Exam Paper: Anti-Money Laundering

CPA Examinations
Session: Summer 2020
Questions: 50 MCQs
Summer-2020

Student Name:
Registration Number: Professional
Course Code
Exam Center:
S-613

Anti-Money Laundering Measures &

Business Ethics
Online Paper (with Solutions)

NOTES:
Time allowed
• Attempt ALL questions.
1 hour
• All questions carry equal marks

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1 THE PATRIOT ACT DOES NOT REQUIRE WHICH OF THE FOLLOWING AS PART OF AN
APPROPRIATE AML PROGRAM?

A. APPOINTMENT OF COMPLIANCE OFFICER

B. WRITTEN POLICIES AND PROCEDURES
C. INDEPENDENT REVIEW OF THE PROGRAM
D. MANDATORY DRUG SCREENING

2 FAILURE TO REPORT SUSPICIOUS ACTIVITIES CAN RESULT IN PENALTIES OR LEGAL

ACTION AGAINST YOU AND YOUR COMPANY.

A. TRUE
B. FALSE

3 MONEY LAUNDERING IS THE PROCESS BY WHICH THE PROCEEDS OF CRIMINAL ACTIVITY

ARE INTRODUCED INTO LEGITIMATE MAINSTREAM OF FINANCIAL COMMERCE.

A. TRUE
B. FALSE

4. THE PATRIOT ACT STRENGTHENED SEVERAL ANTI-MONEY LAUNDERING LAWS.

A. TRUE
B. FALSE

5. EMPLOYEE TRAINING PROGRAMS SHOULD

A. INCLUDE ALL EXISTING AND NEW EMPLOYEES

B. BE ONGOING AND UPDATED TO INCLUDE NEW CHANGES IN THE LAW AND INDUSTRY
C. BE SPECIFIC TO THE EMPLOYEES DUTIES AND THE SERVICES PROVIDED BT THE MSB
D. BE DOCUMENTED AND CONFIRMED BY APPROPRIATE TESTING
E. ALL OF THE ABOVE

6. WHAT ACT IS AIMED AT THE PROVIDING STRONGER SURVEILLANCE POWERS,

STRENGTHENING CRIMINIAL LAWS AGAINST TERRORISM, AND COMBATING MONEY
LAUNDERING?

A. OFAC
B. BSA
C. IDENTITY THEFT ACT
D. PATRIOT ACT

7. SECTION 352 OF THE PATRIOT ACT REQUIRES ALL MSB'S TO IMPLEMENT ANTI-MONEY
LAUNDERING PROGRAMS THAT INCLUDE

A. WRITTEN POLICIES AND PROCEDURES

B. APPOINTMENT OF A COMPLIANCE OFFICER
C. ONGOING EMPLOYEE TRAINING PROGRAM
D. THE INDEPENDENT REVIEW FUNCTION
E. ALL OF THE ABOVE

8. THE BANK SECRECY ACT REQUIRES FINANCIAL INSTITUTIONS TO

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 A. REPORT SUSPICIOUS ACTIVITIES
B. KEEP RECORDS OF ALL TRANSACTIONS
C. FILE CURRENCY TRANSACTION REPORTS WITH THE IRS
D. A&C
E. NONE OF THE ABOVE

9. AS A MANAGER/OR COMPLIANCE OFFICER, IT IS PART OF YOUR JOB TO

A. MAINTAIN YOUR COMPANYS AML PROGRAM

B. ENSURE THAT PROPPER REPORTS ARE FILED AND RECORDS MAINTAINED
C. ENSURE THAT EMPLOYEES REPORT SUSPICIOUS ACTIVITIES
D. ALL OF THE ABOVE

