CAFCA EXAM QUESTIONS WITH
CORRECT DETAILED ANSWERS ||
ALREADY GRADED A+ < LATEST
VERSION >
1. What is financial crime? - ANSWER 🗸 Illegal activities that are usually
economically motivated.
2. What is money laundering? - ANSWER 🗸 The process of concealing or
disguising the existence, source, movement, destination, or illegal
application of criminally derived property or funds to make them appear
legitimate.
3. Three stages of money laundering - ANSWER 🗸 - Placement
- Layering
- Integration
4. What is terrorist financing? - ANSWER 🗸 Involves fund for an illegal
political purpose to support terrorist activities. However, money is
necessarily derived from the proceeds of illegal activity. Hawala system
plays a big roles in moving terrorist related funds.
5. What are sanctions? - ANSWER 🗸 Political decision made as part of
diplomatic efforts by countries, regional organization, and international
bodies. Sanctions are primarily a foreign policy and security tool. Sanctions
, are intended to affect behavioral change through deterrence, prevention, or
punishment.
6. What is fraud? - ANSWER 🗸 An International act of criminal deception in
order to obtain an unjust or illegal advantage. Usually for personal gain.
7. Reasons people commit fraud - ANSWER 🗸 - Pressure
- Opportunity
- Rationalization
8. 4th Capacity
9. What is anti-bribery and corruption? - ANSWER 🗸 Bribrery is the giving or
receiving of a financial or other advantage in connection with the improper
performance of a position or trust, or a function that is expected to be
performed impartially, or in good faith.
10.Anti-bribery and Corruption Law? - ANSWER 🗸 - The Foreign Corrupt
Practices Act US
- The UK Bribery Act 2010
11.What is tax avoidance? - ANSWER 🗸 The legal means to reduce the tax
owed.
12.What is tax evasion? - ANSWER 🗸 The illegal means to avoid paying tax
owed.
13.Regulation to combat tax evasion? - ANSWER 🗸 The Foreign Account Tax
Compliance Act (FATCA)
,14.Types of financial crime risks? - ANSWER 🗸 - Regulatory
- Legal
- Financial
- Reputational
15.Anti Money Laundering Regulations? - ANSWER 🗸 - Bank Secrecy Act
(BSA) US
- 5th AML Directive EU
- The ML and TF Regulation 2019 UK
16.What does the Foreign Corrupt Practices Act of 1977 do? (FCPA_ -
ANSWER 🗸 Prohibits US companies and individuals from paying bribes to
foreign officials to further a business deal.
17.What is the Financial Actions Task Force FATF? - ANSWER 🗸 An inter-
governmental body that sets international standards for preventing money
laundering and terrorist financing and the harm they cause to society.
18.Categories of risk? - ANSWER 🗸 - Customer
- Jurisdiction
- Product
- Channel
19.What is beneficial ownership? - ANSWER 🗸 The person or persons having
ultimate control over the funds.
20.Owner vs Controlling Person - ANSWER 🗸 - Owner: individual who
directly or indirectly owns 25% ore more
, - Controlling person: non-owner or owner with less than 25%
ownership who exercises management and operational control of the
legal person "control prong"
21.What is risk appetite? - ANSWER 🗸 This determines the types of customer
it will accept, the types of product it will offer, and the jurisdictions which it
will do business.
22.What is an internal control framework? - ANSWER 🗸 The process through
which an organization obtains reasonable assurance that it it achieving its
objectives in relation to its operations, reporting, and compliance.
23.Components of internal control framework - ANSWER 🗸 - Overall control
environment
- Risk assessment
- Control activities
- Information and communication
- Monitoring
24.Three lines of defense - ANSWER 🗸 - Line of business
- Compliance & internal control functions
- Internal audit
25.Dual Controls - ANSWER 🗸 Are a risk management concept designed to
reduce errors and protect against staff collusion.
