The compliance officer for a bank is reviewing on-boarding documents for a new business account for a domestic corporation. The officer is unable to verify the identity of the beneficial owners of the company. Only information on the nominee owners was provided, and none of the listed addresses are local. The purpose of the business and future expected activity were disclosed to include cash letters, money orders and international remittance transfers.
Which red flag identifies a heightened money laundering risk?
A. Expected activity was advised to include cash letter and money orders
B. The nature and purpose of the business include international remittance transfers
C. The names provided at account opening are identified as the corporation's representative nominees
D. Account signer's government issued identification lists addresses outside of where the branch account was opened
A foreign politically exposed person (PEP) requests to add a beneficiary to a file insurance policy. How should the request be processed to mitigate risk?
A. Perform due diligence on the beneficiary
B. Determine the source of wealth and source of funds
C. Decline the request if the beneficiary is a foreign PEP
D. Decline the request to add a beneficiary due to increased risk
Which requirement is included in the Fourth European Union Directive on money laundering?
A. It requires obliged entities to consider politically exposed persons as high risk for life
B. It requires obliged entities to conduct enhanced due diligence on all prepaid card holders
C. It requires member countries to maintain registries of the beneficial owners of legal entities
D. It requires member states to enact economic sanctions against countries that do not cooperate with Financial Action Task Force recommendations
A bank maintains a relationship with a customer who owns a small bakery business. Which customer action indicates potential money laundering?
A. The customer continually makes regular cash deposits
B. The customer has multiple bank accounts at several locations
C. The customer purchased property insurance that is twice the value of the business
D. The customer recently wired a large amount to a foreign jurisdiction where family is located
A U.K. real estate agent has three foreign clients interested in purchasing an apartment building, valued at ?0 million, in the outskirts of London as an investment property. The clients are not willing to have their names provided to the bank. The clients want to purchase to be made in the names of three private companies for privacy reasons. The plan is to wire the funds into an account held in the name of another private company at a bank in London.
Which red flag should stop the agent from discussing this potential purchase further?
A. The clients are foreign
B. The clients have the funds necessary to fund a ?0 million purchase
C. The clients are not willing to have their names provided to the bank
D. The clients want to purchase to be made in the names of the private companies
What is true regarding disclosure to a law enforcement agency by a financial institution of the supporting documentation for a suspicious transaction report?
A. Documentation must be provided as quickly as possible using email
B. The financial institution may notify the account holder of the request
C. Confirm that the request originated from a representative of the law enforcement agency
D. A copy of all the documentation released must also be provided to the account holder's attorney
As a result of an audit, a policy exception was identified that had been approved by the compliance officer. The auditor determined that the policy exception is a violation of a regulatory requirement. What should the auditor do?
A. Advise the compliance officer on how to appropriately respond to policy exceptions.
B. Include the regulatory violation in the audit report and report it to the board of directors.
C. Consult with legal counsel to determine if the approval of the policy exception was acceptable.
D. Include the regulatory violation in the audit report and recommend the compliance officer be subject to disciplinary action by the board of directors.
The branch manager calls the compliance officer and informs her that a law enforcement officer has just left the branch and was asking a lot of questions and left a business card. What should the compliance officer do?
A. File a suspicious transaction report
B. Follow up to verify that the officer received all necessary information
C. Verify that the reported officer was an actual authorized representative
D. Require the branch manager to write a detailed memo about the request
What is a major economic consequence of money laundering through the use of front companies?
A. Placing more emphasis on manufacturing
B. Weakening of the legitimate private sector
C. Creating a more competitive pricing environment
D. Aligning management principles between criminal enterprises and legitimate businesses
An institution is about to release a new peer to peer (P2P) funds transfer product to provide much needed remittance services to an under-banked population segment in the country.
The servicals worldwide entering only a name and mobile number. The new service charges less than comparable market solutions and offers real time transfer of funds. The customer onboarding process is conducted at branch locations
with identity verification.
Which three present the highest anti-money laundering or sanctions risk and will require controls prior to launch? (Choose three.)
A. Customer onboarding
B. Cross-border functionality
C. Real time transfer of funds
D. Servicing the under-banked population
E. Limited access to counterparty information
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