10. IF A REGULAR CUSTOMER CONDUCTS A CASH TRANSACTION INVOLVING MORE THAN

$10,000, YOUR COMPANY IS NOT REQUIRED TO FILE A CTR

A. TRUE
B. FALSE

11. OFFICE OF FOREIGN ASSESTS CONTROL REGULATIONS APPLY ONLY TO BANKS

A. TRUE
B. FALSE

12. AN EXAMPLE OF SMURFING IS:

A. A BROKER BUYING PESOS WITH U.S. DOLLARS

B. A DRUG DEALER ASKING A STRANGER TO BUY A MONEY ORDER WITH DRUG MONEY
C. WIRING MONEY TO A FOREIGN COUNRTY
D. NONE OF THE ABOVE

13. A CUSTOMER BRINGS IN $12,000 IN CURRENCY AT ONE TIME AND REQUESTS THREE
SEPERATE MONEY ORDERS OF $4,000 EACH. A CTR IS NOT REQUIRED.

A. TRUE
B. FALSE

14. LAUNDERERS MIGHT ATTEMPT A SERIES OF SMALL CURRENCY TRANSACTIONS OVER TIME
BECAUSE

A. A PROVISION OF THE BANK SECRECY ACT REQUIRES THE FILING OF A CTR FOR
TRANSACTIONS EXCEEDING $10,000
B. LARGER AMOUNTS ARE TOO RISKY TO CARRY AROUND
C. THATS HOW LAUNDERERS TAKE IN THE FUNDS
D. NONE OF THE ABOVE

15. IF A CUSTOMER IS RECEIVING A WIRE TRANSFER OF $6,000, THE MSB IS NOT REQUIRED TO
TAKE ID AD RECORD THE CUSTOMERS INFORMATION.

A. TRUE
B. FALSE

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16. YOUR AML PROGRAM SHOULD WARN EMPLOYEES AGAINST DISCLOSING ANY CUSTOMERS
SOCIAL SECURITY NUMBER, DRIVERS LICENSE NUMBER, ADDRESS, OR DATE OF BIRTH DATE
BECAUSE IT COULD BE USED TO HELP IDENTITY THEFT.

A. TRUE
B. FALSE

17. YOUR AML PROGRAM MUST COVER THE BANK SECRECY ACTS REQUIREMENT THAT
FINANCIAL INSTITUTIONS FILE A ________________________ FOR CERTAIN TRANSACTIONS
OVER $10,000

A. CURRENCY TRANSACTION REPORT

B. SUSPICIOUS ACTIVITY REPORT
C. EXCEPTION NOTICE
D. CRIMINAL ACTIVITY REPORT

18. A CUSTOMER BUYS MONEY ORDERS FOR $5,999 CASH ON MONDAY, $9,000 CASH ON
WEDNESDAY, $9,500 CASH ON THURSDAY, AND $8,000 CASH ON FRIDAY. THIS DESERVES MORE
INVESTIGATION AS A POTENTIAL CASE OF STRUCTURING.

A. TRUE
B. FALSE

19. AHMED WANTS TO MAKE A $3,500 WIRE TRANSFER. AS IDENTIFICATION, HE PRESENTS HIS
VISA CREDIT CARD. THIS IS SATISFACTORY IDENTIFICATION.

A. TRUE
B. FALSE

20. A CUSTOMER COMES IN FOUR DAYS IN A ROW, EACH TIME REQUESTING A WIRE TRANSFER
OF $2,900. YOU DO NOT NEED TO REPORT THIS AS A SUSPICIOUS ACTIVITY.

A. TRUE
B. FALSE

21. WHICH OF THE FOLLOWING ARE EXAMPLES OF WILLFUL BLINDNESS?

A. ALLOWING A CUSTOMER TO PURCHASE MONEY ORDERS UNDER DIFFERENT NAMES

B. SELLING MULTIPLE MONEY ORDERS TO A CUSTOMERS AND NOT RECORDING HIS OR
HER ID
C. COMPLETING A TRANSACTION FOR A LESS, NON-REPORTABLE AMOUNT AFTER A
CUSTOMER HAS REFUSED TO PRODUCED ID FOR A LARGER TRANSACTION
D. CASHING A CHECK FOR SOMEONE WHO IS NOT THE PAYEE OF THE CHECK
E. ALL OF THE ABOVE

22. FOR THE MONEY LAUNDERING PROCESS TO BE A SUCCESS, TRANSACTIONS SUCH AS

CURRENCY EXCHANGE, WIRE TRANSFERS, AND MONEY ORDERS NEED TO BE COMPLIMENTED
WITHOUT ANY PAPER TRAIL.

