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. Structuring is a common technique in jurisdictions that...
have in place compulsory currency reporting requirements.
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.
High-speed matching of known or suspected patterns in very large DB's using recognition algorithms.
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.


2. Commodity Pool
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.
Combines funds from various members and users them to trade in futures or options contracts.
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.
Countering the Financing of Terrorism (Counter Terrorist Financing).


3. Why is understanding 'Product Diversion' important to the AML investigator?
Foreign Corrupt Practices Act
a Sr Management level
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 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).


4. What is the significance of 'Non-Financial Trades and Businesses' in realtion to Money Laundering?
The FIU of the UK
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.
Middle East and North Africa Financial Action Task Force


5. FATF Sepcial Recommendation on Terrorist Financing -- SR Three
foreign correspondent banks
All admininstrative and law enforcemnt authorities concerned wiht combating money laundering and terrorist financing - including the FIU and supervisors.
Money Laundering and Tax Evasion
Freeze and confiscate terrorist assets.


6. 'Closed-end Mutual Fund' (Or Comany)

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7. FATF Recommendation 33
Countries should ensure that there is adequate - accurate and timely information on the beneficial ownership and control of legal persons.
Any item that a bank is wiling to accept for immediate - provisional credit to a customer's account - instantly increasing the account's balance.
Council of European committee of Experts on the Evaluation of AML measures and the Financing of Terrorism
Take immediate steps to ratify and implement the UN instruments.


8. USA Patriot Act Section 312 'Offshore Bank'
Real Estate - Insurance Transactions - Trade-Based Money Laundering.
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.
Impose AML requirements on alternative remittance systems.
A bank whose license has conditions that prohibhit the licensed entity from conducting banking activities with the citizens - or with the local currency - of the country that issued that license.


9. 'Coucil of Europe Convention on Laundering - Search - Seizure and Confiscation of the Proceeds from Crime' is known for what?
Goods such as food - grains and metals that are usually traded in large amounts on a commodities exchange - usually through future contracts.
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.
Countries should ensure that there is adequate - accurate and timely information on the beneficial ownership and control of legal persons.
Extending the offense of money laundering to include money laundering associated with all serious offenses - not only with drug trafficking [Adopted 9/90].


10. Identification data
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.
Freeze and confiscate terrorist assets.
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.
Reliable - independent source of documents - data or information.


11. The 'Art Loss Register'

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12. How does the Egmont group help its members?
An account that does not show activity other than the posting of interest or account maintenance fees.
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.
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.
Operator or solicitor of funds for a commodity pool - which combines funds from members and trades futures or options contracts.


13. Characteristics of an 'Open System Stored Value Card'
As a financial institution service that is very vulnerable to money laundering.
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.
An association of global financial institutions that issues guidelines is such areas as correspondent banking - private banking - terrorist financing etc.
have in place compulsory currency reporting requirements.


14. Apostille

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15. Who issues the Internationa Narcotics Control Strategy Report (INCSR) and how often?
Placement - Layering - Integration.
Review customer files and conduct random sampling of accounts.
The US State Dept issues the report annually.
A fund - offered by an investment company - that offers shares while investing the capital in diversified securities of other companies.


16. FATF Recommendation 11
Financial institutions should pay special attention to (and examine & document) complex - unusual large transactions - and all transactions which have no apparent economic or lawful purpose.
Report suspicious transactions linked to terrorism.
An intelligence gathering law enforcement or regulatory body that receives financial information form covered financial institutions - businesses and persons in tis respective country.
Financial instrument whose price is realted to the underlying commodity - currency - economic variable - financial istrument or security.


17. Boiler Room
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.
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
Extending the offense of money laundering to include money laundering associated with all serious offenses - not only with drug trafficking [Adopted 9/90].
The US State Dept issues the report annually.


18. What is the aim of Joint Money Laundering Steering Group? (UK)
Person who - for compensation - provides advice on securities and investments and manages client assets.
To promulgate good practices in countering money laundering and to give practical assistance in interpreting the UK Money Laundering Regulations and laws
Direct or indirect advisor on buying and selling futures or commodity options.
foreign correspondent banks


19. What were recently identified as Emerging Money Laundering risks?
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 contractual provision that allows the contract owner the right to return the contract within a specified period for a refund.
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.
Funds transfers - Shell Corporations - Contractual Transactions.


