EMT Practice Test

1. Question Content...

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Question1: Bank A is located in Country A.
A wire transfer from Bank B located in Country B is processes by Bank A,where the funds are being moved to a customer at Bank C located in Country C.
The wire transfer isdeemed suspicious by Bank A.

Question2: What is a key risk associated with Correspondent Accounts according to the Basel Customer Due Diligence paper?

Question3: A Money Laundering Reporting Officer's (MLRO) lack of action led to deficiencies in the bank's AML program and a civil monetary penalty being levied against the MLRO. Why was this direct action taken against the MLRO?

Question4: Why do organized crime groups often use front companies? (Choose two).

Question5: The line of business is responsible for creating, implementing and maintaining policies and procedures, as well as communicating these to all personnel. It must also establish processes for screening employees to ensure high ethical and professional standards and deliver appropriate training on AML policies and procedures based on roles and functions performed so employees aware of their responsibilities. To facilitate this, employees should be trained as soon as possible after being hired, with refresher training as appropriate.
To guard against acquisition or control of a financial institution by money launderers or their associates, what should supervisory agencies require?

Question6: What does designing a country as being of "prime money laundering concern" allow the U.S. government to do?

Question7: A client is a wholesale auto business that operates as a used car lot. The client regularly ships vehicles internationally. In a four-month period, the client received wires totaling $ 1,250,000 from a dealer in Benin in West AfricA. All wires originated from Benin and were in increments of $50,000.
Account debits made to the account were payable to various transport companies. All incoming checks reference various vehicles purchased. Dock shipping receipts produced by the client to support account activity identify the vehicles but cannot easily be tied to the wires receives.
What is the suspicious behavior?

Question8: What is a tool governments and multi-national bodies can use to prevent the proliferation of weapons of mass destruction?

Question9: How can violations of anti-money laundering laws be a risk to individuals?

Question10: What is an aspect of the USA PATRIOT Act that has extraterritorial reach?

Question11: Financial Intelligence Units (FIUs) are responsible for:

Question12: A potential client calls a broker-dealer wishing to purchase securities. The client does not appear to be concerned with any fees associated with the account or price of the securities. Further information provided by the potential client indicates the individual may have relatives working for a company in which the potential client wants to invest. Which type of activity is the potential client attempting to commit?

Question13: Which should authorities do to safeguard AML information exchanged with other countries?

Question14: Which method to finance terrorism involves falsifying transaction-related documents?

Question15: What poses the greatest money laundering risk for a financial institution offering on-line services to customers?

Question16: A bank customer operates a fuel station as a sole proprietorship. The customer places deposits and other credits in a business account. The customer routinely transfers money from the business account to a brokerage account where he invests in money market securities. The customer also routinely makes monthly transfers to a credit card and line of credit to pay off balances. The volume of activity flowing through the business account has doubled in the past 3 months. An internal investigator reviews business account statements and credit card activity for the past 3 months, scans media articles about the customer, and interviews the account officer about the customer and account activity. This internal investigation did not provide an explanation for the increased activity1. Which of the following should the anti-money laundering specialist recommend to the internal investigator?

Question17: A financial institution (FI) has decided to revamp its compliance program to be more risk-based. Which option should the FI use as part of the new risk-based compliance program?

Question18: Which measure to mitigate risk does the Basel Committee's Customer Due Diligence Principles suggest banks apply when accepting business from non-face-to-face customers?

Question19: What are three factors a financial institution should examine with regard to a new customer who is opening up a new account? Choose 3 answers

Question20: An anti-money laundering specialist is concerned that several suspicious transaction reports will discuss potential illegal activity of bank employees. In this situation, which of the following is the immediate concern for the institution?

Question21: Which assessments are involved in the processes of mutual evaluation and follow-up by the FATF?

Question22: 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?

Question23: At a small community bank, the compliance officer identifies unusual activity on a customer, who with his personal and company accounts, is the bank's largest depositor. The customer's companies have significant balances on their outstanding loans. The compliance officer notices that there is a lot of unusual movements of money between the customer's individual and business accounts. After filing a suspicious transaction report (STR), the compliance officer gets a call from law enforcement indicating that they want the bank to keep the account open while they conduct an investigation into the customer.
How should the compliance officer escalate this information to the board of directors?

Question24: Which is a key role of FATF-Style Regional Bodies (FSRBs)?

Question25: When an institution files an STR with regard to a particular account, what steps should the institution take visa account?