26.1st - file is correct/complete
27.2nd - verify info to prevent collusion
28.The second line of defense department must: - ANSWER 🗸 - Be
empowered to obtain access to info throughout the organization
CORRECT DETAILED ANSWERS ||
ALREADY GRADED A+ < LATEST
VERSION >
1. What is financial crime? - ANSWER 🗸 Illegal activities that are usually
economically motivated.
2. What is money laundering? - ANSWER 🗸 The process of concealing or
disguising the existence, source, movement, destination, or illegal
application of criminally derived property or funds to make them appear
legitimate.
3. Three stages of money laundering - ANSWER 🗸 - Placement
- Layering
- Integration
4. What is terrorist financing? - ANSWER 🗸 Involves fund for an illegal
political purpose to support terrorist activities. However, money is
necessarily derived from the proceeds of illegal activity. Hawala system
plays a big roles in moving terrorist related funds.
5. What are sanctions? - ANSWER 🗸 Political decision made as part of
diplomatic efforts by countries, regional organization, and international
bodies. Sanctions are primarily a foreign policy and security tool. Sanctions
, are intended to affect behavioral change through deterrence, prevention, or
punishment.
6. What is fraud? - ANSWER 🗸 An International act of criminal deception in
order to obtain an unjust or illegal advantage. Usually for personal gain.
7. Reasons people commit fraud - ANSWER 🗸 - Pressure
- Opportunity
- Rationalization
8. 4th Capacity
9. What is anti-bribery and corruption? - ANSWER 🗸 Bribrery is the giving or
receiving of a financial or other advantage in connection with the improper
performance of a position or trust, or a function that is expected to be
performed impartially, or in good faith.
10.Anti-bribery and Corruption Law? - ANSWER 🗸 - The Foreign Corrupt
Practices Act US
- The UK Bribery Act 2010
11.What is tax avoidance? - ANSWER 🗸 The legal means to reduce the tax
owed.
12.What is tax evasion? - ANSWER 🗸 The illegal means to avoid paying tax
owed.
13.Regulation to combat tax evasion? - ANSWER 🗸 The Foreign Account Tax
Compliance Act (FATCA)
,14.Types of financial crime risks? - ANSWER 🗸 - Regulatory
- Legal
- Financial
- Reputational
15.Anti Money Laundering Regulations? - ANSWER 🗸 - Bank Secrecy Act
(BSA) US
- 5th AML Directive EU
- The ML and TF Regulation 2019 UK
16.What does the Foreign Corrupt Practices Act of 1977 do? (FCPA_ -
ANSWER 🗸 Prohibits US companies and individuals from paying bribes to
foreign officials to further a business deal.
17.What is the Financial Actions Task Force FATF? - ANSWER 🗸 An inter-
governmental body that sets international standards for preventing money
laundering and terrorist financing and the harm they cause to society.
18.Categories of risk? - ANSWER 🗸 - Customer
- Jurisdiction
- Product
- Channel
19.What is beneficial ownership? - ANSWER 🗸 The person or persons having
ultimate control over the funds.
20.Owner vs Controlling Person - ANSWER 🗸 - Owner: individual who
directly or indirectly owns 25% ore more
, - Controlling person: non-owner or owner with less than 25%
ownership who exercises management and operational control of the
legal person "control prong"
21.What is risk appetite? - ANSWER 🗸 This determines the types of customer
it will accept, the types of product it will offer, and the jurisdictions which it
will do business.
22.What is an internal control framework? - ANSWER 🗸 The process through
which an organization obtains reasonable assurance that it it achieving its
objectives in relation to its operations, reporting, and compliance.
23.Components of internal control framework - ANSWER 🗸 - Overall control
environment
- Risk assessment
- Control activities
- Information and communication
- Monitoring
24.Three lines of defense - ANSWER 🗸 - Line of business
- Compliance & internal control functions
- Internal audit
25.Dual Controls - ANSWER 🗸 Are a risk management concept designed to
reduce errors and protect against staff collusion.
26.1st - file is correct/complete
27.2nd - verify info to prevent collusion
28.The second line of defense department must: - ANSWER 🗸 - Be
empowered to obtain access to info throughout the organization
