Certified Compliance Professional (CCP) 2023

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Name

Organisation

This PEP definition which states that they - “Include individuals whose current or past official position can attract publicity or whose financial action or circumstances may be the subject of increased public scrutiny”.

FATF

Wolfsberg Group Definition

Brentwood

Basel

None of the above

None

The following information can be used to identify individuals except;

Legal name and any other names used

Correct permanent address in full, Telephone, fax numbers & email address

Details of a onetime co-passenger

Date and place of birth, Nationality, Occupation, public position held

Official personal identification number or other unique identifier contained in an unexpired official document, Signature

None

Customer Due Diligence is a process of establishing that the;

customer is who he/she claims he/she is

Customer is a criminal

Customer is living alone

Customer is hot tempered

Customer is a socialite

None

Below are the sources of ML/TF threats except:

Customers

Location/geography/jurisdiction

Law Enforcement agents

Products & Services

Delivery channels and technology

None

Threat could mean a person or event likely to cause damage or danger. An FI or DNFBP is faced with the threat of money laundering/terrorist financing from except;

Terrorist group

Money launderers

Toddler

Fraudsters

Shell banks, shell companies and Criminals

None

The following are benefits of Compliance except;

It provides practical guidance on the interpretation and application of both external laws and internal codes of behaviour, and equips them with knowledge and values relevant to functional areas to protect the institution and its employees as well as make the society safe and secure.

Compliance helps to improve the quality and speed of the product development process, because regulatory and ethical considerations are included automatically from an early stage;

Helps to improve a country’s public as well as international image and removal from the list of Non-Cooperative Countries and Territories (NCCT), if blacklisted. Thereafter, Foreign Direct Investments (FDIs) are attracted and more FDIs expected, and the due to improved image, the country’s citizens are threat fairly with respect, both within and outside the country

Compliance is an enemy of business and it kills profitability and it is counter-productive as resources are wasted on compliance trainings

Compliance protects financial institutions against regulatory compliance risks especially in a sanctions regime when there is zero tolerance for non-compliance and It also discourages, deters and punishes criminality because money laundering is tied to it;

None

The ………. of the FIs or DNFBPs have the right to identify and assess all the risks embedded in the operation of their institution. This also includes the risk of money laundering and terrorist financing. The policy and review for assessing the risk should be approved.

Board

Management

Risk Management

Operations

Compliance

None

Sequel to the September 11 terrorist attack, FATF Recommendations were expanded in 2001 to include

Anti-money laundering (AML)

Combating of Terrorist Financing (CTF)

Know Your Customer (KYC)

Politically Exposed Persons (PEPs)

Customers Due Diligence (CDD).

None

When presented with a search warrant, an institution should consider taking the following steps, except:

Call the financial institution's in-house or outside counsel

Review the warrant to understand its scope

Resist the search operation to prove you are stubborn and tough

Ask for and obtain a copy of the warrant

Remain present while the agents record an inventory of all items they seize and remove from the premises. Keep track of the records taken by the agents, get a copy and note the law enforcement agents and/or affiliations present.

None

The Levels of risks are and generally all risk categories can be broken down into the following levels of risk, except:

Good

Unacceptable or Prohibited

High

Medium

Low or Standard

None

Training is a core pillar of compliance. Since compliance is driven by human. Knowledge gap may pose a serious challenge to achieving compliance goals. Consequently, there is need for training and re-training of compliance personnel and all the critical stakeholders within an organisation in the art of compliance. To achieve this, there is a need to set the following six (6) rules except

Implement an approved annual training plan for all employees and directors

Drive compliance training for only back office staff as marketers or relationship officers/managers are always in marketplace

Send quarterly returns on training programs execution to the regulators

Conduct at least an annual AML/CFT compliance training for Board and Management

Send CCOs and Compliance Staff to Professional Certification Programs

None

There are differences between Terrorist Financing and money laundering. Terrorist financing has the following attributes except;

The motivation is ideological and the conduit favours cash couriers or informal financial systems such as Hawala and currency exchange firms.

Source of funding is Internally from self-funding cells (generally centered on criminal activity).

Detection of suspicious transactions is in terms of Suspicious relationships, such as wire transfers between seemingly unrelated parties, which lead to transactional links

In terms of financial activity, no workable financial profile of operational terrorists exists, according to U.S. 9/11 Commission.

The terrorist can benefit from the terrorist finance raised for the terror activities by utilizing the funds before the terror act is carried out.

None

Suspicious Transaction Report (STR) is rendered to which of the following bodies;

Central Bank

Financial Intelligence Unit (FIU),

Police

Customs Service

Drug Law Enforcement

None

Vulnerability refers to the weaknesses in the internal control processes that may likely be exploited by the threats. The weaknesses include except;

Insufficient customer-base

Improper implementation of KYC/CDD

Poor Record keeping

Late rendition of mandatory reporting

Inaccurate Sanctions Screening

None

One of the commonly used techniques of Money Laundering (ML) through which a customer uses multiple individual and/or transactions to make cash deposits into several accounts and/or to procure financial instruments or managers cheques or bank drafts in amounts below the reporting threshold is referred to as;

