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. Why does a launderer try to run transactions through a concentration account of a financial institution?
The opposing part of a transaction or trade.
Casinos - real estate agents - precious metal/stone dealers - lawyers - notaries - accountants and trust & company service providers.
Because they are accounts through which funds are transferred and commingled without personally identifying the originator.
Financial Action Task Force on Money Laundering in South America


2. Free Look Period
Ad interbank transmittal form - resembling a deposit slip - used to accompany cash and cash equivalent items sent from one bank to another.
Provide mutual legal assistance.
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 contractual provision that allows the contract owner the right to return the contract within a specified period for a refund.


3. Derivatives
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.
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.
To create new overseas markets - dispose of excess goods - or otherwise recover their costs.
Financial instrument whose price is realted to the underlying commodity - currency - economic variable - financial istrument or security.


4. 'Competent Authorities' refers to _____.
Electronic transmissions of funds between financial institutions on behalf of themselves or their customers.
All admininstrative and law enforcemnt authorities concerned wiht combating money laundering and terrorist financing - including the FIU and supervisors.
Supervisors should have powers to monitor and ensure compliance - including the ability to compel production of information and to impose sanctions.
Criminalize the financing of terrorism - terrorist acts and terrorist organisations.


5. A pyramid scheme is also called...
a chain-referral scheme.
Reliable - independent source of documents - data or information.
Harmful or Preferrential Tax Regimes.
Penny Stocks


6. Margin
An arrangement whereby an investor pays for part of a securities purchase and borrows the rest from a securities intermediary.
Futures contracts - forwards - swaps or options.
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.
Adopted in 1999 - it imposed sanctions on Taliban-controlled Afghanistan for its support of Osama Bin Laden and the Al-Qaeda organization


7. What is one of the cental stragetic tools required for effective action against money laundering?
Normally seen as non-violent or involving 'business-related' schemes rather than violent or threat or violence crimes.
Operator or solicitor of funds for a commodity pool - which combines funds from members and trades futures or options contracts.
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.
Confiscation


8. What is the goal of the Egmont group?

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9. Basel committee's 'Customer Due Diligence for Banks' when verifying a unit's compliance with KYC policies and procedures - the home country supervisors or auditors should do what?
Financial instrument whose price is realted to the underlying commodity - currency - economic variable - financial istrument or security.
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.
Review customer files and conduct random sampling of accounts.
Applied by an authority - it is a special seal which certifies that a document is a true copy of an original. However - it does not and cannot speak to the validity of the document's content.


10. Identification data
Freeze and confiscate terrorist assets.
Reliable - independent source of documents - data or information.
'Tip Off' a customer that a report has been filed. Failure to maintain confidentiality is a violation of law.
The FIU of Russia


11. What was the effect of the 1988 Vienna Convention as it relates to extradtition?
A market is which securities are bought and sold outside of establisehd securities markets.
An association of global financial institutions that issues guidelines is such areas as correspondent banking - private banking - terrorist financing etc.
If provided for money laundering to be an internationally extraditable offense.
By acquiring personal information about the victim (e.g: DOB - address - CC numbers) through stealth and misrepresentations.


12. Investigative Log
Financial instrument whose price is realted to the underlying commodity - currency - economic variable - financial istrument or security.
A contemporaneous record of the steps - observations - evidence - findings and decisions of an investigation.
Countries should ensure that their competent authorities provide the widest possible range of international cooperation to their foreign counterparts.
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.


13. Who appear to be predominant users of hawalas and other alternative remittance systems?
Expatriates sending money back to their home country or by other individuals sending money abroad.
Customer makes payments on account with bad checks - then takes cash advances before they clear - thereby expanding his credit.
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.
The exempt accounts must be documented and the financial institution that secures the exemptions must still monitor their financial transactions.


14. What is important about the US Money Laundering Control Act (MCLA)?
Non-Coperative countries and Territories. Country or territory that has been designated by the FATF as non-cooperative with international AML principles and procedures.
It was the first law in any country to make money laundering a crime.
Strengthen customer identification measures in iternational and domestic wire transfers.
Financial institutions should have AML/CFT programs that include approved policies - employee screenings & ongoing training and an audit function to test it all.


