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

You are an examiner for a financial industry regulator One of your smaller firms has shown a dramatic increase in wire activity that you think may be indicative of them facilitating money laundering. You request their outgoing wire transactionsfor the past six months and they provide you a spreadsheet with nearly 10,000 wires.
Which two criteria would be the MOST effective way to narrow down your sample for investigation? Choose
2 answers

• A. The client(s) with the highest number of foreign wires
• B. The client(s) with multiple wires just below the reporting threshold
• C. The client(s) with multiple third-party wires to different foreign beneficiaries
• D. The client(s) with an address outside the country where your firm is domiciled

Mr. Johnson, a compliance officer at ABC Corporation, is conducting due diligence on a potential business partner based in a foreign country. During the due diligence process, Mr. Johnson discovers that the potential partner's principal shareholder is a politically exposed person (PEP) from a country subject to OFAC sanctions. What is the most appropriate action for Mr. Johnson to take?

• A. Proceed with the business partnership but conduct enhanced monitoring of transactions involving the PEP.
• B. Reject the business partnership due to the involvement of a PEP from a sanctioned country.
• C. Proceed with the business partnership but disclose the involvement of the PEP to OFAC.
• D. Seek guidance from OFAC on the permissibility of engaging with the potential partner.

One of the tasks for an employee of a U S bank is to administer overseas large value drafts. The employee receives a draft from Country X that is identified as a high-risk and non-cooperative jurisdiction by the FATF According lo the FATF 40 Recommendations, which action should the employee take?

• A. Since the draft was issued in a non-cooperative country block the transaction
• B. Conduct an investigation according to the money laundering and the financing of terrorism norms/rules enforced and adopted by Country X
• C. Verify the transaction's basic data according to the bank's international operations manual
• D. Request additional documentation to get a deeper understanding about the payer and the origin of the funds

Company A required capital to purchase wholesale consumer products to resell to retail outlets Company A solicited working capital by offering investors promissory notes in exchange for borrowed funds. The promissory notes promised a high annual interest rate of 14% Company A paid the promised 14% returns and a commission from the new funds received from later investors No wholesale products were purchased with the investors funds and there was no underlying business.
Which type of fraud is being described?

• A. Advanced Fee scheme
• B. Ponzi scheme
• C. Pyramid scheme
• D. Pump and dump scheme