Cash Depositing

Financial Transactions

Smurfing

Derivatives

Hedging

None

The safeguards of both control and audit functions are necessary to ensure that compliance programs, processes, procedures, policies put in place by management are adequate, effective and efficient. To achieve this, a financial institution should put in place the following rules except;

Train Internal Audit in AML/CFT Compliance to be able to perform statutory function of independent testing

Internal Audit should conduct independent audit and testing of compliance annually and a review of AML/CFT programme done every 3 years by external AML/CFT Compliance Consultants

External Audit of the institution is sufficient hence no other independent review, audit or testing of compliance function by AML/CFT Compliance consultant is necessary

The Compliance Audit Report should be submitted to the Board (Board Audit Committee) for review

The Internal Audit of Compliance should be dependent on the Risked Based Approach (RBA) by qualified and experienced Audit Staff

None

In order to ensure that illegitimate money is safeguarded, the money launderer, employs the following;

Scheming and Disguising

Tactic

Technique

Method and Strategies

All of the above

None

Which one of the following is not a Politically Exposed Persons (PEPS);

The President, Vice president, Ministers, Advisers

Executive members of Market Association

Members of Senate and their advisers and assistants

Members of the House of Representatives and their advisers and assistants

Members of the Judiciary and their assistants

None

Which of the recommendations of FATF stated that Risk-Based Approach is the process of identifying, measuring, monitoring and mitigating risk;

Recommendation 1

Recommendation 2

Recommendation 3

Recommendation 4

Recommendation 5

None

Risk assessment in AML/CFT Compliance is very important in order to ………………. compliance and related risks using risk management techniques and principles to protect the FI and DNFBPs, except;

Identify

Assess

Control

Ignore

Manage

None

Law enforcement investigations, in many other jurisdictions, can be triggered by any number of factors, including;

the receipt suspicious transaction report or STR

tips from other sources (inside and outside of the government)

Information gleaned from other cases

Observation and environmental scanning

All of the above

None

Money laundering (ML) can be defined as follows;

Money laundering is the process through which you subject your funds to thorough cleaning and cleansing using any method of your choice in relation to financial engineering and laundry in order to have money that is clean.

Money Laundering is the conversion or transfer of property (i.e. money, goods, commodities, etc.) knowing that such property is derived from a serious criminal offence, for the purpose of concealing or disguising its illicit origin of the property or of assisting any person who is involved in the commission of the crime to evade the legal consequences of his actions, and the concealment or disguising of the true nature, source, location, disposition, movement, rights with respects to, or ownership of property, knowing that it is derived from a criminal offence

Money laundering is the process by which criminals do not attempt to hide or do not disguise the true origin and ownership of the proceeds of their criminal activities and they do not convert or transfer but spend it openly to prove they are courageous and it does not matter whatever source even though illegitimate so long as you are in possession of the money

Money laundering is the process through which rich people relate with banks to obtain clean and crispy paper money to replace their dirty paper money or notes because many rich people do not like to touch or spend filthy money.

This is the process through which the cash management unit of financial institutions make arrange with central bank and dry cleaning/laundry service providers to ensure all mutilated and dirty money are thoroughly laundered and replaced to ensure they are clean before they are pushed into circulation or used to pay customers for withdrawals because the government has advised that dirty money should not be allowed to remain in circulation.

None

The Compliance Department can choose any or more than one of the following media to communicate to the entire institution except;

Compliance handbook, Newsletter or periodicals

Compliance awareness

Sharing of hand bills at the motor park

Compliance Screen savers and Titbits

Compliance eLearning

None

Politically Exposed Persons (PEPs) are people of honour, fame and repute hence they should be treated as people without risk in financial institutions. But regulatory authorities and compliance professionals think otherwise about PEP customers’ risk classification and believe they should be treated as follows;

High risk by default

Medium risk by default

Low risk by default

Zero risk

None of the above

None

Compliance can be defined as;

Adherence to profit motive and compliance with the laws and regulations that are convenient and which will not shrink profitability of the financial institution’s or DNFBP’s business.

Adherence to laws, rules, regulations and guidelines that are relevant in the course of doing business or in the operation or activities of providing goods and services

Disobedience to laws, rules, regulations and guidelines that are relevant in the course of doing business or in the operation or activities of providing goods and services.

Obedience to convenient extant laws, rules, regulations and guidelines that are irrelevant in the organisation’s line of doing business

None of the above

None

The following are high Risk Terror Finance International locations or Countries, locations, or jurisdictions:

Drug Source/Transit

OECD list (Tax Haven) and INCSR Primary Concern (Int’l Narcotics Control Strategy Report), etc

Offshore Banking Centre

OFAC list and NCCT

Regulated and FATF countries and territories

None

In this era of deep social media penetration, a person’s footprint gathered through Google, Facebook and other social networks – can provide valuable information about an individual that cannot be gleaned from other sources. This method of KYC/CDD process is known as;

Artificial Intelligence (AI)

Data Resource Management

Social Biometrics

Blockchain

KYC Utilities

None

There are reasons that gave rise to the global shift and focus on Compliance which include the following except;

Focus on reputational risk

Increasing regulatory legislation

Stricter penalties for regulatory breaches

Use of sanctions by regulators to punish opposition

Threat to the society and indeed the entire world

None

In the case of corporate entities, the following general identification procedure for this class of customers are adopted except;

Name and principal place of business of the company

Names of Directors and official identification number e.g. RC no.