15. The Palemo Convention
Countries should ensure that knowledge can be inferred. Additionally - legal persons should be subject to theses laws.
The UN Convention against Transnational Organized Crime [Adopted 12/2000].
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.
Placement - Layering - Integration.


16. What are some of the AML dangers of casino junkets?
Berlin- based - non-governmental organization with goal of improving government accountability and curbing national and international corruption.
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.
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.
Ensure that entities - in particular non-profit organizations - cannot be misused to finance terrorism.


17. How does 'Product Diversion' work?
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.
Strengthen customer identification measures in iternational and domestic wire transfers.
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.
Intentional misrepresentation - concealment or omission of the truth for the purpose of deception or manipulation to ther detriment of a person or organization.


18. Vital Service Providers (VSPs)
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).
People who help move the billions of dollars drug traffickers earn around the world.
Combines funds from various members and users them to trade in futures or options contracts.
Real Estate - Insurance Transactions - Trade-Based Money Laundering.


19. UK courts view on 'Suspicion'
Ensure that entities - in particular non-profit organizations - cannot be misused to finance terrorism.
As 'felonies' or 'all offenses in the criminal code'.
Have measures in place to detect the physical corss-border transportation of currency and bearer negotiable instruments - including a declaration system.
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.


20. How do 'Hedge Funds' operate?

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21. A 'Cash Letter' can also be referred to as _____.
October 1980. The instigation of Basel Committee on Banking supervision (with which the group maintains close contact).
The financial institution can become subject to lawsuits from the failure to observe mandatory KYC standards or from the failure to practise due diligence.
tipped off that they are being investigated.
Pouch activity.


22. What does FIU do beyond what FIU does?

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23. FATF Recommendation 30
Countries should ensure policy makers - the FIU - law enforcement and supervisors have effective mechanisms to enable cooperation.
Competent authorities should be provided with adequate financial - human and technological resources. Personnel should be of high integrity.
Firm or person that solicits and accepts commodity futures orders from customers but does not accept funds. Two types of IB_C's: Guaranteed and Independent.
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)


24. Commodity Pool
Combines funds from various members and users them to trade in futures or options contracts.
Render mutual legal assistance notwithstanding the absence of dual criminality. Where dual criminality is required - classification should not be an issue.
The International Monetary Fund (IMF) and the world bank conduct the joint program.
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.


25. What does FIU do?
Confiscation
Competent authorities should be provided with adequate financial - human and technological resources. Personnel should be of high integrity.
An intelligence gathering law enforcement or regulatory body that receives financial information form covered financial institutions - businesses and persons in tis respective country.
It analyzes and processes information and disseminates it to appropriate government authorities in support of AML efforts and financial crime investigations.


26. FATF Recommendation 33
Countries should ensure that there is adequate - accurate and timely information on the beneficial ownership and control of legal persons.
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.
Impose AML requirements on alternative remittance systems.
High-speed matching of known or suspected patterns in very large DB's using recognition algorithms.


27. Why do companies export their goods at prices far below those in their home country?
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.
To create new overseas markets - dispose of excess goods - or otherwise recover their costs.
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.
A bank which uses the services of another bank - such as check clearing - wire transfers - etc. The bank providing the service is the 'Correspondent Bank'


28. What is the aim of Joint Money Laundering Steering Group? (UK)
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.
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.
The financial institution can become subject to lawsuits from the failure to observe mandatory KYC standards or from the failure to practise due diligence.
To promulgate good practices in countering money laundering and to give practical assistance in interpreting the UK Money Laundering Regulations and laws


29. Pink Sheets
Passed in 1977 - the US law is primarily known for its anti-bribery provisions (it also applies to foreign companies with stocks covered by the Securities and Exchange Act of 1934).
Because they are accounts through which funds are transferred and commingled without personally identifying the originator.
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.
An electronic quotation system that displays quotes of many securities traded over the counter.


30. In what country is the Egmont Group Secretariat now located?
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
Review customer files and conduct random sampling of accounts.
If one needs to transport currency across borders - one needs to have the smallest package possible to avoid detection.
Canada


31. What do boiler room salespeople typically sell?
Penny Stocks
Placement - Layering - Integration.
Electronic transmissions of funds between financial institutions on behalf of themselves or their customers.
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.


