What is the primary purpose of Anti-Money Laundering (AML) regulations?
a) To promote tax evasion
b) To prevent financial fraud and illicit activities
c) To encourage unregulated transactions
d) To assist in insider trading
Which international organization sets global AML standards?
a) World Trade Organization (WTO)
b) International Monetary Fund (IMF)
c) Financial Action Task Force (FATF)
d) United Nations Security Council (UNSC)
What is the first stage of money laundering?
a) Integration
b) Layering
c) Placement
d) Structuring
What does Know Your Customer (KYC) require financial institutions to do?
a) Report all transactions to tax authorities
b) Identify and verify the identity of customers
c) Freeze accounts of all new customers
d) Ignore low-value transactions
Which of the following is NOT a stage of money laundering?
a) Placement
b) Investment
c) Layering
d) Integration
What does Suspicious Activity Reporting (SAR) involve?
a) Filing reports for transactions that exceed a certain limit
b) Reporting unusual or suspicious transactions to authorities
c) Closing accounts of high-risk customers
d) Only reporting cash transactions
Which of the following is an example of layering in money laundering?
a) Depositing small amounts of cash into multiple accounts
b) Making a single large deposit
c) Transferring funds through multiple accounts to obscure the source
d) Withdrawing all funds in cash
What is the primary goal of the integration stage in money laundering?
a) To withdraw all funds in cash
b) To make illegal funds appear legitimate
c) To deposit funds in offshore accounts
d) To send money to untraceable sources
Which law in the United States is specifically designed to combat money laundering?
a) The Patriot Act
b) The Securities Act
c) The Tax Reform Act
d) The Foreign Corrupt Practices Act
What is a politically exposed person (PEP) in AML terms?
a) Any person with a criminal background
b) A government official or individual with high political influence
c) A bank manager
d) A financial analyst
What is the main reason criminals engage in money laundering?
a) To evade taxes legally
b) To disguise the origin of illegally obtained funds
c) To increase their legitimate business profits
d) To deposit money in banks
Which of the following is considered a red flag for money laundering?
a) Regular salary deposits
b) Large cash deposits with no clear source
c) Monthly mortgage payments
d) Using a debit card for small purchases
What role do financial institutions play in AML compliance?
a) They only process transactions without monitoring them
b) They are required to monitor and report suspicious transactions
c) They can ignore small transactions below a certain amount
d) They do not have any AML obligations
What is the threshold for reporting cash transactions under the U.S. Bank Secrecy Act?
a) $5,000
b) $10,000
c) $15,000
d) $20,000
Which method is commonly used for trade-based money laundering?
a) Over-invoicing or under-invoicing goods
b) Depositing funds in personal savings accounts
c) Buying gold and jewelry
d) Using a single account for transactions
What does Customer Due Diligence (CDD) involve?
a) Ignoring low-risk customers
b) Verifying customer identities and assessing risks
c) Allowing anonymous transactions
d) Only monitoring transactions above $50,000
What is a shell company in the context of money laundering?
a) A legitimate business with multiple employees
b) A fake or inactive company used to hide funds
c) A government-regulated financial institution
d) A type of stock market investment
Which sector is considered high-risk for money laundering?
a) Retail stores
b) Real estate
c) Supermarkets
d) Bookstores
What is the primary function of a Financial Intelligence Unit (FIU)?
a) Conducting tax audits
b) Investigating and analyzing suspicious financial transactions
c) Issuing bank loans
d) Regulating stock markets
