Financial Crime Specialist (CFCS) Free Practice Test

Question 1

A bank holds accounts for several different gatekeeper clients such as attorneys accountants and company formation agents II is conducting a periodic review of these accounts and updating their risk ratings.
Which two accounts should the bank consider to be at highest risk? Choose 2 answers

A. An accountant at a private accounting firm whose clients are large multinational agricultural corporations

B. A notary in Latin America who specializes in assisting clients from other countries with high-end real estate transactions

C. A company formation agent that establishes private investment companies primarily for clients in Africa and Asia

D. An attorney whose practice specializes in cases involving maritime law in the international shipping industry

Correct Answer: B,C

Question 2

The U.S. Federal Bureau of Investigations (FBI) has recently contacted your financial institution to provide advanced warning of a potential attack by a known cybercrime ring Based on information obtained from an ongoing investigation, the FBI believes that an attack is likely within the next 48 hours although it does not have any further details on the likely targets or attack techniques.
Your institution has a large online presence and holds a variety of sensitive data-from payment card numbers to personal information on customers that could be used in identity theft schemes Based on the available information which steps should you prioritize? Choose 2 answers

A. Implement enhanced monitoringofuser access logs that record when and how individuals are connecting to the institution's networks

B. Analyze the results from your most recent cybersecurity assessment to determine the data that would be at greatest risk

C. Notify customers that online operations may be interrupted in response to a threatened cyber incident

D. Contact the institution's public relations department and instruct them to begin drafting a strategy on how to respond to the potential cyber incident

Correct Answer: B,D

Question 3

In your job as an analyst with a securities regulator you are reviewing the movement and volatility in penny stocks. As part of your daily work, you review reports and you encounter this chart in the chart the dotted line represents the closing price and the bars represent average daily volume.

Which type of securities fraud should you begin investigating?

A. Front running

B. Market manipulation

C. Insider trading

D. Cherry picking

Correct Answer: B

Question 4

A fully qualified mortgage applicant submits an offer to purchase an investment properly through the seller's agent conditional on obtaining financing within 72 hours. The purchaser provides accurate and verifiable documentation to support the acquisition and servicing of the debt but the purchase price of the properly appears to be higher than what you would consider fair market value. You suspect that the customer is involved in a real estate investment scheme that is dependent upon an inflated properly value.

A. The Lille attorney

B. The mortgage broker

C. The lender

D. The sellers agent

Correct Answer: D

Question 5

The money laundering control officer at a bank has determined that there are three business accounts at the bank that are conducting related high velocity transactions that do not match the profile for the stated business activities of the account. Further investigation determines that the signatories of the three accounts were joint defendants in a civil fraud lawsuit ten years earlier.
Which action must the money laundering control officer at the bank lake?

A. Freeze the accounts until further investigation can be made

B. Prepare a Suspicious Activity or Transaction Report (i.e. SAR or STR) and file it with the Financial intelligence Unit (FIU) in the jurisdiction where the bank conducts operations

C. Contact the government investigators and report his suspicion that the accounts may be part of a fraud scheme

D. Arrange individual meetings with the account holders and inquire about the transactions

Correct Answer: B

Question 6

An internal auditor is conducting a quality assurance review of sales results and records for a large U.S.
based aerospace and defense contracting firm The auditor has been tasked with reviewing the recordsofsales departments in several countries because the company has raised concerns over accounting discrepancies and possible issues with inflated sales figures.
In the records of one sales department the auditor documents an unusually high number of returnsofairplane parts. These returns come from purchasers who executed sales contracts only to invoke right of return shortly afterwards.
Upon reviewing thesesales contracts,the auditor cannot find specific provisions regarding right of return for purchasers.
Given this information which is the MOST likely conclusion the internal auditor will make?

A. The sales department may be involved in a tax evasion scheme involving falsified returns to disguise undisclosed assets

B. The sales department manager may be involved in an embezzlement scheme tied to the returned airplane parts

C. The sales department may beinvolved in a fraudulent revenue recognition scheme related to hidden payment andrefundterms

D. The sales department may be violating sanctions through the undocumented saleofdual-use goods to countriessubjectto U S sanctions

Correct Answer: C

Question 7

A company is concerned that its prepaid cards could be used by identity thieves seeking to launder funds.
You have been asked to examine its card program and designate features to reduce the risks of the cards being abused.
Which policy would MOST reduce the risk ol money laundering?