32. What does the 'SEC' (US Securities and Exchange Commission) do?
Middle East and North Africa Financial Action Task Force
Real Estate - Insurance Transactions - Trade-Based Money Laundering.
Direct or indirect advisor on buying and selling futures or commodity options.
Under what authority? Among other things - it regulates brokers and dealers - under authority of the Securities Exchange Act of 1934.


33. Money Mules
By acquiring personal information about the victim (e.g: DOB - address - CC numbers) through stealth and misrepresentations.
Operator or solicitor of funds for a commodity pool - which combines funds from members and trades futures or options contracts.
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.
Countries should apply Recommendations to any business or profession that poses a money laundering or terrorist financing risk.


34. Who conducts the Financial Sector Assessment Program (FSAP)?
The International Monetary Fund (IMF) and the world bank conduct the joint program.
Financial institutions should be required - by law or regulation - to report suspicious activity to their national FIU.
Customer makes payments on account with bad checks - then takes cash advances before they clear - thereby expanding his credit.
Foreign Corrupt Practices Act


35. Common types of 'Derivatives'
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].
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.
Futures contracts - forwards - swaps or options.


36. Examples of VSP's
Attorneys - accountants - broker-dealers - communication and transportation providers - bankers and other financial service providers - concealment trap (hiding places) builders etc.
It was the first law in any country to make money laundering a crime.
With respect to STR/SAR reporting - financial institutions should be afforded safe harbor - yet barred from any unauthorized disclosures.
Maintaining correspondent accoutnts at US Financial Institutions (USA Patriot Act)


37. 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...
Countries should ensure that there is adequate - accurate and timely information on the beneficial ownership and control of legal persons.
The opposing part of a transaction or trade.
Provide mutual legal assistance.
foreign correspondent banks


38. Dormant Account
An account that does not show activity other than the posting of interest or account maintenance fees.
Large companies often export their branded products at wholesale prices far below those at which those products are offered in that country.
If one needs to transport currency across borders - one needs to have the smallest package possible to avoid detection.
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.


39. FCPA (US)
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
Foreign Corrupt Practices Act
Non-Coperative countries and Territories. Country or territory that has been designated by the FATF as non-cooperative with international AML principles and procedures.
weakness in the implementation of bank programs - ineffective control procedures and failure to practice due diligence.


40. Transparency International
Berlin- based - non-governmental organization with goal of improving government accountability and curbing national and international corruption.
'Tip Off' a customer that a report has been filed. Failure to maintain confidentiality is a violation of law.
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.
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.


41. Scheme
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.
EurAsian Group
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.
Assess any international correspondent's bank nature - ownership - management - reputation - supervision and AML & Terrorist Financing controls. Also. document relationship responsibilities.


42. FATF Recommendation 25
Competent authorities should provide guidelines in applying national AML/CFT measures - especially for detecting and reporting suspicious activity.
Countering the Financing of Terrorism (Counter Terrorist Financing).
The financial institution can become subject to lawsuits from the failure to observe mandatory KYC standards or from the failure to practise due diligence.
PEP accounts need to be identified - approved by senior management - and have ongoing enhanced monitoring. Sources of Wealth and funds must also be established.


43. Reverse Flip

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44. Behaviour detection

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45. FATF Recommendation 15
Assess any international correspondent's bank nature - ownership - management - reputation - supervision and AML & Terrorist Financing controls. Also. document relationship responsibilities.
Financial institutions should have AML/CFT programs that include approved policies - employee screenings & ongoing training and an audit function to test it all.
No.
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.


46. Dematerialization of Securities

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

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48. What is the Wolfsberg group?
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.
An association of global financial institutions that issues guidelines is such areas as correspondent banking - private banking - terrorist financing etc.
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.
A federal regulator in the US - responsible for auditing risk and compliance measuers of federally chartered banks.


49. FATF
The US State Dept issues the report annually.
Report suspicious transactions linked to terrorism.
Financial Action Task Force
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.


50. Variable Annuity
Processes transactions for merchants who accept credit cards.
Court order directing a law enforcement officer to seize and detain a particular person and require them to provide an answer to a compliant or otherqise appear in court.
A Correspondent Banking Client who receives Corresponding Banking services from an institution and itself provides Correspondent Banking services to other financial institutions in the same currency as the account it maintains with the institution.
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.