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IATI Diploma practice questions

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Question 1Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

Which international body sets the global standards for combating money laundering and terrorist financing?

  1. The Basel Committee on Banking Supervision
  2. The Financial Action Task Force Correct answer.
  3. The World Trade Organization
  4. The International Monetary Fund

Explanation

The Financial Action Task Force (FATF) is the intergovernmental body that issues the FATF Recommendations, which form the global standard for AML/CFT. Other bodies issue related guidance but do not set the universal AML/CFT standard.

Question 2Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

What does the term 'placement' describe in the classic three-stage model of money laundering?

  1. Introducing illicit cash into the financial system Correct answer.
  2. Separating proceeds from their source through layers of transactions
  3. Reintegrating proceeds into the legitimate economy
  4. Reporting a suspicious transaction to the authorities

Explanation

Placement is the first stage, where criminal cash first enters the financial system, for example through deposits or purchases. Layering and integration are the later stages that follow it.

Question 3Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

Which activity is the defining purpose of terrorist financing, as distinct from money laundering?

  1. Concealing the origin of funds obtained through fraud
  2. Moving criminal proceeds across borders to avoid detection
  3. Evading tax on profits from legitimate trade
  4. Funding acts of terrorism regardless of whether the funds are legally earned Correct answer.

Explanation

Terrorist financing focuses on the destination and purpose of funds, which may be entirely legitimate in origin. Money laundering focuses on concealing the illicit source of proceeds.

Question 4Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

Under a risk-based approach, what should a firm do first when designing its AML/CFT controls?

  1. Outsource all compliance decisions
  2. Identify and assess the risks it faces Correct answer.
  3. Wait for a regulator to prescribe each control
  4. Apply identical checks to every customer

Explanation

The risk-based approach requires a firm to identify and assess its money laundering and terrorist financing risks before calibrating controls. Controls are then proportionate to those assessed risks.

Question 5Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

What is the purpose of customer due diligence at onboarding?

  1. To guarantee that a customer will never launder money
  2. To replace ongoing transaction monitoring
  3. To verify identity and understand the customer's business and risk profile Correct answer.
  4. To maximise the products sold to a customer

Explanation

Customer due diligence establishes identity and builds an understanding of the customer's activity and risk, which informs later monitoring. It supports but does not replace ongoing monitoring.

Question 6Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

A politically exposed person is best described as someone who:

  1. has been convicted of a financial crime
  2. works in the compliance department of a bank
  3. holds or has held a prominent public function Correct answer.
  4. has requested enhanced privacy protections

Explanation

A politically exposed person holds or has held a prominent public function, which presents heightened corruption risk. This status triggers enhanced due diligence, not automatic refusal.

Question 7Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

Which of the following is a common indicator of structuring (smurfing)?

  1. A single large deposit fully documented with a clear source
  2. Multiple cash deposits just below a reporting threshold Correct answer.
  3. A customer closing an inactive account
  4. A salary paid monthly by direct transfer

Explanation

Structuring involves splitting transactions to stay below reporting or threshold limits, so repeated deposits just under a threshold are a classic red flag. Genuine, documented transactions with clear sources are not indicative of structuring.

Question 8Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

Which of these is a predicate offence for money laundering?

  1. A parking violation
  2. Late payment of an invoice
  3. Breach of an employment contract
  4. Fraud Correct answer.

Explanation

Fraud generates criminal proceeds and is a recognised predicate offence for money laundering. Minor regulatory or civil matters generally do not qualify as predicate offences.

Question 9Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

What does 'layering' typically aim to achieve?

  1. Reporting suspicious activity to a financial intelligence unit
  2. Obscuring the audit trail between criminal proceeds and their source Correct answer.
  3. Calculating the firm's risk appetite
  4. Establishing the customer's identity

Explanation

Layering uses complex series of transactions to break the link between funds and their criminal origin. It follows placement and precedes integration.

Question 10Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

A customer requests enhanced due diligence be bypassed because of their senior government role. How should the firm respond?

  1. Apply enhanced due diligence and escalate for senior approval as required Correct answer.
  2. Report the customer to the police as a criminal
  3. Grant the request to preserve the relationship
  4. Close the account immediately without review

Explanation

PEP status requires enhanced due diligence, and any decision to retain the relationship should follow the firm's escalation and senior approval process. Seniority does not justify waiving controls.