Name of company located next to the prospective corporate customer

Original or certified copy of the certificate of incorporation

Nature and purpose of the business and its legitimacy

None

The following are the attributes of a blockchain except;

Distributed time-stamped ledger

Digital information can be distributed but not copied

Fool-proof, immutable history of a person’s or company’s financial activity

Duplication and unsecured financial transactions

Greater efficiency and automation to the KYC process

None

In the Rules of Engagement in AML/CFT Compliance, the following are important part of it except;

The FI or DNFBP should establish written AML/CFT policies and procedures

The Board should approve the AML/CFT policies and procedures of the FI or DNFBP

The FI or DNFBP should review/update the AML/CFT policies and procedures at least every 3 years

The FI or DNFBP should communicate the AML/CFT program to all employees and directors

The FI or DNFBP should engage the entertainment industry to organize social events every month-end

None

Regional and Cluster Compliance Coordination is in charge of the following;

AML/CFT Compliance Awareness and training at the branches, clusters and regions

Attends to Law Enforcement requests in the cluster locations

Reviews and ensures complete account opening documentations in the clusters

Monitors transactions and accounts in the clusters to identify suspicious transactions and activities in the clusters

All of the above

None

Which of these are the risks and reasons why an institution should be cautious and pay special attention to the management of PEP customers

Erosion of Shareholders Fund/ Deposit Base

Regulatory Fines and reputational Damage

Cancellation of Correspondent Banking Relationship

Revocation of Licence, etc

All of the above

None

One of the New Hires in your bank that has recently been trained stated in the course of your monthly Departmental meetings that; ‘Correspondent banking relationship involves the use of Nostro (an account held by a bank in foreign currency in another bank). In other words, from the respondent bank view, the funds deposited at correspondent banks are referred to as Nostro accounts’. Considering the expression of this New Hire in relation to the terminology, Nostro, as indicated above, which of the following statements below is correct about his assertion of Nostro;

Yes, it is true

No, it is not true

Central Bank holds meeting with FI to give interpretation

It depends on the interpretation by the affected Financial Institution

The Foreign Currency (FX) in the account must be transferred to Foreign Reserve

None

The following are redflags associated with an employee except;

Employee is involved in an excessive number of unresolved exceptions

Employee lives a lavish lifestyle that could not be supported by his or her salary.

Employee takes some nap or rest during break periods

Employee frequently overrides internal controls or established approval authority or circumvents policy

Employee uses company resources to further private interests

None

A customer deposits cash and numerous financial instruments in amounts under the reporting threshold to fund an investment account and wants to liquidate the large position through a series of small transactions. What can this be referred to as;

Financial Leverage

Financial Engineering

Investment redflags

KYC/CDD redflags

Terrorist Financing redflags

None

The financing of proliferation of WMD is the use of money to facilitate the movement, use and proliferation of WMD across the world. There is the likelihood of interconnection between proliferation and terrorist activities because of the following except;

Financing of proliferation can aid terrorism globally,

There is also a concern in relation to Dual Use Goods

These categories of goods and technologies can also be used for the development of WMD, terrorist activities and human rights violations

Proliferation financing can assist in bringing socio-economic from developed to developing countries

These so called ‘dual use’ are subject of European Union (EU) control and other international jurisdictions hence its movement under trade services should be kept under close watch.

None

There are different types of risks associated with various customers and in relation to Politically Exposed Persons (PEPs), they can be classified in any of the following ways;

a) High risk customers

b) Medium risk customers

c) Low risk customers

d) A and C

e) A and B

None

The best approach to be adopted by a financial institution or DNFBP to fulfill expectations in relation to Consumer Protection is by;

Ensuring timely complaints handlings and dispute resolution

Promoting professionalism and ethics

Outlining the rights and responsibilities of customers

Adopting fair and ethical debt recovery practices

All of the above

None

Compliance Staff or compliance Human Capital should include the following except;

Executive Compliance Officer (ECO)

CCO and CCO Office

Divisional/Group Head Compliance

Compliance Risk and Due Diligence Officer

Operations Officer

None

FATF was formed by G8 with the objective of;

Combating the growing problem of Money Laundering (ML) worldwide

Fighting Terrorist Financing (TF)

Assisting the developing countries to pull them out of poverty and stimulate economic development

Strengthen the relationship between the developed countries and developing countries

Partnership between Europe and other continents for industrialization

None

Under Recommendation 39, FATF recommends that Countries should be able to execute extradition requests in relation to ML/TF without undue delay. In particular, countries should;

a) Ensure ML and TF are extraditable offences;

b) Ensure that they have a case management system, and clear processes for the timely execution of extradition requests including prioritisation where appropriate; and

c) Not place unreasonable or unduly restrictive conditions on the execution of requests.

d) A, B and C

e) A and B

None

The following is recommended as proper organogram for Compliance Department with relevant departments, among others, except;

Compliance Risk and Due Diligence

Transactions and Activities Monitoring

Credit Administration

Compliance Investigation and Analytics

Regulatory Reporting and Data Quality Unit

None

This PEP definition was given By …………… ‘’ .. Individuals who are or have been entrusted with prominent public functions in a foreign country, for example heads of state or of government, senior politicians, senior government, judicial or military officials, senior executives of state-owned corporations, important political party officials. Business relationships with family members or close associates of PEPs involve reputational risks similar to those with PEPs themselves. The definition is not intended to cover middle ranking or more junior individuals.

