation - often established in an offshore jurisdiction with tight secrecy laws to protect the financial privacy of its owners.
USD/EUR 3 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
Provide mutual legal assistance.


6. The Vienns Convention
A contemporaneous record of the steps - observations - evidence - findings and decisions of an investigation.
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.
Goods such as food - grains and metals that are usually traded in large amounts on a commodities exchange - usually through future contracts.
The UN Convention against Illicit Trafficking in Narcotic drugs and Pyshotropic substances [Adopted 12/88].


7. Who appoints a 'Federal Receiver' (US)?
To provide a forum for FIU's (Financial Intelligence Unit) to improve support to their respective national AML progrmans and development protocols for the sharing of information.
Freeze and confiscate terrorist assets.
A US Federal Court
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)


8. FATF's designated transactional threshold for Delaers is Precious metals and / or Precious Stones is _____.
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
www.artloss.com
USD/EUR 3 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
The transfer of physical - hard-copy security certificates to book entry credits of a security holder's interest.


9. 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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10. Vital Service Providers (VSPs)
Money Laundering - bribery - health care - tax - bankruptcy - securities or environmental frauds etc.
People who help move the billions of dollars drug traffickers earn around the world.
Customer makes payments on account with bad checks - then takes cash advances before they clear - thereby expanding his credit.
Take immediate steps to ratify and implement the UN instruments.


11. Common types of 'Derivatives'
Open and Closed system
Person who - for compensation - provides advice on securities and investments and manages client assets.
An electronic quotation system that displays quotes of many securities traded over the counter.
Futures contracts - forwards - swaps or options.


12. Characteristics of an 'Open System Stored Value Card'
The transfer of physical - hard-copy security certificates to book entry credits of a security holder's interest.
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.
Countries should take immediate steps to become party to and implement fully the relevant international conventions related to AML and CFT efforts.
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.


13. FATF Recommendation 31
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
Ensure that entities - in particular non-profit organizations - cannot be misused to finance terrorism.
Countries should ensure policy makers - the FIU - law enforcement and supervisors have effective mechanisms to enable cooperation.
Financial Action Task Force


14. FATF Sepcial Recommendation on Terrorist Financing -- SR Four
Report suspicious transactions linked to terrorism.
They are businesses such as ariplane - automobile and boat dealers - lawyers - jewelers - real estate brokers and others that are subjec to BSA regulations (US).
Countries should establish national centers to receive and disseminate AML/CFT information and have access to law enforcement and others.
Typical mass-market banking where individual customers use local branches of larger commercial banks.


15. A 'panzi' scheme is named for whom?
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.
Adopted in 1999 - it imposed sanctions on Taliban-controlled Afghanistan for its support of Osama Bin Laden and the Al-Qaeda organization
Normally seen as non-violent or involving 'business-related' schemes rather than violent or threat or violence crimes.
An association of global financial institutions that issues guidelines is such areas as correspondent banking - private banking - terrorist financing etc.


16. What was the effect of the 1988 Vienna Convention as it relates to extradtition?
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.
If provided for money laundering to be an internationally extraditable offense.
Countries should ensure that secrecy laws do NOT inhibit implementation of these Recommendations.
The International Monetary Fund (IMF) and the world bank conduct the joint program.


17. Distribution Channels (Insurance Industry)
Open and Closed system
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]
The terms of such exchanges - the persons subject to being exchanged - and the crimes for which exchanges will be permitted.
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.


18. A 'Cash Letter' can also be referred to as _____.
To reduce financial crime - including money laundering and terrorit financing.
Firm that contracts with issuing or acquiring banks to provide transaction processing and other credit-card related services for the banks.
A contemporaneous record of the steps - observations - evidence - findings and decisions of an investigation.
Pouch activity.


19. FATF Recommendation 17
Criminalize the financing of terrorism - terrorist acts and terrorist organisations.
Countries should have effective criminal - civil and administrative sanctions for money laundering or terrorist financing violations.
Ad interbank transmittal form - resembling a deposit slip - used to accompany cash and cash equivalent items sent from one bank to another.
Should give special attention to relationships or transactions of people - companies or financial institutions from countries showing little regard for these Recommendations.


20. 'Commission Rogatoire' known in English as?
Any item that a bank is wiling to accept for immediate - provisional credit to a customer's account - instantly increasing the account's balance.
A prepaid card that is linked to the global funds network - which can allow for worldwide ATM with-drawls and purchases with many merchants.
The terms of such exchanges - the persons subject to being exchanged - and the crimes for which exchanges will be permitted.
Letters Rogatory


21. Reverse Flip

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22. FATF Recommendation 9
Pouch activity.
Provide the widest possible range of assistance to other countries' law enforcement and regulatory authorities for terrorist financing investigations.
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.
Countries should have effective criminal - civil and administrative sanctions for money laundering or terrorist financing violations.