20. FATF
Direct or indirect advisor on buying and selling futures or commodity options.
Financial Action Task Force
An electronic quotation system that displays quotes of many securities traded over the counter.
Expatriates sending money back to their home country or by other individuals sending money abroad.


21. FATF Recommendation 1
Canada
A firm or person that solicits or accepts orders on futures contracts or commodity options and accepts funds for their execution.
Countries should criminalize money laundering and apply it to all serious offenses - even if committed in another country.
Typical mass-market banking where individual customers use local branches of larger commercial banks.


22. FATF Sepcial Recommendation on Terrorist Financing -- SR Eight
Dealers in precious metals/stones - trust and company services providers - lawyers - notaries and accountants should all be required to report suspicious activity - but legal privilege cannot be violated.
A federal regulator in the US - responsible for auditing risk and compliance measuers of federally chartered banks.
Futures contracts - forwards - swaps or options.
Ensure that entities - in particular non-profit organizations - cannot be misused to finance terrorism.


23. Counter Party
Extending the offense of money laundering to include money laundering associated with all serious offenses - not only with drug trafficking [Adopted 9/90].
Render mutual legal assistance notwithstanding the absence of dual criminality. Where dual criminality is required - classification should not be an issue.
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.
The opposing part of a transaction or trade.


24. GIABA
Intergovernmental Action Group against Money Laundering in Africa
Financial institutions should have AML/CFT programs that include approved policies - employee screenings & ongoing training and an audit function to test it all.
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.
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.


25. A public perception that a bank is not able to manage its operational risk effectively can...
Countries should ensure that there is adequate - accurate and timely information on express trusts - including information on the settlor - trustee and beneficiaries.
A prepaid card that is linked to the global funds network - which can allow for worldwide ATM with-drawls and purchases with many merchants.
disrupt or adversely afftect the business of the bank.
A bank whose license has conditions that prohibhit the licensed entity from conducting banking activities with the citizens - or with the local currency - of the country that issued that license.


26. What is meant by 'Know Your Correspondent Bank'?

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

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28. FATF Recommendation 10
It one wants to open a bank account overseas - but do it through the mail - the bank may need to be assured that the copy of the passport is correct. The Apostille mark can assure this.
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.
Record retention: 5 years - data to recreate any individual transaction; 5 years after relationship ends - all customer identification data
The world's largest private DB of stolen art.


29. Why do companies export their goods at prices far below those in their home country?
Countries should ensure that there is adequate - accurate and timely information on express trusts - including information on the settlor - trustee and beneficiaries.
Normally seen as non-violent or involving 'business-related' schemes rather than violent or threat or violence crimes.
To create new overseas markets - dispose of excess goods - or otherwise recover their costs.
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.


30. Wholesale Banking
Banking services between merchant banks and other financial institutions.
A prepaid card that is linked to the global funds network - which can allow for worldwide ATM with-drawls and purchases with many merchants.
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.
2% - 5% ($590B - $1.5T)


31. What do 'Hedge Funds' attempt to do?
The UN Convention against Illicit Trafficking in Narcotic drugs and Pyshotropic substances [Adopted 12/88].
have in place compulsory currency reporting requirements.
To profit all kinds of markets by pursuing leveraging and other speculative investment practises thay may increase the risk of investment loss.
Open and Closed system


32. Legal Arrangements (Insurance Industry)
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]
The principal US money laundering law can apply to a non-US citizen if the 'conduct' occurs 'in part' of the US.
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.
PEP accounts need to be identified - approved by senior management - and have ongoing enhanced monitoring. Sources of Wealth and funds must also be established.


33. Three stages of money laundering
A fund - offered by an investment company - that offers shares while investing the capital in diversified securities of other companies.
A US Federal Court
Placement - Layering - Integration.
An electronic quotation system that displays quotes of many securities traded over the counter.


34. FATF Recommendation 14
With respect to STR/SAR reporting - financial institutions should be afforded safe harbor - yet barred from any unauthorized disclosures.
To profit all kinds of markets by pursuing leveraging and other speculative investment practises thay may increase the risk of investment loss.
A corporation - often established in an offshore jurisdiction with tight secrecy laws to protect the financial privacy of its owners.
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)


35. What is one of the cental stragetic tools required for effective action against money laundering?
A fund - offered by an investment company - that offers shares while investing the capital in diversified securities of other companies.
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.
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.
Confiscation


36. As considered by UN and OECD - these are jurisdictions that have no or low tax rates - and do not attract real business or foreign investment
Harmful or Preferrential Tax Regimes.
An account that does not show activity other than the posting of interest or account maintenance fees.
Take immediate steps to ratify and implement the UN instruments.
Attorneys - accountants - broker-dealers - communication and transportation providers - bankers and other financial service providers - concealment trap (hiding places) builders etc.