Wolfsberg

FATF

GIABA

Basel Committee

None of the above

None

Biometric technology is one of the tools employed by financial institutions and DNFBPs in the management of KYC/CDD. All the following are components of biometrics except;

Fingerprint recognition

Iris scan

Behavioural Pattern

Vein pattern recognition

Heartbeat monitoring

None

DPMS redflags for Gold include the following except;

An established customer purchasing much larger than usual quantities

Using cash to purchase bullion, especially in large amounts

Foreign nationals purchasing gold bullion through multiple transactions over a short period

Purchase of Gold with pension payments and proceeds from sale of pensioners first property

Gold purity, weight, origin and value are misclassified on customs declaration forms

None

Where countries do not impose sanctions regimes that will allow them to freeze assets of persons designated by the United Nations Security Council for involvement in terrorism or the proliferation of weapons of mass destruction, is regarded as;

Sovereignty Rights

International Diplomacy

Terrorist Financing Redflag

National Autonomy

National interest redflag

None

The BCBS also plays an important role in AML/CFT compliance through its principles on;

Politically Exposed Person (PEP)

Customer Due Diligence (CDD)

Combating of Terrorism Financing (CTF),

Whistleblowing

Corporate Governance

None

Under Recommendation 33, FATF recommends that countries should maintain comprehensive statistics on matters relevant to the effectiveness and efficiency of their AML/CFT systems. This includes keeping statistics on the following:

STRs, received and disseminated

ML/TF investigations, prosecutions and convictions;

Property frozen; and confiscated, seized

Mutual legal assistance or other international requests for co-operation made and received

All of the above

None

A customer who has Unrealistic business proceeds compared to client’s profile, re-activates his/her dormant account with huge amount and/or deposits at various branches the same day for no logical reason is said to be;

Doing well in his/her business

Patronizing the institution

Diversifying his/her operations

Manifesting signs of redflag

Showing that his business requires another account

None

There is an increasing wave of vulnerabilities on the part of financial institutions and DNFBPs to cybercrime and the sources of threats and vulnerabilities are from;

Products and Services

Customers

Employees and Directors

Compliance

All of the above

None

‘Trust but Verify’ means the following, except:

Verification of information is extremely important

Although customer should be trusted but you should do the needful

Do not border about verification as customer is always right and cannot be questioned

Certain information such as names, permanent address, validity of official documents, should be verified

Corroborate your observation and documents submitted

None

With Nigeria now under increased monitoring by Financial Action Task Force (FATF), it will have to implement its FATF Action Plan by completing its Residual ML/TF/PF Risk Assessment and updating the National AML/CFT/CPF strategies relevant to high-risk predicate offences. When was Nigeria placed under Grey-list by FATF?

November 2022

December 2022

January 2023

February 2023

March 2023

None

In addition to FATF definition, Politically Exposed Persons (PEPs) can also be defined as;

Past or current office holders or individuals entrusted with high level private functions

Past or current office holders or individuals entrusted with high level business functions.

Past or current office holders or individuals entrusted with high level market functions

Past or current office holders or individuals entrusted with high level public functions

Past or current office holders or individuals entrusted with high level professional functions

None

…………… also known as De-banking refers to financial institutions exiting relationship with and closing the account of clients considered as ‘High risk’;

De-marketing

De-risking

De-connecting

De-relationship

None of the above

None

The following observations can be referred to as redflags associated with customers. Except;

Large - scale cash transactions

Rapid offshore transfer of funds immediately they are deposited

An institution’s application that is always experiencing system glitches.

Unusual funds inflow into customers account

Settlement of Bad and Doubtful Debt by third parties or without waiver request

None

The use of Artificial Intelligence (AI) in KYC/CDD management relies more on Natural Language Processing (NLP) and supervised machine learning techniques. Each of these technologies has specific uses and NLP, in particular, is starting to come into widespread use in helping to analyze amorphous content, such as adverse media, also called negative news. Together with machine learning, NLP-based AI can read such articles and perform a range of tasks, including extracting metadata, identifying entities that are referred to, and understanding the intent or purpose of specific parts of the document. This compliance practice is known as;

Information Gathering Technique

Structured Analysis

Behavioural Analysis

Unstructured Data Analysis

Data aggregation Method

None

It is mandatory for a financial institution to have compliance policies, processes, procedures and programmes documentations approved by;

Top Management

Executive Management

The Board

Executive Compliance Officer (ECO)

Chief Compliance Officer (CCO)

None

With the increasing risk of money laundering faced by financial institutions around the world, regulators are focusing on the controls and procedures banks have put in place to prevent money laundering and actively assist law enforcement authorities in detection and investigation. The following are the controls except one;

Preventive

Detective

Operative

Corrective

Directive

None

What is the primary motivation of a money launderer?