23. Affidavit
A written statement given under oath before an officer of the court - notary public - or other authorized person. Commonly used as the factual basis for an application for a search - arrest or seizure warrant.
foreign correspondent banks
Respondent banks may be used by other banks and customers to conduct transactions through a correspondent account.
2% - 5% ($590B - $1.5T)


24. Express Trust
As 'felonies' or 'all offenses in the criminal code'.
A trust clearly created by the settlor - usually in the form of a document - such as a written deed or trust.
Large companies often export their branded products at wholesale prices far below those at which those products are offered in that country.
a chain-referral scheme.


25. Portfolio Manager
Countries should ensure that their competent authorities provide the widest possible range of international cooperation to their foreign counterparts.
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.
As a financial institution service that is very vulnerable to money laundering.
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.


26. What are included in the Wolfsberg AML Principles on Private Banking?
General recommendations for client acceptance - updating client files - practices when identifying unusual or suspicious activity - monitoring - control responsibilities - reporting - education and records retention.
Assess any international correspondent's bank nature - ownership - management - reputation - supervision and AML & Terrorist Financing controls. Also. document relationship responsibilities.
Absolutely NOT. If the decision is based purely on profile - then you are discriminating. you need to file such reports on the ACTIVITY especially if it differs from the 'normal and expected' as reflected in the customer profile.
A corporation - often established in an offshore jurisdiction with tight secrecy laws to protect the financial privacy of its owners.


27. FATF Sepcial Recommendation on Terrorist Financing -- SR Six
Intentional misrepresentation - concealment or omission of the truth for the purpose of deception or manipulation to ther detriment of a person or organization.
When residents are prevented from benefiting from a tax-regime or when non-residents are prevented from accessing the domestic market.
Impose AML requirements on alternative remittance systems.
An intelligence gathering law enforcement or regulatory body that receives financial information form covered financial institutions - businesses and persons in tis respective country.


28. Dematerialization of Securities

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29. Examples of White-collar crime
Countries should recognize money laundering as an extraditable offense.
People who help move the billions of dollars drug traffickers earn around the world.
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.
Money Laundering - bribery - health care - tax - bankruptcy - securities or environmental frauds etc.


30. 'Competent Authorities' refers to _____.
All admininstrative and law enforcemnt authorities concerned wiht combating money laundering and terrorist financing - including the FIU and supervisors.
A US Federal Court
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.
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.


31. Dormant Account
Render mutual legal assistance notwithstanding the absence of dual criminality. Where dual criminality is required - classification should not be an issue.
An account that does not show activity other than the posting of interest or account maintenance fees.
All admininstrative and law enforcemnt authorities concerned wiht combating money laundering and terrorist financing - including the FIU and supervisors.
A US Federal Court


32. What is the primary use of a 'Mutual Legal Assistance Treaty'?
To allow for mutual assistance in legal proceedings and access to documents and witnesses and other legal and judicial assistance in the respective countries.
PEP accounts need to be identified - approved by senior management - and have ongoing enhanced monitoring. Sources of Wealth and funds must also be established.
The FIU of Russia
Normally seen as non-violent or involving 'business-related' schemes rather than violent or threat or violence crimes.


33. What normal business practise makes 'Product Division' possible?
To reduce financial crime - including money laundering and terrorit financing.
With respect to STR/SAR reporting - financial institutions should be afforded safe harbor - yet barred from any unauthorized disclosures.
Large companies often export their branded products at wholesale prices far below those at which those products are offered in that country.
October 1980. The instigation of Basel Committee on Banking supervision (with which the group maintains close contact).


34. What is the goal of the Egmont group?

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35. How do most governments view Private Banking?
Terrorism and Terrorist Financing
As a financial institution service that is very vulnerable to money laundering.
Countries should ensure that their competent authorities provide the widest possible range of international cooperation to their foreign counterparts.
Assess any international correspondent's bank nature - ownership - management - reputation - supervision and AML & Terrorist Financing controls. Also. document relationship responsibilities.


36. Why is 'refining' critical to a money launderer's efforts?
It was the first law in any country to make money laundering a crime.
Countries should criminalize money laundering and apply it to all serious offenses - even if committed in another country.
If one needs to transport currency across borders - one needs to have the smallest package possible to avoid detection.
The UN Convention against Transnational Organized Crime [Adopted 12/2000].