Question26: Since its last regulatory examination, a financial institution has aggressively grown by adding profitable new products and services. The institution has not historically received regulatory criticism regarding its anti-money laundering compliance program. However, a recent regulatory examination cited significant deficiencies in the anti-money laundering program that were attributed primarily to the lack of oversight by the institution's leadership in implementing adequate controls over the new products and services.
Which area of international control should leadership first address to correct the weaknesses in the program?

Question27: Which is a key goal of EU Directives on money laundering?

Question28: Which response represents a high-level principle for FATF-Style Regional Bodies (FSRB)?

Question29: What is an essential element of Know Your Customer (KYC) standards according to the Basel Committee's Customer Due Diligence for Banks paper?

Question30: Upon a routine account review a money laundering investigator identified a number of large round dollar wire transfer deposits into a business account owned by a local auto repair shop. The wire transfers all originated from a country that is a known financial secrecy haven with poor anti-money laundering controls. The investigator concludes there appears to be no legitimate business purpose for the wire transfers and files a suspicious transaction report. The owner of the auto repair shop is popular in the community and is a well-known philanthropist.
To whom should the investigator escalate these concerns?

Question31: The findings of an internal audit discover that a large group of employees do not know how to handle Politically Exposed Persons (PEPs). Which is the next course of action that should be taken?

Question32: In many jurisdictions, financial institutions are prohibited from hiring a person who has been convicted of what type of offense?

Question33: According to experts, what is the most effective way to prevent money laundering through financial institutions?

Question34: Which three conduits for moving terrorist-related funds do terrorist financing generally favor? Choose 3 answers

Question35: In which two ways does a government Financial Intelligence Unit interact with public and private sectors?
(Choose two.)

Question36: Which trading pattern may be indicative of money laundering in capital markets?

Question37: What national agency is responsible for analyzing and assessing the information it receives to substantiate possible existence of money laundering or terrorist financing activities?

Question38: In which two ways do Financial Action Task Force-style regional bodies influence anti-money laundering and terrorist financing standards within their respective regions? (Choose two.)

Question39: The Wolfsberg Anti-Money Laundering Principles for Private Banking require new clients to be approved by whom?

Question40: A financial institution receives a regulatory enforcement action because of deficiencies in its anti-money laundering program.
Which action should the board of directors take?

Question41: A commission rogatory would be used in which gateway to obtain information from another country?

Question42: Which three elements should be considered in an institution's enhanced due diligence process to assure itself that it has secured sufficient understanding of its higher risk respondent bank customers according to the Wolfsberg Principles on Correspondent Banking?

Question43: Transfers of money over the last 6 months to a corporation in a jurisdiction with strict secrecy laws triggered an alert. Which of the following should cause the most suspicion of money laundering?

Question44: What are two requirements with respect to supporting documentation that is used to identify potentially suspicious activity, according to Financial Action Task Force? (Choose two.)

Question45: A junior account manager within an international private bank in Country A was asked by one of his valued customers, who has held an account for several years in the institution, about depositing a large sum of cash into her account. The junior account manager informed his customer that his bank does not accept cash. The junior account manager later reviewed a customer activity report and noticed a number of smaller dollar wires from banks in neighboring Country B, which has lax currency controls, that totaled about as much as the customer intended to deposit.
What should the junior account manager do?

Question46: With which person(s) should an anti-money laundering officer coordinate when implementing a new hire screening program?

Question47: Which three methods are commonly used by an accountant to launder money? (Choose three.)

Question48: What are the European Union Directives on Money Laundering?

Question49: What is a method of placement that can be used by a money launderer in a deposit taking institution?

Question50: In May 2002, the Wolfsberg Principles on Private Banking were revised and included a section that prohibits the use of internal non-client accounts in a manner that would prevent officials from appropriate monitoring movements of funds or keep clients from being linked to the movement of funds on their behalf.
What is another name for these internal, non-client accounts?

Question51: Following a recent exercise which explained how a correspondent banking operation could be used by money launderers, an anti-money laundering specialist decided to re-write the due diligence procedures for entering into agreements with foreign financial institutions. Which of the following information should be included to establish a rigorous "Know Your Respondent" procedure?
1.Respondent's management, nature of license, and major business activity.
2. Computer equipment and software capability.
3. The quality of supervision in the home country.
4. Respondent's location, in particular the existence of a real physical presence.

Question52: A SAR/STR should be filed when the accountable institution identifies that:

Question53: An automotive parts company in South America sends multiple $500,000 wire transfers per week to ABC Holdings Ltd. in Asia referencing payment for silk flower shipments. Research reveals Sunrise Holdings, Ltd is registered in the British Virgin Islands with no available ownership information.
What are two red flags that indicate how trade-based money laundering could be occurring in this instance?
(Choose two.)

