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Quizzes > Quizzes for Business > Finance

Test the AML/CFT Compliance Quiz Today

Sharpen anti-money laundering and CFT compliance skills

Difficulty: Moderate
Questions: 20
Learning OutcomesStudy Material
Colorful paper art depicting a quiz about AMLCFT Compliance

Ready to sharpen your AML/CFT quiz skills? This interactive AML/CTF Compliance Quiz covers anti-money laundering fundamentals and CFT compliance scenarios that are essential for compliance officers and financial professionals. You'll gain confidence in risk-based due diligence and reporting obligations, and you can effortlessly customize questions in our editor. For more practice, explore the intermediate AML Compliance Knowledge Quiz or check out other quizzes available on the platform.

Which US law requires financial institutions to establish anti-money laundering programs including customer identification and reporting?
Securities Act of 1933
USA PATRIOT Act
Bank Secrecy Act
Dodd-Frank Act
The Bank Secrecy Act mandates that financial institutions implement AML programs with customer identification and reporting requirements. While the USA PATRIOT Act expanded AML provisions, the core AML program requirement is established by the BSA.
What does CFT stand for in AML/CFT compliance?
Corporate Financial Transparency
Centralized Funds Transfer
Combating Fraud Techniques
Countering the Financing of Terrorism
CFT stands for Countering the Financing of Terrorism and focuses on preventing and detecting funds used for terrorist activities. Other options do not accurately reflect the CFT objective.
Which of the following is a core component of Know Your Customer (KYC) procedures?
Verifying customer identity
Investing customer funds
Reporting internal profits
Conducting market analysis
Verifying customer identity is fundamental to KYC, ensuring institutions know who their clients are. The other options are unrelated to customer identification and due diligence.
The primary objective of AML/CFT regulations is to:
Increase bank profits
Prevent and detect money laundering and terrorist financing
Simplify tax reporting
Promote global trade
AML/CFT regulations aim to prevent and detect money laundering and terrorist financing activities within financial systems. Other options do not align with the regulatory intent.
Which of the following is NOT typically included in an AML program?
Training programs
Transaction monitoring
Customer risk assessment
Loan syndication approvals
Loan syndication approvals are part of credit operations rather than AML program components. AML programs typically include customer risk assessments, training, and transaction monitoring.
Which of the following is a common red flag for suspicious activity?
Structuring transactions just below reporting thresholds
Having an account balance within expected range
Using online banking for routine payments
Making a single large deposit in one transaction
Structuring transactions just below reporting thresholds is a known technique to avoid automated reporting, making it a classic red flag. The other behaviors are typical and do not necessarily indicate suspicious activity.
When applying a risk-based due diligence approach, financial institutions should:
Allocate more resources to higher-risk customers
Eliminate customer risk assessments
Focus only on low-value transactions
Treat all customers identically
A risk-based approach entails allocating more resources and scrutiny to higher-risk customers to manage AML/CFT risks effectively. Treating all customers the same would ignore differing risk profiles.
Enhanced due diligence (EDD) for a politically exposed person (PEP) typically includes:
Senior management approval and source of wealth verification
Only verifying address
Reducing monitoring frequency
Automating all decisions without review
EDD for PEPs requires senior management approval and detailed source-of-wealth verification due to their higher risk. Simply verifying an address or reducing monitoring would be insufficient for high-risk clients.
Which report is filed for cash transactions exceeding $10,000 under US regulations?
Suspicious Activity Report (SAR)
Currency Transaction Report (CTR)
Quarterly Transaction Statement
Large Value Fund Report
Financial institutions must file a Currency Transaction Report for any cash transaction exceeding $10,000. SARs are for suspicious activity, not merely large cash transactions.
Under the EU's AML directives, client due diligence records must generally be kept for at least:
Permanently
Three years
Five years
Ten years
The EU AML Directives require keeping due diligence records for at least five years after the end of a business relationship. This retention ensures traceability and compliance audits.
Which of the following best defines transaction monitoring?
One-time customer onboarding check
Continuous review of customer transactions to identify suspicious patterns
Annual financial statement audit
Market trend analysis
Transaction monitoring involves the ongoing review of customer transactions to detect unusual or suspicious activity. One-time checks or unrelated analyses do not constitute monitoring.
A Suspicious Activity Report (SAR) must be filed when:
Any deposit exceeds $1,000
A financial institution detects known or suspected money laundering
A customer requests their account balance
A customer changes their address
A SAR is required when there is detection of known or suspected money laundering or terrorist financing. Routine transactions or administrative changes do not trigger SAR filings.
What is the risk classification for a customer from a high-risk jurisdiction with complex ownership structures?
Low risk
High risk
Minimal risk
Unknown risk
Customers from high-risk jurisdictions with complex ownership structures are classified as high risk due to increased money laundering vulnerabilities. Low or minimal risk classifications would underestimate the danger.
Which factor does NOT typically increase a client's risk rating?
Complex corporate structure
Customer is a politically exposed person
Customer resides in a high-risk jurisdiction
Using a local non - politically exposed subsidiary
A local non - politically exposed subsidiary usually poses standard risk and does not inherently increase risk rating. PEP status, complex structures, and high-risk jurisdictions elevate risk.
For ongoing monitoring, financial institutions should review high-risk accounts at least:
Every five years
Quarterly
Annually
Only at onboarding
High-risk accounts require at least an annual review to ensure that risk profiles remain accurate and controls are effective. More infrequent reviews would not suffice for elevated-risk clients.
Under FATF recommendations, which scenario requires enhanced due diligence (EDD)?
Customer with indirect ownership through multiple shell companies
Retail customer with a single local address
Routine mortgage repayment
Employee payroll transfers
Indirect ownership via multiple shell companies obscures beneficial owners, triggering EDD under FATF. Routine retail or payroll transactions do not require EDD.
In designing an AML compliance audit, which key risk area should auditors focus on?
Facility maintenance schedules
High-risk customer file reviews
Marketing campaign performance
Only documenting internal profits
Auditors should focus on high-risk customer files to assess the adequacy of due diligence and monitoring controls. Profit documentation and facility schedules are not central to AML risks.
What is a primary challenge in monitoring correspondent banking relationships?
Excessive transaction volume in the home country
Limited visibility into respondent bank's customer transactions
Branch network expansion
Currency exchange rate fluctuations
Correspondent banks often lack detailed data on the respondent bank's customers, limiting monitoring capabilities. Other issues are operational but not the primary AML challenge.
Regarding recordkeeping, which best practice ensures compliance?
Allowing manual edits without tracking
Deleting outdated files annually
Retaining only paper records
Implementing immutable audit trails with timestamped logs
Immutable audit trails with timestamped logs provide reliable, tamper-evident records essential for compliance audits. Manual edits without tracking or deleting files undermine record integrity.
How should a financial institution calibrate its automated monitoring thresholds?
Using a single universal threshold for all customers
Ignoring customer risk levels
Based on customer segment transaction profiles and risk scores
Adjusting only after regulatory fines
Thresholds should be tailored to customer transaction patterns and risk levels to detect anomalies effectively. Universal thresholds or ignoring risks reduce monitoring accuracy.
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Learning Outcomes

