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A financial institution is conducting an enterprise-wide risk assessment (EWRA) and has identified a high inherent risk of money laundering associated with its private banking division due to the clientele’s high net worth and complex financial structures. However, the institution has implemented robust customer due diligence (CDD) and enhanced due diligence (EDD) procedures, along with sophisticated transaction monitoring systems.

How would these controls impact the assessment of residual risk?

A.

The residual risk would be eliminated entirely because the controls are sufficient to mitigate all potential risks

B.

The residual risk would be significantly reduced due to the effectiveness of the controls in place

C.

The residual risk would remain high due to the inherent nature of the private banking business

D.

The residual risk would be moderately reduced, but further controls may be necessary to achieve an acceptable level

A multinational corporation is considering expanding into a new market with a history of political instability and corruption.

Which strategy would be most effective in mitigating reputational risk from a financial crime perspective associated with such an expansion?

A.

Ensure the jurisdiction risks and other relevant factors have been taken into consideration in the EWRA and the residual risks are within the corporation's risk appetite

B.

Partnering with established local businesses to leverage their knowledge and connections while sharing risks

C.

Ensuring the company has strong ties with local government officials to influence policy and avoid negative scrutiny

D.

Committing to open communication, ethical practices, and community engagement to build trust with stakeholders

E.

Minimizing the company's direct presence in the country to reduce exposure to potential risks

A customer of a financial Institution (Fl) complained that they had received multiple emails appearing to originate from the Fl urging them to click on a link or open a remittance attachment for confirmation. After opening the attachment, the customer later realized that funds had been systematically transferred out of their bank account without their knowledge

Which type of cybercrime is described in this scenario?

A.

Vishing

B.

Pharming

C.

SMSishing

D.

Spear phishing

Which statement regarding data privacy is the most accurate in the context of AML investigations?

A.

Organizations are required to demonstrate that customers have opted into information sharing before submitting suspicious activity reports to relevant financial intelligence units (FIUs)

B.

Any customer that is the subject of a suspicious report filing has the right to request redaction of their personal data

C.

FIUs should document purposes for which personal data included on suspicious activity reports may be shared with other agencies

D.

Data privacy laws prohibit information sharing between financial institutions for the purposes of AML investigations in all jurisdictions

Which strategies are most effective for prioritizing resources within an anti-financial crime (AFC) program using a risk-based approach (RBA)? (Choose two.)

A.

Prioritizing resources towards lower-risk areas to reduce workload

B.

Regularly reassessing risks to adjust resource allocation

C.

Allocating more resources to areas with higher financial crime risk

D.

Providing equal resources to all departments to maintain consistency

E.

Using a fixed resource allocation plan without adjustments

How can public-private partnerships (PPPs) foster collaboration in the fight against financial crime? (Choose two.)

A.

Developing a culture of compliance

B.

Improving governance in the public sector by requesting feedback from financial institutions

C.

Reducing transaction monitoring false positives for all financial institutions

D.

Improving the quality and quantity of data available for analysis by sharing information

Which practices should financial institutions (FIs) adopt for the process of terminating customer relationships? (Choose three.)

A.

Utilizing a flexible communication style that adapts to different customer situations during the termination process

B.

Implementing a standardized procedure for customer termination that includes risk assessments and necessary documentation

C.

Performing a final review of a customer's transaction history and records to address any unresolved issues prior to termination

D.

Keeping records of the termination process, including the justification for the decision and any correspondence with the customer

E.

Notifying the customer of the termination decision only after completing the termination process to prevent possible disputes

Which of the following corporate structures present a higher money laundering risk because of reduced transparency? (Select Three.)

A.

A limited liability company incorporated in a foreign jurisdiction

B.

A private company that has no activity in a tax haven jurisdiction

C.

A company with nominee shareholders and directors in a local jurisdiction

D.

A company with bearer shares incorporated in a tax haven jurisdiction

E.

A private investment company incorporated in a tax haven jurisdiction with strict secrecy laws

Professions such as lawyers, accountants, and trust and company service providers (TCSPs) are sometimes referred to as "gatekeepers" because they:

A.

often do not understand and are not covered by money laundering laws and regulations, unwittingly allowing criminals to enter the legitimate economy.

B.

are an entry point to the financial system and a first line of defense against the infiltration of illicit funds into the legitimate economy.

C.

are required under money laundering laws and regulations in all jurisdictions to stop any criminals from being able to integrate illicit funds into the legitimate economy.

D.

are high-risk actors who can deliberately allow criminals to enter the legitimate economy.

A wealthy individual is using a complex corporate structure to facilitate illegal logging and then illegal mining of the resulting resources from that land.

Which category of predicate crime is taking place?

A.

Trade-based money laundering

B.

Corruption

C.

Illicit resource trade

D.

Environmental crime