Summary Of Key Points - AML & Cft

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Marynflc
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Quizzes Created: 1 | Total Attempts: 175
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  • 1/18 Questions

    Individuals who are found guilty of money laundering offences or tipping-off a money launderer could face imprisonment, a fine or both.

    • True
    • False
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About This Quiz

This quiz assesses understanding of Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT), focusing on key stages like placement and integration, and identifying activities like layering. It's designed for learners to recognize and respond to financial compliance challenges.

Summary Of Key Points - AML & Cft - Quiz

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  • 2. 

    A politically exposed person (PEP) is someone who is anti-government.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The given statement is false. A politically exposed person (PEP) refers to an individual who holds a prominent public position or has held one in the past, making them vulnerable to corruption and bribery. Being anti-government does not necessarily make someone a PEP. PEPs are typically individuals in positions of power, such as government officials, high-ranking military personnel, or leaders of state-owned enterprises.

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  • 3. 

    MAS will take serious enforcement actions, ranging from formal warnings, reprimands, restriction on operations, to financial penalties and revocation of licences against financial institutions who breach the anti-money laundering laws.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The given statement suggests that MAS (Monetary Authority of Singapore) will impose strict measures on financial institutions that violate anti-money laundering laws. These measures include formal warnings, reprimands, restrictions on operations, financial penalties, and even revocation of licenses. Therefore, the correct answer is true.

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  • 4. 

    CDD is required on an ongoing basis after an applicant becomes a customer.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    CDD stands for Customer Due Diligence, which is a process that financial institutions and other regulated entities must undertake to verify the identity of their customers and assess any potential risks associated with them. This process is not a one-time event but rather an ongoing requirement. Once an applicant becomes a customer, the institution must continue to monitor and update their information regularly to ensure compliance with anti-money laundering and counter-terrorism financing regulations. Therefore, the statement that CDD is required on an ongoing basis after an applicant becomes a customer is true.

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  • 5. 

    Government ministers, senior civil or public servants, senior political party officials, member of the World Trade Organisation are examples of Politically Exposed Persons. 

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Government ministers, senior civil or public servants, senior political party officials, and members of international organizations like the World Trade Organization are considered Politically Exposed Persons (PEPs). PEPs are individuals who hold prominent positions and are more susceptible to corruption, bribery, or money laundering due to their influence and access to public resources. Financial institutions and organizations need to exercise extra caution when dealing with PEPs to mitigate the risk of financial crimes. Therefore, the statement that these individuals are examples of Politically Exposed Persons is true.

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  • 6. 

    The 4 stages of the Money Laundering Process are: dirty money, ________, layering and integration.

    Correct Answer
    placement
    Explanation
    The correct answer is "placement." In the money laundering process, placement refers to the initial stage where illegal funds are introduced into the financial system. This typically involves depositing cash into banks or other financial institutions, often in small amounts to avoid suspicion. By placing the dirty money into the legitimate financial system, criminals can begin the process of disguising its origins and making it appear clean.

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  • 7. 

    If you suspect that a customer may be trying to launder money, you should report immediately to your agency leader and compliance department.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    If a customer is suspected of trying to launder money, it is important to report this immediately to the agency leader and compliance department. Money laundering involves the process of making illegally-gained proceeds appear legal. It is a serious crime that can have severe consequences. By reporting suspicions promptly, the agency can take appropriate action to investigate and prevent any illegal activities from taking place. This helps to maintain the integrity of the organization and ensures compliance with legal and regulatory requirements.

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  • 8. 

    Methods used by terrorists to move funds are similar to money laundering and amounts may not be large.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true because terrorists often use methods similar to money laundering to move funds. These methods can include using shell companies, wire transfers, and other illicit financial activities. Additionally, the amounts involved may not always be large, as terrorists may rely on smaller transactions to avoid detection. Overall, this statement highlights the similarities between terrorist financing and money laundering techniques.

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  • 9. 

    Dirty money can come from

    • Bribery and insider trading

    • Selling of hawker food

    • Casino gambling and lottery wins

    • Tax savings and capital gains from shares

    Correct Answer
    A. Bribery and insider trading
    Explanation
    Dirty money refers to illegally obtained money that is often used for illegal activities or to hide the source of the funds. Bribery and insider trading are both forms of illegal activities that can generate dirty money. Bribery involves offering or accepting money or gifts in exchange for influence or favors, while insider trading involves trading stocks based on non-public information. Both activities are illegal and can result in individuals obtaining large sums of money through illicit means.

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  • 10. 

    Dirty money that has been made clean and used to purchase real estate and stock investments is an example of which stage of the money laundering process?

    • Layering

    • Disposal

    • Integration

    • Placement

    Correct Answer
    A. Integration
    Explanation
    Integration is the correct answer because it refers to the stage of the money laundering process where the illegally obtained funds are mixed with legitimate assets, such as real estate and stock investments, in order to make them appear legal and indistinguishable from legitimate income. This stage aims to make it difficult for authorities to trace the origins of the funds and separate them from legitimate sources.

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  • 11. 

    A direct insurer shall perform CDD measures when:

    • The direct life insurer establishes business relations with any customer

    • There is suspicion of money laundering or terrorism financing

    • The direct life insurer has doubts about the veracity or adequacy of any information previously obtained.