37. What the primary objectives of Offshore Group of Banking Supervisors?
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
Solicits potential customers and issues the credit cards.
Record retention: 5 years - data to recreate any individual transaction; 5 years after relationship ends - all customer identification data
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.


38. FATF Recommendation 5
The International Monetary Fund (IMF) and the world bank conduct the joint program.
Financial institutions should NOT keep any anonymous or fictionally named accounts - plus they should undertake customer due diligence measures.
Countries should ensure that there is adequate - accurate and timely information on express trusts - including information on the settlor - trustee and beneficiaries.
Ensure that entities - in particular non-profit organizations - cannot be misused to finance terrorism.


39. Agent (Insurance Industry)
No.
An electronic quotation system that displays quotes of many securities traded over the counter.
2% - 5% ($590B - $1.5T)
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


40. Operational risks in KYC context relate to...
that appear to be linked
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.
weakness in the implementation of bank programs - ineffective control procedures and failure to practice due diligence.
Electronic transmissions of funds between financial institutions on behalf of themselves or their customers.


41. FATF Recommendation 40
The FIU of Russia
Countries should ensure that their competent authorities provide the widest possible range of international cooperation to their foreign counterparts.
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]
Impose AML requirements on alternative remittance systems.


42. FATF Sepcial Recommendation on Terrorist Financing -- SR Seven
www.artloss.com
Countries should maintain comprehensive statistics to gauge effectiveness of their AML and CTF efforts.
Strengthen customer identification measures in iternational and domestic wire transfers.
Countries should ensure that there is adequate - accurate and timely information on the beneficial ownership and control of legal persons.


43. FATF Sepcial Recommendation on Terrorist Financing -- SR Two
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.
tipped off that they are being investigated.
Operator or solicitor of funds for a commodity pool - which combines funds from members and trades futures or options contracts.
Criminalize the financing of terrorism - terrorist acts and terrorist organisations.


44. (Stock) Warrants
Countries should ensure that there is adequate - accurate and timely information on express trusts - including information on the settlor - trustee and beneficiaries.
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.
The terms of such exchanges - the persons subject to being exchanged - and the crimes for which exchanges will be permitted.
An account that does not show activity other than the posting of interest or account maintenance fees.


45. FATF Recommendation 2
Countries should ensure that knowledge can be inferred. Additionally - legal persons should be subject to theses laws.
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.
A bank whose license has conditions that prohibhit the licensed entity from conducting banking activities with the citizens - or with the local currency - of the country that issued that license.
High-speed matching of known or suspected patterns in very large DB's using recognition algorithms.


46. Money Mules
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.
The transfer of physical - hard-copy security certificates to book entry credits of a security holder's interest.
Intentional misrepresentation - concealment or omission of the truth for the purpose of deception or manipulation to ther detriment of a person or organization.
No.


47. Moneyval
Expatriates sending money back to their home country or by other individuals sending money abroad.
A corporation - often established in an offshore jurisdiction with tight secrecy laws to protect the financial privacy of its owners.
To reduce financial crime - including money laundering and terrorit financing.
Council of European committee of Experts on the Evaluation of AML measures and the Financing of Terrorism


48. 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...
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.
As 'felonies' or 'all offenses in the criminal code'.
that appear to be linked
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. What tend to be the markings of Private Banking transactions?
Ad interbank transmittal form - resembling a deposit slip - used to accompany cash and cash equivalent items sent from one bank to another.
Maintaining correspondent accoutnts at US Financial Institutions (USA Patriot Act)
Confidentiality - complex beneficial ownership arrangements - offshore investment vehicles - tax shelters and credit extension services.
Operator or solicitor of funds for a commodity pool - which combines funds from members and trades futures or options contracts.


50. Commodity
Goods such as food - grains and metals that are usually traded in large amounts on a commodities exchange - usually through future contracts.
Countries should apply Recommendations to any business or profession that poses a money laundering or terrorist financing risk.
Firm that contracts with issuing or acquiring banks to provide transaction processing and other credit-card related services for the banks.
a Sr Management level