  1. Identify key AML/CFT regulations and requirements
  2. Analyse suspicious activity indicators accurately
  3. Apply risk-based due diligence procedures
  4. Evaluate enhanced due diligence for high-risk clients
  5. Demonstrate reporting obligations and recordkeeping practices
  6. Master ongoing monitoring and compliance audit techniques

Cheat Sheet

  1. Understand Key AML/CFT Regulations - Grab your detective magnifying glass and explore the Financial Action Task Force (FATF) Recommendations, the global rulebook for spotting and stopping money laundering and terrorist financing. Familiarize yourself with its key standards so you can speak the language of regulators and compliance professionals alike. FATF AML/CFT summary
    2. bis.org
  2. Recognize Suspicious Activity Indicators - Hone your intuition by learning the red flags of sketchy transactions - think odd withdrawals, weird wire patterns, or deals diving under reporting thresholds. The more patterns you know, the sharper your financial crime radar becomes. Suspicious activity indicators
    3. bis.org
  3. Apply Risk-Based Due Diligence - Not all clients pose the same level of risk, so tailor your due diligence efforts like a pro chef seasoning a dish - focus more on spicy, high-risk cases. By mapping and measuring risk, you'll deploy your resources where they matter most and ace your compliance goals. SEC Pakistan risk-based approach
    4. secp.gov.pk
  4. Conduct Enhanced Due Diligence for High-Risk Clients - When you spot politically exposed persons (PEPs) or other high-risk customers, it's time to kick your diligence into overdrive. Gather extra intel, schedule more frequent check-ins, and keep your eyes peeled for any sneaky moves. Financial Crime Academy compliance tips
    5. financialcrimeacademy.org
  5. Understand Reporting Obligations - Know the drill: if you uncover suspicious behavior, you must file a Suspicious Activity Report (SAR) with the right authorities. Staying on top of reporting rules keeps you out of hot water and makes you a compliance champion. ComplyAdvantage AML essentials
    6. complyadvantage.com
  6. Maintain Accurate Recordkeeping - Good recordkeeping is like keeping a trusty diary of every compliance move you make. Detailed logs, policy updates, and audit trails help you breeze through regulatory reviews and impress any auditor. ComplyAdvantage recordkeeping tips
    7. complyadvantage.com
  7. Implement Ongoing Monitoring - Don't set and forget - your monitoring tools should run 24/7, scanning transactions and profiles like night-vision goggles for unusual activity. Continuous vigilance ensures no suspicious behavior slips through the cracks. ComplyAdvantage ongoing monitoring
    8. complyadvantage.com
  8. Establish a Strong Compliance Framework - Build your foundation with clear policies, robust procedures, and regular risk assessments - think of it as constructing a fortress against financial crime. A solid framework ensures every team member knows their role in keeping the bad actors at bay. Remitso 5 pillars guide
    9. compliance.remitso.com
  9. Understand the Three Lines of Defense - Meet your compliance dream team: frontline staff spot issues first, the compliance team builds the game plan, and internal audit double-checks everything for extra assurance. Each line plays a unique role in keeping your organization safe. Sanctions.io three lines explained
    10. sanctions.io
  10. Stay Informed on AML/CFT Best Practices - Financial crime tactics evolve faster than technology, so keep your knowledge fresh with the latest trends, tools, and tactics. Being in-the-know gives you the upper hand in defending your organization. ComplyAdvantage AML best practices
    11. complyadvantage.com
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