Anti-Money Laundering and Compliance Intermediate Quiz

Question 1
Which international body established guidelines for combating money laundering?

(A) United Nations

(B) International Monetary Fund (IMF)

(C) World Bank

(D) Financial Action Task Force (FATF)

Question 2
In a financial institution, what is the primary purpose of Customer Due Diligence (CDD) under AML policies?

(A) To limit the types of accounts customers can open

(B) To collect excessive personal data

(C) To increase transaction fees

(D) To understand the customer’s risk profile and verify their identity

Question 3
Which one of the following transactions is least likely to indicate money laundering activity?

(A) A customer depositing their regular monthly salary

(B) Multiple large, irregular cash deposits

(C) Frequent deposits just under the regulatory reporting threshold

(D) Several transactions involving offshore jurisdictions

Question 4
A bank employee notices a long-time client suddenly starts making frequent, large international wire transfers. What should be their immediate response?

(A) Notify local law enforcement before alerting compliance

(B) Contact the client for a casual explanation

(C) Immediately freeze the client's account

(D) File a Suspicious Activity Report (SAR) to the appropriate compliance department

Question 5
Which regulation primarily governs AML practices in the United States?

(A) Patriot Act

(B) Sarbanes-Oxley Act

(C) Bank Secrecy Act (BSA)

(D) Dodd-Frank Act

Question 6
What is the role of a Money Laundering Reporting Officer in a financial institution?

(A) Focus solely on customer service complaints

(B) Oversee and ensure compliance with AML regulations, including submission of Suspicious Activity Reports

(C) Develop the institution’s marketing strategies

(D) Handle daily transaction processing unrelated to AML

Question 7
Which measure is considered best practice for mitigating money laundering risk in a bank's digital services?

(A) Limit the number of online services available to customers

(B) Disable two-factor authentication for ease of access

(C) Rely solely on customer self-declaration for account opening

(D) Implement robust identity verification and transaction monitoring systems

Question 8
How does enhanced due diligence differ from standard due diligence under AML guidelines?

(A) It includes immediate account termination after one violation

(B) It solely focuses on domestic clients without international ties

(C) It involves a deeper investigation and ongoing monitoring of higher-risk customers

(D) It requires less documentation for small transactions

Question 9
A client uses multiple offshore structures to obscure the origin of funds. What AML risk does this activity represent?

(A) Legitimate tax optimization strategies

(B) A data encryption error in file transfers

(C) Standard investment diversification

(D) Layering of funds, which is a key stage in money laundering

Question 10
Why is inter-agency cooperation critical in preventing money laundering?

(A) It reduces the workload for each individual agency

(B) It allows for sharing of intelligence and leads to more effective identification of suspicious networks

(C) It increases the secrecy of transactions without legal oversight

(D) It solely benefits international banks rather than domestic ones

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