CFCS Exam Training Practice Tests (ACFCS Financial Crime Specialist)]

Question 1

A small but very successful construction company is expanding rapidly Having quickly gone from just a few employees to a larger staff the company's managers have become concerned about the possibility for internalTheftand fraud, and are implementing compliance measures.
The company promotes one of its current HR employees to be the new head of compliance It institutes a new whistleblower policy in which all employees are required to report suspicious behavior or transactions directly to their immediate supervisor who will escalate as necessary.
The company also institutes a gifts and entertainment policy that restricts promotional expenses for the company's sales staff and any managersthatinteract with clients and vendors Finally the company starts a selective review process for all invoices above a certain threshold subjecting them to senior management review.
Based on this scenario which is the MOST significant weakness in the company's efforts to detect and prevent internal financial crime?

A. The promotion of a current employee as head of compliance - Compliance officers should always be hired externally to minimize the chances of internal fraud B. Thewhistleblowerpolicy - Reporting should never go through the company's business lines it should lake place anonymously C. The gifts and entertainment policy - The policy is not comprehensive enough and should include all company employees not only sales staff and management D. The Policy ofinvoice review - All invoices should be subject to senior management approval not only those above a certain level

Correct Answer: B

Question 2

Which actions have led to penalties or violations of sanctions regimes overseen by the Office of Foreign Assets Control (OFAC)? Choose 2 answers

A. Stripping wire transfer information to conceal customer information B. Conducting transactions with entities that have been removed from the sanctions list C. Conducting transactions with high-risk individuals D. Failing to search customers against the sanctions list

Correct Answer: A,D

Question 3

You work in Ihe investigations unit at a financial crime compliance department of a bank You have been assigned an alert to review a transaction in a customer account held by a small plumbing company.
The alert was produced on a funds transfer out ol the plumbing company's account to what appears to be a business account in another stale The customer appears to have initialed the funds transfer request yesterday evening a weekend day that is outside of the company s usual business hours. The company does not commonly conduct transactions with business accounts that are out of state and the amount was slightly larger than other outgoing funds transfers.
While reviewing this alert you realize that several other alerts on the account have just recently been generated all relating to outgoing transfers destined lor Ihe same out-of-stale business account.
Which is the MOST appropriate next step for you to take?

A. Flag the account as potentially compromised and open an investigation B. Contact the customer to inquire about Ihe suspicious nature of the transactions C. File a Suspicious Activity or Transaction Report (SAR/STR) on the transactions D. Contact the business account receiving the funds transfers to inquire about their purpose

Correct Answer: A

Question 4

Mr. X is a business consultant who specializes in helping European companies expand their operations into Latin America. You are part of a law enforcement unit investigating Mr. X who is under suspicion of assisting his clients to conceal bribe payments made to government officials in Latin American countries.
Mr. X is knowntocontrol a numberofdifferent companies andtheirrelated subsidiaries within severalLamAmerican countries. You are tracing (fundsthat originated from an account held by one of Mr.X's companies in the UK in an effort to establish that he is involved in the corruption and money laundering scheme.
Which would provide the BEST indicatorThatMr.X is helping to launder funds connected to bribery?

A. Funds whose source can be traced to a corporate account in a country located in the European Union B. Funds that are being used in the operation of a business in ahigh-riskjurisdiction C. Funds transferred to business associates of Mr.X located in the European Union D. Funds transferred into the account from a nondescript business with little information available about it

Correct Answer: D

Question 5

Through an annual review for an insured persons government-provided health insurance claims you determine that the applicant's eligibility has been consistently and significantly overstated. Further the medical justification reveals possible duplicate procedures within a short period of time All details and documents provided by the applicant are verified to be accurate and valid.
This type of fraud is usually initiated from which involved party?

A. Beneficiary or claimant B. Service or health care provider C. Health insurance company D. No involved party, these are merely accidental errors in billing at the system level

Correct Answer: B

Question 6

During an organizational overview of financial crime controls, Ms. Lee, the compliance analyst, discovers that certain high-risk customers have not undergone enhanced due diligence (EDD) as required by regulatory guidelines. What is the most appropriate action for Ms. Lee to take?