Question54: A bank is preparing for its anti-money laundering independent review, which is performed every two years under the direction of the compliance officer. The bank's corporate audit department will conduct the review.
The compliance officer will review the final report before it is released to the Board of Directors.
What is the issue with this situation?

Question55: Which of the following reflect money laundering risk indicators in relation to a securities account?
1. A high level of activity in that securities account immediately followed by a high volume of securities transactions.
2. Frequent wire transfers into an account immediately followed by debit card transactions.
3. Frequent wire transfers into an account immediately followed by checks (cheques) or other payment instruments drawn on the account.

Question56: Which scenario should be escalated as potentially suspicious activity?

Question57: Which of the following customer transactions with a securities dealer would indicate the highest suspicion of money laundering?

Question58: Which are the two most common controls a financial institution (FI) uses to identify suspicious money-laundering activity? (Choose two.)

Question59: A foreign bank operating under an offshore license wants to open a correspondent account with a United States (U.S.) bank. The foreign bank plans to provide payable through account services to some of its customers.
What must the foreign bank provide to the U.S. bank under the USA PATRIOT Act?

Question60: A precious metals dealer opens a new account with a bank. Which requires a referral to AML Investigations for further review?

Question61: What is the currency threshold under the European Union Fourth Anti-Money Laundering Directive?

Question62: Which two factors should increase the risk of a correspondent bank customer and require additional due diligence according to the Wolfsberg Anti-Money Laundering Principles for Correspondent Banking? (Choose two.)

Question63: An organization's automated surveillance system identifies large fluctuations in customer activity. As a result of an audit, the compliance officer is informed that the system is not generating alerts when activity is consistently abnormal over a long period of time. Currently the organization is evaluating new alert scenarios in an attempt to address this problem.
Which type of scenario is helpful in mitigating this weakness?

Question64: What reputational risk consequence could a financial entity face for violating AML laws?

Question65: Which insurance product is particularly vulnerable to money laundering?

Question66: In the FATF 40 recommendations, the focus of AML efforts has been expanded beyond Financial Institutions.
Which three businesses and/or professions are covered? Choose 3 answers

Question67: A bank compliance officer has implemented enhanced monitoring rules that have identified some unusual activity that may be indicative of human trafficking.
Which red flag should prompt additional transactional review?

Question68: How can a 'free-look provision' as part of a life insurance policy help criminals to launder money?

Question69: The USA PATRIOT Act requires United States (U.S.) financial institutions to collect certain information from non-U.S. banks that hold a correspondent account.
Which two pieces of information must a non-U.S. bank provide to its U.S. correspondent to enable them to comply with this requirement? (Choose two.)

Question70: Bank A is a non-United States (U.S.) bank that has $5 million in a correspondent account at a bank in New York City. The Worldwide Terrorist Syndicate (WTS) has $1 million in its account at a non-US branch of Bank A.
The U.S. government has initiated forfeiture action against the WTS.
Which potential action can the U.S. take under the USA PATRIOT ACT pursuant to the issuance seizure warrant?

Question71: When providing reporting of STRs to the board, which of the following should be provided?

Question72: Which of the following competent authorities should directly receive suspicious or unusual transaction reports?

Question73: After review of the financial institution's enterprise-wide anti-money laundering risk assessment, the new compliance officer identifies several deficiencies that need attention.
Which deficiency could lead to the highest potential for unmitigated risk?

Question74: A bank provides trade financing for a company whose primary export is steel.
Which action by the company indicates possible money laundering?

Question75: Which method is used to launder money via wire remittances sent through a bureau de change or money services business?

Question76: What is the appropriate compliance control for identifying politically exposed persons (PEPs) according to the Basel Committee's paper on Customer Due Diligence for Banks?

Question77: Which methods are typically used to launder money using insurance companies? (Choose two.)

Question78: What are two aspects of the Wolfsberg Anti-Money Laundering (AML) Principles for Correspondent Banking? (Choose two.)

Question79: The Board of Directors for a small private bank has asked the management to no longer apply the identity requirements for high net worth individuals to protect their privacy. Which of the following Financial Action Task =once 40 Recommendations should cause an anti-money laundering specialist the most concern?

Question80: In reviewing recent activity, a compliance officer for a money transmitter that several customers are each remitting the same amount of money but much more frequently.
How should the institution respond?