A. The cards can be used al merchants' points of sale to get cash back on purchases

B. The cards must be reloaded at the original point of sale using a debit or credit card

C. The cards hold a low maximum value and can be reloaded by the customer several times a day

D. The cards expire one year after their issue date and the funds revert to the customer

Correct Answer: B

Question 8

Your client is the victim of an investment fraud You traced the investment payments made by your client to XYX, Inc. Your research indicates XYX is incorporated in Delaware.
Which means are used to obtain beneficial ownership information from a state authority?

A. Contact the Delaware Secretary of State and request the list of corporate officers and directors

B. Petition the Delaware Court of Chancery to obtain details ol beneficial ownership

C. Contact the corporate Registered Agent and request a list of the shareholders

D. No beneficial ownership information is required to be obtained by the Delaware Secretary ol State

Correct Answer: D

Question 9

You are a federal investigator and have identified assets in an offshore jurisdiction that you have strong evidence are the proceeds of illicit activities that look place in your jurisdiction.
While you have convincing evidence that would tie the assets to the financial crime you are investigating you have been unable to obtain documents that show true beneficial ownership because of secrecy laws.
Which action is MOST likely to gain control of the properly or identify the true beneficial owner?

A. File a quitclaim deed on the properly

B. File a lawsuit against the caretaker to obtain the assets

C. File an rem proceeding against the assets

D. File a tax lien against the property

Correct Answer: C

Question 10

Phillips Importers LLC. is a shell company owned by Jon Phillips Mr. Phillips is very active in his local church He has convinced a large number of individuals from his church to invest in the Phillips Fund, which guarantees 10% returns.He lakes the money he collects and puts itina bank account for Phillips Importers LLC. He uses that money to market the Phillips Fund to new investors, print statements, pay dividends to his investors and pay some of his personal expenses.
Which types of fraud isMr.Phillips committing? Choose 2 answers

A. Affinity fraud

B. Ponzi scheme

C. Market manipulation

D. Pyramid scheme

Correct Answer: A,B

Question 11

You are an investigator pursuing a suspected fraudster whom you believe is leading a multi-million dollar Ponzi scheme targeting the elderly in your country You believe you are close to gathering the evidence needed to recover some of the victims losses However you are missing some transaction records from a financial institution that would connect the suspect to accounts holding the proceeds of the fraud.
These records can only be released to law enforcement or government regulators. You have a friend in the local police department who is willing to contact the institution and request the records under the pretenses they are needed for an unrelated police investigation.
Given these circumstances would it be ethical for you to ask your friend to obtain the records?

A. This action is epical because the records are being turned over to a law enforcement official and you the investigator, are not directly misrepresenting yourself

B. This action is unethical because your avenue for obtaining Ihe records was inappropriate, even if you did not directly misrepresent yourself

C. This action is unethical because you do not have proof that Ihe suspect has committed the fraud and are only acting on your belief

D. This action is ethical because you are acting in the best interests of your clients, the fraud victims who need this information to recover some of Their losses

Correct Answer: B

Question 12

You are a manager in Ihe fraud department of a regional bank Upon returning from a three-day weekend one of your analysts informs you that in the last 48 hours a high volume of suspicious activity has been detected in a number of a small business accounts.
The accounts are showing a similar pattern - first a small funds transfer to institutions in other countries followed by a series of larger transactions to the same institutions initiated in rapid succession.
Concerned about the activity you contact your senior compliance managers and recommend these transactions be suspended or clawed back pending further investigation. Based on the information available which additional steps should you recommend?
Choose 2 answers

A. Contact small business accountholders to alert them that they may have been the victims of a ransomware attack

B. Suspend all active credit cards currently issued to small business accounts and issue new ones

C. Contact the cybersecurity department to alert them that your institution may have been the victim of a data breach

D. Require the bank to call a known number to confirm all international transactions from small business accounts

Correct Answer: C,D

Question 13

In the context of compliance programs and controls, what is the primary objective of conducting a risk assessment within a financial institution?

A. To assess the financial institution's exposure to various types of risks.

B. To identify potential areas of non-compliance with internal policies.

C. To generate revenue through risk management activities.

D. To allocate resources for regulatory compliance efforts.

Correct Answer: A

Question 14

During an organizational overview of financial crime controls, Mr. Thompson, the compliance manager, identifies a lack of adequate training for frontline staff on recognizing and reporting suspicious activities.
What is the most effective way for Mr. Thompson to address this issue?

A. Assign responsibility for training to individual branch managers.

B. Conduct a one-time training session for all frontline staff members.

C. Hire additional compliance staff to oversee frontline operations.

D. Develop and implement an ongoing training program tailored to the specific needs of frontline staff.

Correct Answer: D

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ACFCS Financial Crime Specialist (CFCS) Free Practice Test