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    A direct insurer is required to perform customer due diligence (CDD) measures in multiple situations. Firstly, when the direct life insurer establishes business relations with any customer, CDD measures need to be conducted. Secondly, if there is suspicion of money laundering or terrorism financing, CDD measures are necessary. Lastly, if the direct life insurer has doubts about the accuracy or sufficiency of any information previously obtained, CDD measures must be performed. Therefore, the correct answer is "All of the above."

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  • 12. 

    A policyholder who paid large amount of premiums in advance in cash is an example of which stage of the money laundering process?

    • Integration

    • Dirty money

    • Placement

    • Layering

    Correct Answer
    A. Placement
    Explanation
    The stage of the money laundering process that involves placing the illicit funds into the financial system is known as placement. In this stage, the policyholder pays a large amount of premiums in advance in cash, which allows them to introduce their illegal funds into the legitimate financial system. This initial step is crucial for the money launderer to distance themselves from the illegal source of the funds and make it appear as if the money is legitimate.

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  • 13. 

    To perform enhanced due diligence for PEP, you need to:-

    • Get approval from senior management to establish or continue business relations with the customer

    • Get approval from the customer's senior management or relevant government body

    • Conduct enhanced monitoring of business relations with the customer during the course of business relations

    • Establish the source of wealth and source of funds of the customer

    Correct Answer(s)
    A. Get approval from senior management to establish or continue business relations with the customer
    A. Conduct enhanced monitoring of business relations with the customer during the course of business relations
    A. Establish the source of wealth and source of funds of the customer
    Explanation
    The answer is correct because to perform enhanced due diligence for politically exposed persons (PEP), it is necessary to obtain approval from senior management to establish or continue business relations with the customer. This ensures that the decision to engage with a PEP is made at a higher level and is in line with the organization's risk appetite. Additionally, conducting enhanced monitoring of business relations with the customer throughout the course of the relationship helps to mitigate any potential risks associated with PEPs. Finally, establishing the source of wealth and source of funds of the customer is crucial in order to assess the legitimacy of their financial activities and prevent money laundering or corruption.

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  • 14. 

    Enhanced Customer Due Diligence is required for the scenarios:-

    • Close associate of a PEP

    • Family member of a PEP

    • Employee of a foreign bank

    • Customer is classified under high risk occupations

    • Client's nationality is from a high tax risk country

    • Negative reports from media or credible information sources on the customer

    Correct Answer(s)
    A. Close associate of a PEP
    A. Family member of a PEP
    A. Customer is classified under high risk occupations
    A. Client's nationality is from a high tax risk country
    A. Negative reports from media or credible information sources on the customer
    Explanation
    Enhanced Customer Due Diligence is required for close associates and family members of politically exposed persons (PEPs) because they are considered to have a higher risk of involvement in money laundering or corruption. Additionally, customers who are classified under high-risk occupations are more likely to engage in illegal activities, making enhanced due diligence necessary. Similarly, clients from high tax risk countries are at a higher risk of tax evasion, necessitating enhanced scrutiny. Lastly, negative reports from media or credible sources on a customer indicate potential involvement in illicit activities, warranting enhanced due diligence measures.

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  • 15. 

    Customer Due Diligence or "CDD" means obtaining certain information and performing certain verification checks after accepting an applicant as a customer.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The statement is false. Customer Due Diligence (CDD) is the process of gathering information and conducting verification checks on potential customers before accepting them. It is done to assess the risks associated with the customer and to comply with anti-money laundering regulations. Therefore, CDD is performed before accepting an applicant as a customer, not after.

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  • 16. 

    The following is an example of Layering:-

    • Payment by unrelated 3rd party cheque

    • Insurance requested is inconsistent with policyholder's profile

    • Purchase of business enterprise

    • Assignment of policies to unrelated or 3rd party

    Correct Answer
    A. Assignment of policies to unrelated or 3rd party
    Explanation
    Layering refers to the process of creating complex transactions or multiple layers of financial activity to obscure the origin or destination of funds. In this example, the assignment of policies to unrelated or third parties can be seen as a form of layering. By transferring the ownership of insurance policies to unrelated or third parties, individuals or organizations can create a complex web of transactions that make it difficult to trace the true source or purpose of the funds. This can be used as a method for money laundering or other illicit activities.

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  • 17. 

    Activities and processes intended to alter the identity of the source of ________ obtained money in a manner which creates the appearance that it has originated from a legitimate source.

    Correct Answer
    illegally
    Explanation
    The given correct answer is "illegally". The activities and processes mentioned in the question are intended to alter the identity of the source of money obtained illegally. This is done in a way that makes it appear as if the money has come from a legitimate source.

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  • 18. 

    A direct insurer shall identify each customer by obtaining at least the following information:-

    • Full name, including aliases

    • Salary statement

    • Identity card number

    • Residential address

    • Nationality

    • Date of marriage for customers who are married

    • Date of birth

    • Place of birth

    Correct Answer(s)
    A. Full name, including aliases
    A. Identity card number
    A. Residential address
    A. Nationality
    A. Date of birth
    Explanation
    The correct answer is a list of information that a direct insurer should obtain from each customer. This includes the customer's full name, including any aliases they may have, their identity card number, residential address, nationality, and date of birth. These details are important for the insurer to accurately identify and assess the customer, as well as to comply with legal and regulatory requirements.

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Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Jun 05, 2024
    Quiz Edited by
    ProProfs Editorial Team
  • Feb 24, 2016
    Quiz Created by
    Marynflc
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