Question81: A bank sells reloadable open-loop prepaid cards to both customers and non-customers.
What is a red flag associated with these cards that may indicate money laundering?

Question82: What are two risks to institutions for violating anti-money laundering laws as demonstrated by the 2012 HSBC settlement with United States authorities? (Choose two.)

Question83: According to the European Union Money Laundering Directives, "knowledge, intent or purpose"' required as an element for money laundering may be inferred from

Question84: During a law enforcement investigative interview regarding potential money laundering, the suspect starts making assertions and statements that the investigator believes are false.
How should the investigator respond?

Question85: To ensure compliance with economic sanctions established by governmental authorities in the jurisdictions where it operates, a financial institution requires that all new and existing customers be screened at onboarding and quarterly thereafter.
Is this step sufficient to ensure compliance?

Question86: What should an effective anti-money laundering training program include?

Question87: A customer opens a corporate account with a broker-dealer on behalf of several beneficial owners, with a stated long-term investment goal. The customer deposits $25.5 million into the account and three days later transfers $5 million to an overseas bank. Shortly thereafter, the customer begins making numerous purchases of pesos. The compliance officer receives a query regarding the movement of funds. Within a month of account opening, the customer depletes the account.
Which two red flags should prompt the firm's compliance officer to take action? (Choose two.)

Question88: The bank's Compliance Officer is tasked with designing standards based on Basel's KYC principles. Which essential elements should be included in the program? (Choose two.)

Question89: The main purpose of the US Treasury Department for OFAC's extraterritorial reach is to:

Question90: Which requirement is included in the Fourth European Union Directive on money laundering?

Question91: Which safeguard is in place for Financial Intelligence Units (FIUs) to share information securely according to Egmont?

Question92: Which red flag indicates high potential for money laundering in a real estate purchase?

Question93: What was the topic the Wolfsberg Group's first guidance addressed?

Question94: Which scenario is closest to the definition of money laundering the United Nations Convention against Transnational Organized Crime and Other Protocols provided?

Question95: A new accounts representative recently opened an account for individual whose stated employment is tutoring students.
Which customer action indicates possible money laundering?

Question96: The local manager of a remote mortgage origination department of a financial institution has just discovered that sanctions screening of new customers is not being performed.
Which action should the local manager take in this situation?

Question97: Which action should an FIU consider taking when it has information that might be useful to another FIU?

Question98: A financial institution (FI) is being investigated for possible money laundering. When cooperating with law enforcement agencies, which additional steps should the FI ensure are taken? (Choose two.)

Question99: One key aspect of the Office of Foreign Assets Control's extraterritorial reach includes the blocking of certain non-United States initiated transactions for or through the United States (U.S.) for benefit of a restricted person or entity.
Under which three circumstances are U.S. banks required to block transactions? (Choose three.)

Question100: Which red flag should a compliance officer prioritize first for investigation?

Question101: A bank operates in multiple countries and offers a variety of products and services. The compliance officer recently joined the bank and wants to better understand the inherent level of anti-money laundering risk across the entire organization.
Which two factors should be considered? (Choose two.)

Question102: Trusts established in certain offshore jurisdictions make good vehicles to lay under money for which ofthe following reasons?

Question103: Which statement best describes a key aspect of the AML Directive of the EU regarding business relationships and transactions with high-risk third countries?

Question104: In order to protect investigative materials from disclosure when conducting an internal Investigation of any employee of a financial institution, legal counsel of that financial should________?

Question105: What is the primary action a financial institution should take before formulating its anti-money laundering program?

Question106: The compliance officer for a private bank has been tasked with writing a policy on how the bank will deal with intermediaries.
Which two aspects should be included in the policy in respect of intermediaries to align it with the Wolfsberg Anti-Money Laundering Principles for Private Banking? (Choose two.)

Question107: Which practices are dealers in antiques, precious metals, precious stones, jewelry, and art advised to follow to reduce the element of money laundering risk? Choose 3 answers

Question108: A law enforcement agent calls a bank anti-money laundering investigator for supporting information about a suspicious transaction report that was filed the previous month.
How should the investigator respond?

Question109: An anti-money laundering specialist has been hired by an independently-owned community bank to implement an anti-money laundering compliance program. This bank has recently seen a dramatic increase in the number of international electronic fund transfers from its commercial clients. The first thing the anti-money laundering specialist should do is

Question110: What do the Financial Action Task Force (FATF) mutual evaluations of each member assess?

Question111: Which two methods have terrorist groups used to diversify their revenue stream and to fund their operations?
(Choose two.)