To build and grow his/her reputation

To disguise and safeguard the illicit fund

To display and maintain his/her Integrity

To extend and sustain philanthropy

To acquire and wield power

None

Which of the following is part of the 10 Pillars of AML/CFT Compliance;

Corporate Governance, Conduct & Culture

Compliance Management & Internal Sanctions

Enterprise-wide ML, TF & PF Risk Assessment

Customer Due Diligence, EDD, UBO

All of the above

None

Customer Due Diligence (CDD) under Recommendation 10 requires profiling and monitoring the customer appropriately in order to mitigate risks, threats and vulnerabilities throughout the relationship with the FI or DNFBP. It is the totality of what is done to establish that the customer is who he/she says he is. CDD measures are expected to be applied during the following circumstances except:

Establishment of business relationship

Carrying out occasional transactions involving designated threshold & wire transfer

Upon closure of banking relationship with the customer

On suspicion on money laundering & terrorist financing

Doubts about the veracity or adequacy of previously obtained customer identification data

None

The following customer risk factors except one should be used to profile customer and assess risk;

Location of business

How the customer talks

Product or service requested

Nature of customer business

Source of funding and income

None

FIUs normally analyse the information received. If sufficient evidence of unlawful activity is found, the intelligence is passed to;

The Reporting institutions or entities

The relevant competent authorities

Judiciary

Legislature

The relevant FSRB

None

In relation to Real Estate Agents Redflags associated with Legal Persons, they can be said to include the following except;

Transactions involving legal persons or legal arrangements domiciled in tax havens or risk territories

Transactions involving recently created legal persons, when the amount is large compared to their assets

Transactions involving a legal person that has won the ‘Manufacturing Industry Productivity Award of the Year’ with prize money of US$1million in support of raw material purchases and operational expenses.

Transactions involving legal entities, when there does not seem to be any relationship between the transaction and the activity carried out by the buying company, or when the company has no business activity

Transactions involving foundations, cultural or leisure associations, or non-profit-making entities in general, when the characteristics of the transaction do not match the goals of the entity

None

The AML/CFT Research and Training unit is responsible for;

Provides the institution’s employees with sufficient AML/CFT Compliance information to undertake and conduct their responsibilities in compliance with applicable regulations

Credit administration and related training of the institution

Trains the institution’s employees on how to trade on foreign exchange and hedge exchange rate fluctuations

For identification of changes in operational documentations and processes

All of the above

None

The Components of Compliance include the following except;

Development and Maintenance of Written Policies and Procedures

Designation of a Compliance Officer

Development of an Effective Compliance Training, Education and Awareness Programme

Establishment and Maintenance of a Process for Routinely Evaluating and Identifying Potential and Actual Non-Compliance

None of the above

None

A regulation was passed by European Parliament and Council of the European Union on the 14/April/2016. It became effective on the 25th May, 2018. The regulation cover data controller, data processor and data subject within EU. It is also relevant to those outside EU if they process data on EU residents. The only exemption is for those data that concern national securities by EU Law Enforcement Agencies. The acronym for this regulation is known as;

GDPP

GPRS

GDPR

GRDP

GPSR

None

The ML/TF vulnerability sources include the following, except:

Weak Internal Control and Inefficient Customer Due Diligence

Poor Record Keeping and Poor transaction monitoring and reporting

Efficient AML/CFT Compliance Application

Inadequate Training

Weak Management Supervision

None

According to FATF Recommendation 21, FIs & DNFBPs should put in place measures to protect the confidentiality of such staff where they have made their suspicious transaction report to appropriate units/department in good faith and sanction any staff against tipping-off that does any of the following;

a) informs

b) counsels or

c) warns a customer about any report made to the FIU or an on-going investigation concerning such customer’s transaction

d) A, B and C

e) A and B

None

The techniques and methods used in money laundering and terrorist financing are similar to an extent. However, there are crucial differences. Money Laundering has the following features except;

Usually, there is no workable financial profile within their operational activities

The motivation is to make money or profit

Funding is from internal sources within criminal organizations

The money launderer prefers the financial system as their conduit or means of fund transmission

Large amounts in transactions are often structured to avoid reporting requirements.

None

Information Communication Technology (ICT) has been very useful to humanity and has also been used wrongly to perpetrate various crimes which have also been a source of major concern in the world. What is this type of crime that is committed daily called?

Information Crime

Technology Crime

Communication Crime

Cybercrime

None of the above

None

Money launderers and terrorist financiers constitute …….. to the operations of FIs & DNFBPs.

Good control

Profit

Risks

Asset

Necessary

None

The Compliance Officer is privy to a discussion between the relationship manager and he was able to understand that the customer as an investor seems uninterested in the usual decisions to be made about investment accounts, such as fees or the suitability of the investment vehicles and does not mind how high the fees might be or go, all the customer wants is that the investment should be booked, what do you make out of this observation;

This shows that the customer is very loyal

This indicates that the customer is reliable

This shows the customer as a considerable person

This shows there is something wrong and it is a redflag

The proves that the customer truly loves the institution and wants it to be profitable

None

The Executive Compliance Officer (ECO) and/or CCO are at Executive /Top Management level and report to;

The Board

Top Management

Senior Management

Compliance Department

Legal Department

None

DPMS acronym represents what;

Dealers in Precious Metals or Stones

Debtors of Past Monetary Settlement

Dealers in Portable and Movable Systems

Dealers in Payments Monetary Instruments

Debtors Permission Marked System

None

The level of understanding, capacity, maturity and management support of this human elements determine to a reasonable extent the success of compliance in any organization. Management of compliance given the human needs will fully be achieved by setting the following four (4) rules except;