Question 11Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

Which set of events best reflects the placement stage?

  1. A shell company pays consultancy fees to another shell company
  2. A customer deposits large amounts of cash into several accounts Correct answer.
  3. A loan is repaid early with funds from an offshore account
  4. A property is sold and the proceeds are invested in a business

Explanation

Depositing large amounts of cash directly introduces illicit funds into the financial system, which is placement. The other examples involve moving funds between entities, which is characteristic of layering.

Question 12Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

A firm uses a risk-based approach. Which customer should generally receive enhanced due diligence?

  1. A student receiving a monthly allowance from parents
  2. A long-standing customer with low-value transactions
  3. A local salaried employee with a stable account history
  4. A cash-intensive business operating in a higher-risk jurisdiction Correct answer.

Explanation

Cash-intensive activity combined with a higher-risk jurisdiction raises the risk profile and warrants enhanced measures. Low-risk, stable customers typically receive standard due diligence.

Question 13Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

Which control most directly supports ongoing monitoring of customer activity?

  1. Setting the firm's marketing budget
  2. Collecting identity documents once at onboarding
  3. Automated transaction monitoring with defined alert thresholds Correct answer.
  4. Publishing an annual report

Explanation

Ongoing monitoring relies on systems that screen transactions against defined thresholds and generate alerts for review. One-time identity collection supports onboarding but not continuous monitoring.

Question 14Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

A customer's stated occupation is a teacher, but large monthly transfers arrive from multiple unrelated companies abroad. What is the most appropriate first step?

  1. Increase the customer's credit limit
  2. Immediately close the account without documenting reasons
  3. Ignore the discrepancy because the transfers are electronic
  4. Investigate the activity against the customer's profile and consider a suspicious activity report Correct answer.

Explanation

Activity inconsistent with the customer's known profile is a red flag requiring investigation and, where suspicion arises, a report to the financial intelligence unit. Electronic delivery does not reduce risk.

Question 15Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

What is the primary role of a financial intelligence unit?

  1. Setting interest rates
  2. Issuing banking licences
  3. Supervising bank lending practices
  4. Receiving and analysing suspicious transaction reports Correct answer.

Explanation

An FIU receives, analyses and disseminates suspicious transaction reports and related intelligence. It is a national hub for financial intelligence rather than a prudential supervisor.

Question 16Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

Which statement best describes a shell bank?

  1. A bank with a physical presence and a full local licence
  2. A bank that only serves retail customers
  3. A bank incorporated in one jurisdiction with no physical presence there Correct answer.
  4. A bank that has merged with another institution

Explanation

A shell bank is incorporated in a jurisdiction but has no physical presence or meaningful management there. FATF standards prohibit relationships with such banks.

Question 17Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

A firm receives a request from a foreign authority for customer information in a money laundering investigation. What is the appropriate action?

  1. Provide the information immediately without checks
  2. Refuse all foreign requests as a matter of policy
  3. Publish the request on the firm's website
  4. Follow the applicable legal and mutual legal assistance channels Correct answer.

Explanation

Cross-border information sharing must follow legal frameworks, including mutual legal assistance and applicable data protection rules. Ad hoc disclosure without legal basis can breach confidentiality obligations.

Question 18Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

Which practice is most consistent with the FATF Recommendations on wire transfers?

  1. Relying solely on the beneficiary bank to verify originators
  2. Requiring originator and beneficiary information to accompany transfers Correct answer.
  3. Permitting anonymous transfers below a fixed value
  4. Allowing transfers with no originator information

Explanation

The FATF wire transfer standard requires that originator and beneficiary information travel with the transfer so that intermediaries and beneficiaries can screen it. Missing information should trigger risk-based handling.

Question 19Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

What is the main purpose of a national risk assessment in the AML/CFT framework?

  1. To identify and prioritise money laundering and terrorist financing risks at country level Correct answer.
  2. To determine stock exchange listing rules
  3. To set bank capital requirements
  4. To calculate individual tax liabilities

Explanation

A national risk assessment evaluates the country's exposure to money laundering and terrorist financing risks and informs resource allocation and policy. It is a strategic risk exercise, not a fiscal or prudential tool.