A. TRUE
B. FALSE

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23. WHICH OF THE FOLLOWING TRANSACTIONS REQUIRE A RECORD TO BE MADE?

EXCHANGING $2,000 IN TWENTY DOLLAR BILLS TO $2,000 IN ONE HUNDRED DOLLAR BILLS
A. EXCHANGING $1,500 IN DOLLAR TO MEXICAN PESOS
B. EXCHANGING $500 IN PESOS AND $900 IN TWENTY DOLLAR BILLS TO $1,400 IN HUNDRED
DOLLAR BILLS
C. A & C
D. ALL OF THE ABOVE

24. YOUR MSB AND ANY OF ITS EMPLOYEES ARE LIABLE FOR _________ PENALTIES RANGING
FROM FINES OF $250,000 AND IMPRISONMENT OF FIVE YEARS, UP TO FINES OF $5,000,000 AND
IMPRISONMENT OF 10 YEARS.

A. CIVIL
B. FINANCIAL
C. LOCAL
D. CRIMINAL

25. YOU AND YOUR MSB CAN RECEIVE CIVIL AND MONETARY PENALTIES IF YOU
UNKNOWINGLY ASSIST MONEY LAUNDERERS.

A. TRUE
B. FALSE

26. WHICH OF THESE ACTIVITIES MIGHT REQUIRE A SUSPICIOUS ACTIVITY REPORT?

A. A CUSTOMER CANCELS A TRANSACTION AND REQUESTS TO DO A SECOND

TRANSACTION FOR LESS AMOUNT IN ORDER TO AVOID PROVIDING ID.
B. A CUSTOMER REQUESTS AN UNUSUALLY HIGH DOLLAR TRANSACTION AND CANNOT
EXPLAIN THE REASON FOR THE TRANSACTION OR THE SOURCE OF THE CASH
C. A CUSTOMER APPEARS NERVOUS AND ASKS UNUSUAL QUESTIONS ABOUT YOUR
RECORD KEEPING
D. A CUSTOMER TRIES TO BRIBE A TELLER
E. ALL OF THE ABOVE

27. What are the basic requirements of Know Your Customer (KYC) and basic Customer Due
Diligence (CDD)?

A. To identify, verify and assess.

B. To identify, have lunch with and take their money.
C. To identify, verify and record.
D. To run World Check and Google checks.

28. Copies of Currency Transaction Reports ("CTR") must be maintained for a period of:

A. 3 years
B. 5 years
C. 10 years
D. 12 years

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29. The CTR must be complete and accurate. All required consumer information should be obtained
from the consumer before you complete the transaction. If the consumer cannot or will not provide
responsive and complete information, the transaction should:

A. Completed with a note to get the information later

B. Not be completed
C. Change the amount to bypass the report
D. None of the above

30. Detailed identification and a log/file are required for all monetary instrument sales over:

A. $ 1,000 or more
B. $ 2,500 or more
C. $ 3,000 or more
D. $ 4,000 or more

31. While opening an account of a Public Limited company, which of the following is a must?

A. Introduction by a customer known to the banker

B. Certificate of incorporation/Certificate of commencement of business
C. Introduction by ROC
D. None of the above

32. Which Clubs are subject to the AML/CTF Act?

A. clubs which provide electronic gaming and wagering facilities

B. all Clubs
C. clubs which provide bingo but not electronic gaming and wagering facilities
D. None of the above

33. A money launder may offer a winning customer more money than a winning ticket is worth
because:

A. launders are generous

B. launders want a chance to talk to the cashier
C. once they cash the ticket launders have a legitimate source for the cash
D. None of the above