Appointment of CCO with required experience, authority, power, influence and responsibilities

Compliance can be subsumed into Marketing to have closer interaction with customers for easier information gathering

Compliance budget and adequate staffing to meet all obligations and function

Appointment of compliance officers in every branch/subsidiary or cluster as approved by the Central Bank

Synergy between Group Compliance and subsidiaries

None

These are risks that could crystalize as a result of non-adherence to regulations, guidelines and laws as advised by regulatory bodies such as Central Bank of Nigeria. There could be severe sanctions as a result of this breach and these could include any of the following, except;

Sanctions

Fines and Penalties

Sacking of Management and/or Board

Recognition

Withdrawal of Operating Licence

None

As a result of the terrorist attack of September 11, 2001 in United States of America (USA), some guidelines came into prominence globally which culminated into the subsequent enactment of;

US Terrorist Finance Act

USA PATRIOT Act

US PATRIOT Decree

US PATRIOT Guidelines

US PATRIOT and Prevention Act

None

The following is one of the elements of a CDD;

Customer’s Information procedure

Monitoring of customer’s movement

Customer acceptance policy

Risk management of how customer drives car

Assessment of customer’s mood

None

If an employee exaggerates the credentials, background or financial ability and resources of a customer in written reports that the bank requires, for instance for credit appraisal; this is referred to a what in AML/CFT compliance;

Bad behaviour

Redflag

Misdemeanour

Misrepresentation

Innocent mistake

None

In what year was the Financial Action Task Force (FATF) formed by G8?

1980

1998

1989

1986

1990

None

These are the risks which result from the enforcement of the law as a result of the bank’s failure to observe mandatory KYC standards and CDD principles; failure to comply with related compliance provisions in the extant laws or regulations. These failures, infractions, wilful blindness or non-compliance with stipulated rules, laws or regulation could lead to litigations and protracted legal battles in the law courts. The resultant legal risks can crystalize in form of the following, except;

Legal charges or cost of litigation

Fines

Awards from CBN

Penalties

Detention or Imprisonment of Board, Management and staff

None

In accordance with FATF Recommendation 9 on FI Secrecy Laws and with reference to AML/CFT preventive measures which requires FIs & DNFBPs to adhere to AML/CFT Compliance laws, measures and reporting requirements without hiding under the veil of the laws relating to customer confidentiality requires them to report certain transactions of the customer by the FIU which include the following except;

a) Currency Transaction Report (CTR)

b) Foreign Transfer Report (FTR) and

c) Suspicious Transaction Report (STR)

d) A, B and C

e) B and C only

None

The Nostro and Vostro accounts are used in correspondent banking relationship and the terminologies are applied differently depending on the side of the divide it is viewed from, for instance, depending on whether the financial institution is a correspondent bank or a respondent bank. Some say there may be other accounts. Therefore, from the respondent bank’s view, the funds deposited at correspondent banks are referred to as ………………. accounts.

Vostro accounts

Bank accounts

Correspondent accounts

Respondent accounts

Nostro accounts

None

A staff avoids taking periodic vacations and says that he/she is fully committed to the institution’s growth and development. This type of disposition can be explained to mean;

Commitment

Hardwork

Loyalty

Redflag

Support

None

Apart from the major role of International Organization of Securities Commissions (IOSCO) which includes development, implementation and promotion of high standards of regulation for enhancing investors protection around the world, it also issues Anti-Money Laundering Guidance Notes for various areas relating to;

Treasury bills and Treasury Certificates

Securities and Derivatives in the Capital market

Bridging Loans for MSMEs

Correspondent banking activities

PEP investments

None

Which of the following can be referred to as the redflag(s) of Legal Entities and Structures under Real Estate Agents activities;

Use of Unknown/False address of other professionals

Legal formation without economic/market reality

Capital formation without economic/market reality

Use of front or straw people to conceal ownership

All of the above

None

Which of the following will form part of the vulnerabilities in relation to Accountants/Auditors under AML/CFT Compliance;

Management of client money or other assets

Management of bank savings or securities accounts

The creation, operation or management of companies

Buying and selling of business entities

All of the above

None

CBN AML/CFT Manual (as amended) which is also expressed by FATF Classification defined Politically Exposed Persons (PEPs) as;

Individuals who are or have been entrusted with prominent public functions both home and abroad

Individuals who are or have been entrusted with prominent private functions both home and abroad

Individuals who are or have been entrusted with prominent public functions abroad

Individuals who are or have been entrusted with prominent market functions both home and abroad

Individuals who are or have been entrusted with prominent professional functions both home and abroad

None

The following are utilized to perpetrate cybercrime in relation to properties except;

Bank fraud

Financial crimes

Cyber awareness

Forgery

Illegal fund transfer

None

One of the following is not part of FATF recommendations in relation to Confiscation and Provisional Measures under Recommendation 4 which states that Countries should have measures, including legislative measures, that enable their competent authorities to:

Identify, trace and evaluate property that is subject to confiscation

Carry out provisional measures, such as freezing or seizing, to prevent any dealing, transfer or disposal of property subject to confiscation

Take steps that will prevent or void actions that prejudice the country’s ability to freeze or seize or recover property that is subject to confiscation