Question 20Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

A firm's customer is a trust with an opaque ownership structure and nominees in several jurisdictions. Which risk factor is most directly engaged?

  1. Regulated product type
  2. Beneficial ownership opacity Correct answer.
  3. Domestic payment method
  4. Low transaction volume

Explanation

Opaque structures with nominees raise beneficial ownership concerns, so the firm must identify the ultimate beneficial owners. Low volume and domestic payment methods are not the primary concern here.

Question 21Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

Which behaviour should prompt a firm to consider filing a suspicious activity report?

  1. Repeated transactions with no apparent economic purpose Correct answer.
  2. A customer switching to paperless statements
  3. A customer requesting a statement copy
  4. A customer asking about fees before opening an account

Explanation

Transactions with no apparent economic or lawful purpose are a recognised suspicion indicator. Routine service requests do not, by themselves, indicate suspicion.

Question 22Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

What does 'tipping off' mean in an AML/CFT context?

  1. Closing an account due to inactivity
  2. Refusing to open an account for a customer
  3. Charging a fee for a wire transfer
  4. Disclosing to a customer that a suspicious transaction report has been made Correct answer.

Explanation

Tipping off is disclosing that a report has been made or that an investigation is underway, which can prejudice the investigation and is generally prohibited. Other customer service actions do not constitute tipping off.

Question 23Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

FATF Recommendations require countries to criminalise terrorist financing. Which statement best reflects that obligation?

  1. Terrorist financing applies only to cash transactions
  2. Terrorist financing covers funds regardless of whether they were lawfully obtained Correct answer.
  3. Only funds derived from crime can constitute terrorist financing
  4. Terrorist financing is a civil matter rather than a criminal one

Explanation

Terrorist financing criminalisation covers the provision or collection of funds for terrorist purposes, whether or not the funds were lawfully obtained. This distinguishes it from money laundering.

Question 24Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

A firm uses simplified due diligence for a low-risk product. What condition must generally be satisfied?

  1. The firm must apply enhanced measures instead
  2. The firm must report all transactions as suspicious
  3. The firm must still identify and verify the customer Correct answer.
  4. The firm may skip customer identification entirely

Explanation

Simplified measures reduce the intensity of certain checks but do not remove the obligation to identify and verify the customer. The risk assessment must support the lower-risk conclusion.

Question 25Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

Which scenario most clearly indicates trade-based money laundering?

  1. A company over-invoices imports to move value offshore Correct answer.
  2. A company imports goods with prices consistent with market values
  3. A company pays its suppliers within agreed credit terms
  4. A company uses a letter of credit for a routine shipment

Explanation

Trade-based money laundering exploits mispricing, such as over-invoicing, to transfer value across borders. Normal market pricing and routine payment terms are not indicative of mispricing.

Question 26Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

Which of the following best defines money laundering?

  1. The practice of exchanging one currency for another at a retail bank
  2. The transfer of funds between accounts held by the same person
  3. The act of lending money to individuals with poor credit histories
  4. The process of disguising the origin of proceeds of crime to make them appear legitimate Correct answer.

Explanation

Money laundering is the process by which criminals attempt to conceal the true origin and ownership of the proceeds of their criminal activities, aiming to make the funds appear legitimate. It typically involves placement, layering, and integration stages. The other options describe ordinary financial activities or unrelated concepts.

Question 27Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

Which of the following is a key element of the 'placement' stage of money laundering?

  1. Moving funds through multiple accounts to obscure the audit trail
  2. Integrating laundered funds into the legitimate economy
  3. Investing laundered money in real estate
  4. Introducing illicit cash into the financial system Correct answer.

Explanation

Placement is the first stage of money laundering, where illicit cash first enters the financial system, often through deposits, purchases of assets, or other means. Layering involves moving funds to obscure the trail, and integration is the final stage where funds are absorbed into the legitimate economy. Investing in real estate could occur at various stages but is not the defining element of placement.

Question 28Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

A customer opens an account and immediately makes a large deposit followed by a request to transfer the funds to an account in a high-risk jurisdiction. The customer provides vague explanations for the source of funds. Which risk factor is most clearly present?

