CERTIFIED AML FINTECH COMPLIANCE
ASSOCIATE (CAFCA) TEST FINAL EXAM
ACTUAL EXAM COMPLETE EXAM QUESTIONS
WITH DETAILED VERIFIED ANSWERS (100%
CORRECT ANSWERS) /ALREADY GRADED A+
Question 1: What is Financial Crime?
CORRECT ANSWER: Illegal activities that typically
are economically motivated, such as money laundering, terrorist financing, sanctions, fraud, bribery, corruption, and tax evasion
Question 2: Name the three basic stages of money
laundering.
CORRECT ANSWER: Placement, layering, and
integration
Question 3: State the key differences between money
laundering and terrorist financing.
CORRECT ANSWER: Terrorist financing uses funds
to support terrorist activities, but the funds are not necessarily derived from illegal activities. Money laundering always involves the proceeds of illegal activities, typically committed by the ultimate beneficiaries of the funds.
Question 4: What are the main types of sanctions and
who do they target?
CORRECT ANSWER: Financial, economic, and trade.
They generally target individuals, organizations, and countries.
Question 5: List the three major reasons people commit
fraud, and what this model is called.
CORRECT ANSWER: The three major reasons are
pressure, opportunity, and rationalization. This model is referred to as the "Fraud Triangle".
Question 6: Name two important pieces of anti-bribery
and corruption legislation with extra-territorial reach.
CORRECT ANSWER: The Foreign Corrupt Practices
Act in the US and The UK Bribery Act 2010.
Question 7: State two differences between tax avoidance
and tax evasion.
CORRECT ANSWER: Tax avoidance uses legal
practices to reduce taxes owed, whereas tax evasion uses illegal practices to evade paying taxes owed.
Question 8: Name an example of politically exposed
persons (PEPs).
CORRECT ANSWER: Examples of PEPs include
heads of state or heads of government, senior politicians, senior government, judicial and military officials, senior executives of state-owned corporations, and important political party officials, as well as their families and close associates. Usually, PEP positions are specified in each jurisdiction's AML regulation.
Question 9: State an example of high-risk customers that
Fin Techs might encounter.
CORRECT ANSWER: Examples include customers
who sign up using false identities, customers who lie about the purpose of business relationships, front companies, companies with complex ownership structures, and customers linked to organized crime groups.
Question 10: Name some jurisdiction risks and red flags
in the FinTech sector.
CORRECT ANSWE R: Jurisdictions with higher risk
include those with poor AML regulations, high levels of corruption, inadequate frameworks to prevent financing of terrorism, and economic sanctions in place.Jurisdictions that are tax havens and those known to host shell companies are also high risk.
Question 11: Why are Fin Techs often considered to be
high-risk companies?
CORRECT ANSWER: Because of the lack of face-to-
face encounters and the speed with which a person can access financial products.
Question 12: What are some Fin Tech risks and red
flags?
CORRECT ANSWER: Non face-to-face customer
interactions and onboarding, cryptocurrencies and anonymity, faster payments, new technologies and their potential vulnerabilities, unproven business models, and undeveloped governance frameworks.
Question 13: What are the benefits to using banking as a
service provider?
CORRECT ANSWER: Faster speed to market and
overcoming regulatory complexities.
Question 14: What are card schemes?
CORRECT ANSWER: Membership-based networks
that enable a payment method, such as Visa, JCB and MasterCard.
Question 15: What are the three lines of defense in AML
compliance?