Take any appropriate investigative measures

Ensure that the property that is a product of crime can only be confiscated if the money launderer did not put it to proper economic use

None

The following are the best Practices for PEPS and FEPS except;

Identification of all PEPS/FEPS

Reserve the decision to open account to senior management or get senior management approval

Contact PEP/FEP to inform him/her when you are filing regulatory reports

Investigation of the source of funds

Use third party confirmation - internet searches, confirming houses, credit agencies

None

As a proper guide to implementation of rule of engagement under Governance, an FI or DNFBP should ensure the following except;

Consider the provisions the minimum standard and set higher expectations in your FI

Conduct risk assessment to ML & TF before manual compilation

Consult Black market operators for guidance because of the understanding of underground banking system

Seek Board Approval for all Manuals and document the approval for sighting by examiners

Make provision for Renewal Page in the Manual. Set a higher standard for manual update (i.e at least once a year)

None

The EU Defined Politically Exposed Persons (PEPs) as;

‘’ .. Natural persons who have been entrusted with prominent public functions and immediate family members or persons known to be close associates of such persons’’

‘’ .. Natural persons who have been entrusted with prominent private functions and immediate family members or persons known to be close associates of such persons’’

‘’ .. Natural persons who have been entrusted with prominent business functions and immediate family members or persons known to be close associates of such persons’’

‘’ .. Natural persons who have been entrusted with prominent professional functions and immediate family members or persons known to be close associates of such persons’’

None of the above

None

The following are drivers of de-risking, except;

Perceived or Assessed Risk

Client/Customer Profitability

Increased compliance costs and Pressures

Rising Fines and Penalties

Growing number of FATF-Styled Regional Bodies (FSRBs)

None

The term Anti-Money Laundering (AML) is a term mainly used to describe the regulatory measures and controls that require financial institutions and other regulated entities to prevent or report money laundering activities. They include except;

Growing income from shell organizations to expand profits for the benefit of stakeholders

Putting in place an AML Policy

Appointment of compliance officer(s)

Ensuring no account is opened for anonymous customer, monitoring and regulatory reporting

Identification and conduct proper due diligence on customers

None

The evil or consequences of money laundering and/or terrorist financing and/or financing of proliferation of Weapons of Mass Destruction (WMD) are far-reaching and can disrupt and dislocate social, security, political, and economic activities and they include the following except;

Increased Crime and Corruption

Staff insubordination

Undermines the Legitimate Private Sector

Weakening Financial Institutions

Termination of correspondent banking facilities

None

Compliance function is the responsibility of the following groups;

The Board alone

Top management alone

Senior Management alone

Middle Level Management alone

Entire staff

None

Some basic Information in relation to individual customers include;

General Information – Name, Date of Birth, Contact details, Segment or Industry, Relationship Manager, etc

Personal information – the customer’s relationship with spouse and children, neighbour, etc

Demographics – Nationality, Marital Status, Hold Mail, Educational Qualification, Employment details, Income and Expenses, etc

Psychographic – Campaign preferences, membership information, Hobbies, Relationships, Asset information, Product preferences, Transaction plan, etc.

Other Bank Information – Bank accounts, Credit card accounts, etc

None

Persons in positions of authority or officeholders (government, government bodies, political parties and traditional institutions – politicians, top government functionaries (public and civil servants, leaders and chieftains of political parties, top traditional rulers)) can generally be classified as what category of PEPs;

PEP by position

PEP by Influence

PEP by relationship

PEP by association

None of the above

None

The FATF Recommendation 3 are as follows;

ML should be criminalized on the basis of the Vienna Convention and the Palermo Convention (see Article 3(1)(b) &(c) Vienna Convention and Article 6(1) Palermo Convention).

The predicate offences for ML should cover all serious offences, with a view to including the widest range of predicate offences. At a minimum, predicate offences should include a range of offences in each of the designated categories of offences

When proving that property is the proceeds of crime, it should not be necessary that a person be convicted of a predicate offence,

Predicate offences for money laundering should extend to conduct that occurred in another country, which constitutes an offence in that country, and which would have constituted a predicate offence had it occurred domestically

All of the above

None

Under Recommendation 2, FATF recommends the following except:

Countries should have national AML/CFT policies which are informed by the risks identified, and are regularly reviewed

Countries should designate an authority or have a co-ordination or other mechanism that is responsible for national AML/CFT policies

Mechanisms should be in place to enable policy makers, the Financial Intelligence Unit (FIU), law enforcement authorities, supervisors and other relevant competent authorities to co-operate, and where appropriate, co-ordinate domestically with each other concerning the development and implementation of AML/CFT policies and activities. Such mechanisms should apply at both policymaking and operational levels

AML/CFT Compliance responsibilities should be the responsibilities of the Executive arm of government alone and they should jail or charge perceived money launderers and terrorist financiers to court as they desire.