34. If you fail to implement the club's AML/CTF program:

A. you may be charged under the AML/CTF Act and the club may be entitled to terminate your
employment
B. you will have your pay docked
C. the club is required to report the matter to AUSTRAC
D. All of the above

35. A Commercial check is a check made payable to a company. All reporting laws will not apply to
commercial check cashing transactions, like any other natural check

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 A. True
B. False

36. _____________ are engaged in selling goods and providing services, with large volume of
business and often engaged in cash dealings

Hawala Systems
Offshore banking
Front Companies
Shell Companies

37. Cash deposited in bank account in different cities on the same day could be a case of
_________?

A. Drug trafficking
B. Alternative banking
C. Smurfing
D. Trade based laundering

38. What is the single key requirement of Anti-Money Laundering Act?

A. Sharing information with government agencies

B. Identification and verification of customer’s identity
C. To manage relationships with reporting activities
D. None of the above

39. Mr. Waqar transferred money from panama to more than 100 bank accounts in 68 banks in nine
countries in Europe, always in amount under $10,000, which level in process of money laundering
is it?

A. Layering
B. Integration
C. Placement
D. None of the above

40. Dormant/in-operative account means;

A. It is a fixed asset account

B. No debit/credit by customer in account for certain period (generally 2 years)
C. Dead account not operated over 12 years
D. No debit entries, but certain credit entries for certain period

41. ________ refers to the separation of illicit proceeds from their source br creating complex layers
of financial transactions.

A. Integration

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 B. Layering
C. Placement
D. Smurfing

42. Which of the following acts does not constitute a money laundering offence?

A. Dealing with any property, not knowing the property is proceeds of crime
B. Dealing with any property, suspecting the property is proceeds of crime
C. Dealing with any property believing the property is proceeds of crime
D. None of the Above

43. Money laundering measures were originally introducing by:

A. Export-Import Bank of India (EXIM Bank)

B. Deposit Insurance and Credit Guarantee Corporation (DICGC)
C. Security and Exchange Board of India (SEBI)
D. Federal Deposit Insurance Corporation (FDIC)

44. Maximum punishment by the way of imprisonment for the offence commited under the money
laundering act is _______?

A. 12 Years
B. 10 Years
C. 05 Years
D. 07 Years

45. The Three stages of Money Laundering are ______

A. Placement, Layering, Integration

B. Refining, Integration, Layering
C. Placement, Refining, Integration
D. Layering, Placement, Refining

46. Which among the following is the most common/ easiest method used by criminals for money
laundering

A. Collection account
B. Gold and diamond markets
C. Bank to bank loans
D. None of the above

47. What should you consider when managing AML/CTF in your business?

A. Destinations of funds
B. Methods of delivery such as cash, telephone and internet banking
C. Knowing your customers

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 D. All of the above

48. In ______________, Immigrants pay a lot of small amount into single account and accumulated
funds are sent abroad in single transaction

A. Connected account
B. Collection account
C. Payable through account
D. None of the above

49. Money laundering involves three independent steps that often occurs simultaneously. Which of
the following best explains the process of money laundering?

A. Providing a legitimate explanation for the illicit proceeds

B. Separating the proceeds of criminal activity from their origin, through complex level of
financial transactions
C. Physically placing bulk cash proceeds
D. None of the above

50. Which of the following are the consequences of money laundering?

I. Can cause predictable changes in money demand

II. Can pose risk to soundness of financial institutions and financial systems
III. Contaminates the legal financial transactions.
IV. Increases the volatility of international capital flows and exchange rates due to unanticipated cross-
border transfers.

A. I and II
B. I, II, III, IV
C. II, III, IV
D. II and IV

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