A. Ignore the issue as long as there have been no suspicious transactions involving the high-risk customers. B. Document the findings and recommend the implementation of robust procedures for EDD. C. Conduct a retrospective review of the high-risk customers' transactions to assess potential risks. D. Notify senior management and request immediate termination of the high-risk customer relationships.

Correct Answer: B

Question 7

You are Ihe chief anti-money laundering officer of a lull-service bank and you are designing a risk-based customer acceptance program to determine the Terrorist Financing risks specific to not-for-profit (NFP) organizations.
Which enhanced due diligence activity is MOST essential for these types of client relationships due to the elevated risk that NFPs pose?

A. Monitor the financial activity in relation to the stated purpose and objectives of the entity B. Obtain a copy of the organization's charier C. For NFPs customer acceptance requirements are the same as for any other customer D. Establish who controls the organization and its financial activities

Correct Answer: D

Question 8

You are investigating a Hong Kong clothing manufacturer that is allegedly laundering money (or a human trafficking organization.
Deposits to the corporate bank account totaled $4.5 million (USD) for the year 2011 and originated from a single source in Panama that makes payment through a bank account in Riga Latvia.
Payments are received through wire transfers They are always in odd amounts of dollars and cents and the SWIFT messaging always slates that the payments are for a seasonal line of women s dresses.
Which is NOT a red flag for money laundering?

A. The distributor is located in Panama but payments originate (from a Latvian bank in Riga B. The payments are in odd amounts and their purpose is always the same in the SWIFT messaging C. Payments to the fabricator are only received from a single customer in another industry D. The owner of the business who is the sole signatory of the bank account resides in another country

Correct Answer: B

Question 9

InvestPlus was a securities trading firm that purportedly specialized in high-risk high-reward investment opportunities in developing countries. InvestPlus was losing money on many of its products and began to take funds from new clients to repay earlier investors. The scheme was eventually revealed and InvestPlus collapsed leaving behind numerous defrauded investors InvestPlus is now bankrupt.
A group of investors who lost money has hired your law firm to recover assets InvestPlus had complex holdings and investments in many different countries worldwide Without access to the company s financial records it has been difficult to trace them. The owners of InvestPlus reaped substantial profits but led lavish lifestyles and are thought to have burned through most of their assets.
Which is the BEST way your firm could pursue recovery of damages?

A. Request a summons for the owners of InvestPlus to provide testimony on their financial status B. Investigate whether third parties have facilitated the scheme and, if so, pursue legal action against them C. File mutual legal assistance treaty requests in the jurisdictions where InvestPlus is thought to have assets D. Contact other defrauded investors to see if they have further information on the location of recoverable assets

Correct Answer: C

Question 10

Recently your database of customer records was compromised and hundreds of thousands of customer's personal data was stolen Based on the feedback from your customers you have surmised that the following occurred.
* Using the stolen customer information a personalized email was sent to all of the customers Irom the criminals with a significant amount of personal information in them to appear legitimate directing them to a fake website mimicking yours
* That fake website captured logins and passwords from customers for later use
* The criminals then used the logins and passwords to wire funds from those accounts to offshore accounts that they controlled Which type of attack is this?

A. Spear phishing B. Man-in-the-middle C. Login capture D. Key logging

Correct Answer: A

Question 11

You have been asked to investigate an anonymous tip that an executiveofa company has paid bribes to secure business with a foreign government-controlled company. Which would MOST fully support the allegation without any additional evidence?

A. The executive approved an increase in the commissions paid to the sales agent dealing with the customer from 5% to 10% B. The sales agent's commission is being paid to a bank account in a country outside of the agent's sales territory C. Records of funds transfers lo a company lor advertising services that is not on the approved vendor list D. The executive s files include duplicates of invoices for the customer that have sales prices 10% higher than the original

Correct Answer: B

ACFCS Financial Crime Specialist - CFCS Exam Practice Test