Competent authorities should have similar co-operation and, where appropriate, coordination mechanisms to combat the financing of proliferation of weapons of mass destruction

None

Recommendation 2 of FATF is about which of the following;

Ultimate Beneficial Owner (UBO),

Politically Exposed Persons

National Co-operation and Co-ordination,

Customer Due Diligence

Correspondent Banking

None

It is important for financial institutions to incorporate, prepare and schedule timelines in their compliance programmes and activities in relation to the following except;

Annual compliance training as well as new employees,

Investigations as needed

Mobilization of funds from customers

Pre and Post-submission of reports review

Update meetings with Management and Board

None

A customer can be defined or described as or in all or one of the following ways, except;

A person or entity that maintains an account with a financial institution;

A person on whose behalf an account is maintained;

A beneficiary of transactions conducted by an intermediary;

A person who lives near a bank and comes to greet the manager from time to time

A person or entity connected with a financial transaction that can pose a significant or other risk to the institution (e.g. trustees/settlers).

None

National FIUs collect information on ……………………………………. from the financial industry and other entities or professions that are required to report transactions suspected of being money laundering and terrorist financing.

Suspicious or unusual financial activities

All Transactions of financial institutions

Newly opened accounts

Domiciliary accounts

Dormant accounts

None

Those persons who influence those in positions of authority or office holders who are sometimes in the political space are generally referred to as political godfathers, this category of Politically Exposed Persons are known as;

PEP by position

PEP by Influence

PEP by relationship

PEP by association

None of the above

None

If the law enforcement agency or a prosecutor obtains a court order to restrain or freeze an account or to prevent funds from being withdrawn or moved, the institution should;

Obtain a copy of the order

Comply with the restraining or freezing order timely

Question the freezing order and do not be in a haste as nothing will happen if delayed,

Obtained a copy of sworn affidavit, which is sometimes included with the order for additional clues

Note the concerned law enforcement agents and/or Court

None

The Payable-through-accounts which are also known as “pass through” or “pass-by” accounts can be said to be a situation where:

The correspondent bank officers can delightfully pay their flight ticket for a visit to respondent bank offices during overseas trips

The respondent bank allows its customers to access the correspondent account directly to conduct business on their own

The officers of both correspondent bank and respondent bank are passers-by in in foreign jurisdictions

The Central Bank allows a dedicated account to serve PEPs as High Net-worth Individuals (HNIs)

The correspondent Bank and Respondent Bank can allow Payable-through, Pass-through or Pass-by accounts to be opened for any person from developing countries particularly Africa in order for financial inclusion purpose.

None

Which of the following are regulatory approaches;

Rule-Based Regulation, Principle-Based Regulation and Out-Based Regulation

Sanction-Based Regulation, Principle-Based Regulation and Out-Based Regulation

Fine-Based Regulation, Principle-Based Regulation and Out-Based Regulation

Penalty-Based Regulation, Principle-Based Regulation and Out-Based Regulation

None of the above

None

Risk can be defined as the likelihood or probability or threat of damage, injury, liability, loss, or any other negative occurrence that is caused by internal or external vulnerabilities with uncertain impact, and that may be avoided though preemptive action. Meanwhile, risk appetite is the willingness to take risk. This is the amount of risk that the FI or DNFBP is willing to seek or accept in the pursuit of its long term objectives. This is how much risk you can take and you are still comfortable. The risk appetite of an institution is set and approved by;

The Board

Executive Management

Top Management

Senior Management

The Employees

None

The current FATF 40 Recommendations makes the Risk Based Approach (RBA) a centrifugal force and added ………………………….. as part of the global themes.

Combating Terrorist Financing

The Proliferation of Weapons of Mass Destruction (WMD),

Ultimate Beneficial Owner (UBO)

DNFBPs

Know Your Customer (KYC)

None

The review period for high risk situation is also ……………….. than that of low risk.

More frequent

Less frequent

Longer

Shorter

Less regular

None

The following are components of the 10 Pillars of AML/CFT except;

Record Keeping & Retention

Attending Campaign rallies of the ruling party

Online, Real-time Transaction Monitoring

Internal Control & Audit

Training & Awareness Program

None

In Information and Communication Technology (ICT) crimes, the computer is used to target the following crimes except;

a) DOS Attack

b) Armed Robbery

c) Virus Attack

d) Hacking

e) A, B and C

None

To ensure proper rule of engagement in AML/CFT compliance, an FI or DNFBP should also ensure practices which of the following;

There should be policy to protect employees when they report suspicious transactions in good faith

There should be policy on the imposition of sanctions on employees that do not adhere to the monitoring and reporting policies and procedures of the FI or DNFBP

The FI or DNFBP should make sure that the Internal Audit Dept. have the competency to conduct oversight on AML/CFT compliance function

There should be independent audit of compliance by external consultant every 3 years

All of the above

None

If your institution is served with a summons or subpoena compelling the production of certain documents, the institution should;

Have its senior management and/or counsel review the summons or subpoena

Contest the summons or subpoena, if there are grounds to do so, otherwise, take all appropriate measures to comply

Respond on a timely and complete basis to avoid adverse action and penalties

Do not notify the customer who is being investigated and if the government or law enforcement asks the bank to keep certain accounts open, such a request should be obtained in writing under proper letterhead and authority

All of the above

None

Some of the basic concepts of risk are, except;

Threat and Vulnerability

Risk universe

Personal risk

Inherent risk and Residual risk

Risk appetite and Risk tolerance

None

In what year did FATF align its Recommendations from what was known as the 40+9 to only 40 Recommendations?

February 2013

February 2016

February 2014

February 2012

February 2015

None

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