37. What do 'Hedge Funds' attempt to do?
To profit all kinds of markets by pursuing leveraging and other speculative investment practises thay may increase the risk of investment loss.
Assess any international correspondent's bank nature - ownership - management - reputation - supervision and AML & Terrorist Financing controls. Also. document relationship responsibilities.
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.
Expatriates sending money back to their home country or by other individuals sending money abroad.


38. In Emerging Money Laundering Risks - what 3 methods are identified as 'Funds Transfers'?
To promulgate good practices in countering money laundering and to give practical assistance in interpreting the UK Money Laundering Regulations and laws
Money Laundering and Tax Evasion
Harmful or Preferrential Tax Regimes.
Stored Value Cards - Mobile Payments - Internet Payments.


39. Cash Letter
Banking services between merchant banks and other financial institutions.
Ad interbank transmittal form - resembling a deposit slip - used to accompany cash and cash equivalent items sent from one bank to another.
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 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.


40. Variable Annuity
Berlin- based - non-governmental organization with goal of improving government accountability and curbing national and international corruption.
Contract issued by an insurance company under which an investor provides the insurer with funds (a lump-sum or series of payments). The insurer then agrees to make periodic payments to the investor starting the immediately or in the future.
Impose AML requirements on alternative remittance systems.
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.


41. FATF Recommendation 2
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.
A federal regulator in the US - responsible for auditing risk and compliance measuers of federally chartered banks.
Countries should ensure that knowledge can be inferred. Additionally - legal persons should be subject to theses laws.


42. What is one of the cental stragetic tools required for effective action against money laundering?
Confiscation
Extending the offense of money laundering to include money laundering associated with all serious offenses - not only with drug trafficking [Adopted 9/90].
Countries should have effective criminal - civil and administrative sanctions for money laundering or terrorist financing violations.
Account established by a domestic banking institution to receive deposits from - make payments on behalf of - or handle other financial transactions for a foreign financial institution - usually in the foreign financial institutions's cureency.


43. Pink Sheets
Solicits potential customers and issues the credit cards.
An electronic quotation system that displays quotes of many securities traded over the counter.
Countries should ensure that their competent authorities provide the widest possible range of international cooperation to their foreign counterparts.
The opposing part of a transaction or trade.


44. Structuring is a common technique in jurisdictions that...
Futures contracts - forwards - swaps or options.
Direct or indirect advisor on buying and selling futures or commodity options.
PEP accounts need to be identified - approved by senior management - and have ongoing enhanced monitoring. Sources of Wealth and funds must also be established.
have in place compulsory currency reporting requirements.


45. FATF Recommendation 13
Countries should recognize money laundering as an extraditable offense.
Open and Closed system
Financial institutions should be required - by law or regulation - to report suspicious activity to their national FIU.
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.


46. Why do convertible bonds oftern have lower interest rates than non-convertible bonds?
As 'felonies' or 'all offenses in the criminal code'.
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.
They can accrue value as the price of the underlying stock rises.
Financial institutions should NOT keep any anonymous or fictionally named accounts - plus they should undertake customer due diligence measures.


47. FATF Sepcial Recommendation on Terrorist Financing -- SR One
Financial institutions should NOT keep any anonymous or fictionally named accounts - plus they should undertake customer due diligence measures.
Take immediate steps to ratify and implement the UN instruments.
To promote the effective supervision of banks in their jurisdictions; to further international cooperation in the supervision between the Offshore Banking Supervisors - and with Basel committee member nations and other banking supervisors.
The exempt accounts must be documented and the financial institution that secures the exemptions must still monitor their financial transactions.


48. FATF Recommendation 12
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.
The CDD and record-keeping requirements (of Rec 5 - 6 - 8 & 11) apply to non-financial businesses and professions.
Competent authorities should provide guidelines in applying national AML/CFT measures - especially for detecting and reporting suspicious activity.
To allow for mutual assistance in legal proceedings and access to documents and witnesses and other legal and judicial assistance in the respective countries.


49. FATF Recommendation 40
A contemporaneous record of the steps - observations - evidence - findings and decisions of an investigation.
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.
They are businesses such as ariplane - automobile and boat dealers - lawyers - jewelers - real estate brokers and others that are subjec to BSA regulations (US).
Countries should ensure that their competent authorities provide the widest possible range of international cooperation to their foreign counterparts.


50. Fraud
Berlin- based - non-governmental organization with goal of improving government accountability and curbing national and international corruption.
Intentional misrepresentation - concealment or omission of the truth for the purpose of deception or manipulation to ther detriment of a person or organization.
Financial Action Task Force
have in place compulsory currency reporting requirements.