Question112: Which is a key reason why a financial institution (FI) conducts an enterprise-wide AML risk assessment?

Question113: An accounting firm opened an account at a bank that is intended to be used as the operational account for the business. After a few months, a comprehensive review of the account was triggered due to unusual activity on the account. Which most likely triggered the review?

Question114: In performing a risk analysis, which factor(s) should a financial institution review?

Question115: According to the Financial Action Task Force 40 Recommendations, simplified customer due diligence or reduced measures could be acceptable for which of the following types of products or transactions?
1. Life insurance policies where the annual premium is no more than USD/EUR 1,000 or a single premium of no more than USD/EUR 2,500.
2. Insurance policies for pension schemes if there is no surrender clause and the policy cannot be used as collateral.
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4. Trusts where the settlor, trustee and beneficiaries are identified and the shares are in bearer form.

Question116: A compliance officer for a casino may suspect money laundering if an individual:

Question117: A bank maintains a relationship with a customer who owns a small bakery business.
Which customer action indicates potential money laundering?

Question118: What describes the Black Market Peso Exchange money laundering method?

Question119: A popular restaurant in town has begun depositing less cash than it has in prior years. In a review of the customer's accounts, you notice that credit card receipts have increased with no .
The account officer discovers that the restaurant has installed a privately-owned automated teller machine (ATM) onsite and has begun construction on a patio dining area.
Which red flag should trigger additional investigation?

Question120: Which three measures are contained in Financial Action Task Force 40 Recommendations for reporting suspicious activity? (Choose three.)

Question121: A charity has unaudited accounts. Which of the following represents the highest risk factor for terrorist financing?

Question122: What is an example of the integration stage of money laundering involving a bank or another deposit-taking institution?

Question123: A corporate services provider in a European Union (EU) country has a prospect from an African country who deals in oil and gas. The prospect intends to develop an oil terminal in his home country with a $75 million dollar loan secured by a third party, which is a trust formed in a Caribbean island with a holding company based in a European secrecy haven. A young lady is presented as an ultimate beneficial owner who has gained her wealth through a fitness studio in her home country.
What are two red flags that could indicate money laundering or financing terrorism? (Choose two.)

Question124: OFAC-issued regulations apply to which entities? (Choose two.)

Question125: The Basel Committee on Banking Supervision issued a paper in October 2001 in which it presented a Know Your Customer framework and recommended standards applicable to

Question126: One key aspect of promoting an enterprise-wide compliance culture within a financial institution (FI) is that the:

Question127: A remittance company received a money order from a senior political figure m the Philippines to transfer a large sum of money to a charity group in the Philippines. A review of the charity group revealed a director having dose ties with a known terrorist group primarily financed through kidnapping and extortion.
What is a key risk indicator associated with terrorism financing?

Question128: Upon filing a suspicious transaction report, which of the following elements should be the highest anti-money laundering priority in making the decision to keep the account open?

Question129: A quarterly review is conducted on a retail customers account at a bank located in a jurisdiction with currency reporting thresholds. A number of large deposits of financial instruments drawn on other institutions in amounts under thresholds were noted. This activity did not fit the accounts historical profile. A suspicious transaction report will most likely be filed if what also occurred?

Question130: A comprehensive set of risk-based guidelines for maintaining business relationships is being developed.
Which situation indicates that the institution should terminate the relationship with a client?

Question131: A high-volume dealer of precious metals and stones in a high-risk jurisdiction is approached by a new customer interested in selling gold worth $200,000. The customer was referred by a longtime family friend of the dealer and provides no indication of background or business purpose for the sale. The dealer agrees to make the purchase based solely on the reference.
What is the money laundering red flag?

Question132: A bank receives an anonymous tip from an employee about another employee through its confidential hotline.
Which activity warrants further review?

Question133: Pursuant to the Third European Union Money Laundering Directive, how long after being out of prominent office should a person NOT be considered to be a Politically Exposed Person (PEP)?

Question134: A compliance officer identifies a potentially significant risk in a popular financial product. Further investigation reveals there is no mitigating control.
Which course of action should the compliance officer take?

Question135: To what extent should senior management and the Board of Directors be involved in the filing of any STR?

Question136: When performing an investigation, which key steps should be taken to maintain and secure supporting documentation used to perform an investigation of a suspicious activity?

Question137: One area of responsibility for the Board of Directors when implementing a successful AML program is to:

Question138: Which is the main objective when a financial institution (FI) conducts an investigation?