Conducting Investigations Flashcards
7 cards from real CFE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Conducting Investigations flashcards as text
When a fraud examiner is asked to conduct a covert investigation, the MOST critical consideration is:
Answer: Obtaining proper authorization and maintaining strict confidentiality
Covert investigations must be properly authorized and kept confidential to remain legally defensible and protect the integrity of the inquiry.
The 'fraud theory' approach to investigating requires the examiner to:
Answer: Formulate a hypothesis about how the fraud was committed and test it with evidence
The fraud theory approach involves developing a hypothesis about the scheme and then systematically gathering evidence to confirm or refute it.
A fraud examiner reviewing bank statements notices several round-dollar transactions just below the $10,000 CTR reporting threshold. This pattern is MOST indicative of:
Answer: Structuring, which is itself a federal crime
Structuring (also called 'smurfing') involves deliberately breaking up transactions to avoid Currency Transaction Report requirements and is a federal crime.
Which of the following BEST describes the purpose of a 'Suspicious Activity Report' (SAR) in a fraud investigation context?
Answer: A mandatory report filed by financial institutions to FinCEN for suspected money laundering
SARs are required reports that financial institutions must file with FinCEN when they detect suspected money laundering or other financial crimes.
During an investigation, a fraud examiner obtains evidence through an illegal search. This evidence is MOST likely to be:
Answer: Admissible if the examiner is a private party, not law enforcement
The exclusionary rule primarily applies to government actors; evidence obtained by private investigators through illegal searches may still be admissible in court, though the investigator may face separate liability.
When a fraud examiner identifies a potential conflict of interest in conducting an assigned investigation, the MOST appropriate action is to:
Answer: Disclose the conflict to supervisors and recuse if necessary
Disclosing conflicts of interest and recusing when appropriate preserves the examiner's objectivity and the investigation's credibility.
In a fraud investigation, which of the following PUBLIC RECORDS would be MOST useful for tracing hidden asset ownership?
Answer: County property deed records and UCC filings
County property deeds and UCC (Uniform Commercial Code) filings are public records that reveal real property ownership and security interests, helping trace hidden assets.