  1. Unusual transaction pattern with insufficient explanation Correct answer.
  2. Use of a personal account for business purposes
  3. Frequent small cash deposits
  4. Reluctance to provide identification documents

Explanation

The combination of a large deposit followed by an immediate transfer to a high-risk jurisdiction, coupled with vague explanations, is a classic indicator of potential money laundering. This pattern suggests an attempt to move funds quickly without a clear legitimate purpose. The other options describe different risk factors that are not evidenced in the scenario.

Question 29Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

What is the primary purpose of customer due diligence (CDD) in an AML/CFT framework?

  1. To prevent customers from opening multiple accounts
  2. To monitor customer transactions for credit risk
  3. To verify the identity of customers and understand their business relationships Correct answer.
  4. To ensure that customers are charged the correct fees for services

Explanation

Customer due diligence is a core requirement that involves identifying and verifying the customer's identity, understanding the nature of their business, and assessing their risk profile. It helps institutions detect and report suspicious activity. The other options relate to commercial or credit-risk matters, not the primary purpose of CDD.

Question 30Anti-Money Laundering and Counter-Terrorist Financing Fundamentals

A financial institution is designing its AML/CFT training program. Which approach best aligns with a risk-based approach?

  1. Focusing training solely on the legal definitions of money laundering and terrorist financing
  2. Providing the same generic training to all employees annually
  3. Outsourcing all training to an external provider without customization
  4. Tailoring training content and frequency to the specific risks of each role and business area Correct answer.

Explanation

A risk-based approach requires that AML/CFT training be proportionate to the risks faced by different roles and business lines. Employees in higher-risk areas, such as those dealing with high-value transactions or foreign clients, should receive more frequent and specialized training. The other options do not reflect a risk-based approach because they are either uniform, overly theoretical, or lack customization.

Question 31International AML/CTF Standards and Frameworks

Which body issues the Forty Recommendations that form the global baseline for anti-money laundering and counter-terrorist financing standards?

  1. The Wolfsberg Group
  2. The Basel Committee on Banking Supervision
  3. The Financial Action Task Force Correct answer.
  4. The International Monetary Fund

Explanation

The Financial Action Task Force is the intergovernmental body that sets the FATF Recommendations, which are the internationally endorsed baseline for AML/CFT regimes. Other bodies issue sectoral guidance or assessments but do not own the Recommendations.

Question 32International AML/CTF Standards and Frameworks

Under the FATF Recommendations, which approach requires countries and institutions to allocate resources according to the assessed level of money laundering and terrorist financing risk?

  1. The strict liability approach
  2. The proportionality doctrine
  3. The risk-based approach Correct answer.
  4. The precautionary principle

Explanation

The risk-based approach is a core organising principle of the FATF Recommendations, allowing enhanced measures where risk is higher and simplified measures where risk is demonstrably lower. It applies both at national level and within individual institutions.

Question 33International AML/CTF Standards and Frameworks

What does the FATF term 'predicate offence' mean in relation to money laundering?

  1. Any offence committed using a financial institution
  2. The offence of failing to report a suspicious transaction
  3. The underlying criminal activity that generates the proceeds being laundered Correct answer.
  4. A minor regulatory breach that triggers enhanced due diligence

Explanation

A predicate offence is the underlying crime whose proceeds are laundered; money laundering is generally defined by reference to such underlying offences. Countries are required to apply the widest possible range of predicate offences.

Question 34International AML/CTF Standards and Frameworks

Which FATF Recommendation addresses the criminalisation of terrorist financing and targeted financial sanctions related to terrorism?

  1. Recommendation 15
  2. Recommendation 24
  3. Recommendation 5 Correct answer.
  4. Recommendation 10

Explanation

Recommendation 5 requires countries to criminalise terrorist financing and to implement targeted financial sanctions pursuant to UN Security Council resolutions on terrorism. It sits alongside Recommendation 6, which covers proliferation financing sanctions.

Question 35International AML/CTF Standards and Frameworks

Which organisation adopts binding international standards on combating money laundering and the financing of terrorism that its member jurisdictions must implement?

  1. The Financial Action Task Force
  2. The Organisation for Economic Co-operation and Development
  3. The United Nations Security Council Correct answer.
  4. The Egmont Group

Explanation

UN Security Council resolutions, particularly those imposing targeted financial sanctions, are binding on all UN member states under the UN Charter. The FATF sets standards, but the binding legal obligations flow from Security Council resolutions.

