Anti-Money Laundering & KYC Flashcards
7 cards from real RCMS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Anti-Money Laundering & KYC flashcards as text
What does the Corporate Transparency Act (CTA), effective January 2024, primarily require?
Answer: Most U.S. companies to report their beneficial owners to FinCEN
The CTA requires millions of U.S. companies to report beneficial ownership information to FinCEN to combat the misuse of shell companies for illicit finance.
In AML risk assessment, which factor would most likely elevate a customer's risk rating?
Answer: The customer's business involves significant cash transactions in a high-risk jurisdiction
Cash-intensive businesses operating in high-risk jurisdictions present elevated AML risk due to greater opportunities for illicit fund concealment.
Which of the following best describes 'Hawala' in the context of AML?
Answer: An informal value transfer system based on trust that operates outside traditional banking
Hawala is an informal value transfer system where money is moved through a network of brokers (hawaladars) without actual physical transfer of funds.
What is a 'Know Your Customer's Customer' (KYCC) process?
Answer: Due diligence conducted on the customers of an institution's business clients to assess downstream risk
KYCC extends KYC practices to understand who a business customer's own customers are, reducing the risk of being used as an intermediary for illicit transactions.
Under FATF standards, countries with significant AML/CFT deficiencies are placed on which lists?
Answer: The 'Grey List' (Increased Monitoring) and 'Black List' (Call for Action)
FATF maintains a grey list of jurisdictions under increased monitoring and a black list (IOSCO) of high-risk jurisdictions subject to a call for action.
What is the primary AML risk of virtual asset service providers (VASPs) according to FATF guidance?
Answer: Potential for anonymous or pseudonymous transactions that circumvent CDD requirements
VASPs face AML risks primarily because cryptocurrency transactions can be conducted with reduced identity transparency, enabling potential layering and placement of illicit funds.
Which of the following scenarios would most likely require a financial institution to file a SAR, even if no currency reporting threshold is met?
Answer: A new account receiving multiple wire transfers from unrelated parties followed by immediate withdrawals
Rapid in-and-out wire patterns from unrelated sources in a new account are a classic red flag for money laundering that warrants SAR filing regardless of transaction size.