Question 36International AML/CTF Standards and Frameworks

A bank's customer is a politically exposed person. Under the FATF Recommendations, which measure is required in addition to standard customer due diligence?

  1. Filing of a suspicious transaction report in every case
  2. Automatic exit from the relationship
  3. Establishment of the source of wealth and source of funds Correct answer.
  4. Referral of the relationship to the financial intelligence unit for approval

Explanation

For PEPs, institutions must apply enhanced measures, including establishing source of wealth and source of funds, obtaining senior management approval, and conducting enhanced ongoing monitoring. A suspicious transaction report is required only where there is suspicion, not automatically.

Question 37International AML/CTF Standards and Frameworks

Which of the following best describes the FATF's 'targeted financial sanctions' obligation?

  1. Criminal prosecution of designated persons by the designating state
  2. Reporting of all cross-border wire transfers above a fixed threshold
  3. Freezing of assets without delay for persons and entities designated under relevant UN Security Council resolutions Correct answer.
  4. Imposition of trade embargoes on entire jurisdictions

Explanation

Targeted financial sanctions require jurisdictions to freeze funds and other assets of designated persons and entities without delay and without prior notice, and to ensure no funds are made available to them. This is a preventive, asset-freezing measure rather than a criminal or trade measure.

Question 38International AML/CTF Standards and Frameworks

Which FATF Recommendation sets out the requirement for countries to criminalise money laundering?

  1. Recommendation 29
  2. Recommendation 3 Correct answer.
  3. Recommendation 8
  4. Recommendation 20

Explanation

Recommendation 3 requires countries to criminalise money laundering on the basis of the Vienna and Palermo Conventions. It also addresses the scope of predicate offences and ancillary offences.

Question 39International AML/CTF Standards and Frameworks

What is the primary purpose of a national risk assessment under the FATF framework?

  1. To certify individual institutions as fully compliant with AML/CFT standards
  2. To replace sectoral supervision with self-assessment by reporting entities
  3. To identify, assess and understand money laundering and terrorist financing risks so that resources can be prioritised Correct answer.
  4. To calculate the exact volume of laundered funds in a jurisdiction

Explanation

A national risk assessment identifies and evaluates ML/TF risks across sectors and channels so that authorities can prioritise and allocate resources appropriately. It is an analytical exercise, not a certification or precise quantification of criminal proceeds.

Question 40International AML/CTF Standards and Frameworks

A financial institution applies simplified customer due diligence to a low-risk customer. Which condition must be satisfied under the FATF Recommendations?

  1. The institution must obtain senior management approval for every transaction
  2. The lower risk must be demonstrated by an adequate risk assessment Correct answer.
  3. The customer must consent to simplified measures in writing
  4. The customer must be a resident of the institution's home jurisdiction

Explanation

Simplified measures are permitted only where lower risk has been identified and justified through an adequate risk assessment, and they must not apply where there is suspicion of ML/TF. The institution remains responsible for demonstrating that the risk is genuinely lower.

Question 41International AML/CTF Standards and Frameworks

Which body typically receives and analyses suspicious transaction reports at national level?

  1. The financial intelligence unit Correct answer.
  2. The prudential banking supervisor
  3. The central bank's monetary policy committee
  4. The securities exchange regulator

Explanation

The financial intelligence unit is the national centre responsible for receiving, analysing and disseminating suspicious transaction reports and other financial disclosures. Supervision and monetary policy are distinct functions.

Question 42International AML/CTF Standards and Frameworks

Which FATF Recommendation requires countries to ensure that beneficial ownership information of legal persons is available to competent authorities in a timely manner?

  1. Recommendation 12
  2. Recommendation 38
  3. Recommendation 24 Correct answer.
  4. Recommendation 32

Explanation

Recommendation 24 requires countries to prevent misuse of legal persons by ensuring adequate, accurate and timely beneficial ownership information is available to competent authorities. Recommendation 25 performs a parallel function for legal arrangements such as trusts.

Question 43International AML/CTF Standards and Frameworks

Under the FATF Recommendations, which offence relates specifically to the movement of cash across borders without the required declaration?

  1. Correspondent banking under Recommendation 13
  2. Cash courier offences under Recommendation 32 Correct answer.
  3. Market abuse under Recommendation 34
  4. Tipping off under Recommendation 21

Explanation

Recommendation 32 requires countries to operate a declaration or disclosure system for cross-border physical transportation of currency and bearer negotiable instruments, backed by sanctions for false or missing declarations. The other items concern unrelated areas of the framework.

Question 44International AML/CTF Standards and Frameworks

What is the principal purpose of a mutual evaluation conducted by the FATF and its regional bodies?

  1. To assess whether a jurisdiction has implemented the Recommendations effectively in law and in practice Correct answer.
  2. To license financial institutions to operate in member countries
  3. To impose fines on institutions that breach AML rules
  4. To calculate the tax revenue lost to money laundering

Explanation

Mutual evaluations assess technical compliance with the Recommendations and the effectiveness of a jurisdiction's AML/CFT system. They result in ratings and follow-up processes, not fines or licences for individual institutions.

Question 45International AML/CTF Standards and Frameworks

Which of the following is an element of the FATF definition of a politically exposed person?

  1. Any individual holding assets above a fixed threshold
  2. A customer who has previously been the subject of a suspicious report
  3. An individual entrusted with a prominent public function Correct answer.
  4. Any person connected to a foreign company

Explanation

A PEP is an individual who is or has been entrusted with prominent public functions, along with family members and close associates. Wealth thresholds or prior reports are not part of the definition.

Question 46International AML/CTF Standards and Frameworks

Which FATF Recommendation requires financial institutions to conduct customer due diligence and to identify the beneficial owner?

  1. Recommendation 22
  2. Recommendation 26
  3. Recommendation 10 Correct answer.
  4. Recommendation 16

Explanation

Recommendation 10 sets out the customer due diligence requirements, including identifying the customer and the beneficial owner, understanding the ownership and control structure, and conducting ongoing monitoring. Recommendation 22 applies similar obligations to designated non-financial businesses and professions.

Question 47International AML/CTF Standards and Frameworks

A country's authorities wish to permit reliance on third parties for customer due diligence. Under the FATF Recommendations, what remains the responsibility of the institution relying on the third party?

  1. The obligation to report to the FIU on the third party's behalf
  2. Ultimate responsibility for compliance with CDD requirements Correct answer.
  3. The obligation to supervise the third party as a regulated entity
  4. Nothing, because responsibility passes entirely to the third party

Explanation

Where reliance on a third party is permitted, the relying institution remains ultimately responsible for meeting CDD requirements, including obtaining the necessary information promptly. The third party must be regulated and supervised and must have measures in place.

Question 48International AML/CTF Standards and Frameworks

Which FATF Recommendation addresses the risks posed by new technologies, including virtual assets?

  1. Recommendation 19
  2. Recommendation 23
  3. Recommendation 15 Correct answer.
  4. Recommendation 17

Explanation

Recommendation 15 requires countries and institutions to identify and assess the ML/TF risks arising from new or developing technologies and to take appropriate measures, including the regulation of virtual asset service providers.

Question 49International AML/CTF Standards and Frameworks

Which statement best reflects the FATF position on the sharing of information within a financial group?

  1. Group-wide AML/CFT programmes should include information sharing within the group where permitted by law Correct answer.
  2. Sharing is permitted only between institutions in the same jurisdiction
  3. Information sharing is prohibited to protect customer confidentiality
  4. Information may only be shared with the FIU and never within the group

Explanation

The FATF requires financial groups to implement group-wide programmes that include sharing of information for CDD and risk management purposes, subject to legal and confidentiality safeguards. Cross-border sharing should be permitted where confidentiality is protected.

Question 50International AML/CTF Standards and Frameworks

Which FATF Recommendation deals with the regulation and supervision of designated non-financial businesses and professions?

  1. Recommendation 28 Correct answer.
  2. Recommendation 27
  3. Recommendation 35
  4. Recommendation 30

Explanation

Recommendation 28 concerns the regulation and supervision of DNFBPs, including casinos, real estate agents, dealers in precious metals and stones, and lawyers and accountants where applicable. Recommendation 27 performs a parallel function for financial institutions.