Certified AML Fintech Compliance Associate
(CAFCA) UPDATED ACTUAL Questions
and CORRECT Answers
What is Financial Crime? - CORRECT ANSWER - Illegal activities that typically are
economically motivated, such as money laundering, terrorist financing, sanctions, fraud, bribery,
corruption, and tax evasion
Name the three basic stages of money laundering. - CORRECT ANSWER - Placement,
layering, and integration
State the key differences between money laundering and terrorist financing. - CORRECT
ANSWER - Terrorist financing uses funds to support terrorist activities, but the funds are not
necessarily derived from illegal activities. Money laundering always involves the proceeds of
illegal activities, typically committed by the ultimate beneficiaries of the funds.
What are the main types of sanctions and who do they target? - CORRECT ANSWER -
Financial, economic, and trade. They generally target individuals, organizations, and countries.
List the three major reasons people commit fraud, and what this model is called. - CORRECT
ANSWER - The three major reasons are pressure, opportunity, and rationalization. This model
is referred to as the "Fraud Triangle".
Name two important pieces of anti-bribery and corruption legislation with extra-territorial reach.
- CORRECT ANSWER - The Foreign Corrupt Practices Act in the US and The UK Bribery
Act 2010.
State two differences between tax avoidance and tax evasion. - CORRECT ANSWER - Tax
avoidance uses legal practices to reduce taxes owed, whereas tax evasion uses illegal practices to
evade paying taxes owed.
, Name an example of politically exposed persons (PEPs). - CORRECT ANSWER - Examples
of PEPs include heads of state or heads of government, senior politicians, senior government,
judicial and military officials, senior executives of state-owned corporations, and important
political party officials, as well as their families and close associates. Usually, PEP positions are
specified in each jurisdiction's AML regulation.
State an example of high-risk customers that Fin Techs might encounter. - CORRECT
ANSWER - Examples include customers who sign up using false identities, customers who
lie about the purpose of business relationships, front companies, companies with complex
ownership structures, and customers linked to organized crime groups.
Name some jurisdiction risks and red flags in the FinTech sector. - CORRECT ANSWER -
Jurisdictions with higher risk include those with poor AML regulations, high levels of corruption,
inadequate frameworks to prevent financing of terrorism, and economic sanctions in place.
Jurisdictions that are tax havens and those known to host shell companies are also high risk.
Why are Fin Techs often considered to be high-risk companies? - CORRECT ANSWER -
Because of the lack of face-to-face encounters and the speed with which a person can access
financial products.
What are some Fin Tech risks and red flags? - CORRECT ANSWER - Non face-to-face
customer interactions and onboarding, cryptocurrencies and anonymity, faster payments, new
technologies and their potential vulnerabilities, unproven business models, and undeveloped
governance frameworks.
What are the benefits to using banking as a service provider? - CORRECT ANSWER - Faster
speed to market and overcoming regulatory complexities.
What are card schemes? - CORRECT ANSWER - Membership-based networks that enable a
payment method, such as Visa, JCB and MasterCard.
What are the three lines of defense in AML compliance? - CORRECT ANSWER - The first
line of defense is the line of business. The second line of defense is the compliance and internal
control functions. The third line of defense is internal audit.
(CAFCA) UPDATED ACTUAL Questions
and CORRECT Answers
What is Financial Crime? - CORRECT ANSWER - Illegal activities that typically are
economically motivated, such as money laundering, terrorist financing, sanctions, fraud, bribery,
corruption, and tax evasion
Name the three basic stages of money laundering. - CORRECT ANSWER - Placement,
layering, and integration
State the key differences between money laundering and terrorist financing. - CORRECT
ANSWER - Terrorist financing uses funds to support terrorist activities, but the funds are not
necessarily derived from illegal activities. Money laundering always involves the proceeds of
illegal activities, typically committed by the ultimate beneficiaries of the funds.
What are the main types of sanctions and who do they target? - CORRECT ANSWER -
Financial, economic, and trade. They generally target individuals, organizations, and countries.
List the three major reasons people commit fraud, and what this model is called. - CORRECT
ANSWER - The three major reasons are pressure, opportunity, and rationalization. This model
is referred to as the "Fraud Triangle".
Name two important pieces of anti-bribery and corruption legislation with extra-territorial reach.
- CORRECT ANSWER - The Foreign Corrupt Practices Act in the US and The UK Bribery
Act 2010.
State two differences between tax avoidance and tax evasion. - CORRECT ANSWER - Tax
avoidance uses legal practices to reduce taxes owed, whereas tax evasion uses illegal practices to
evade paying taxes owed.
, Name an example of politically exposed persons (PEPs). - CORRECT ANSWER - Examples
of PEPs include heads of state or heads of government, senior politicians, senior government,
judicial and military officials, senior executives of state-owned corporations, and important
political party officials, as well as their families and close associates. Usually, PEP positions are
specified in each jurisdiction's AML regulation.
State an example of high-risk customers that Fin Techs might encounter. - CORRECT
ANSWER - Examples include customers who sign up using false identities, customers who
lie about the purpose of business relationships, front companies, companies with complex
ownership structures, and customers linked to organized crime groups.
Name some jurisdiction risks and red flags in the FinTech sector. - CORRECT ANSWER -
Jurisdictions with higher risk include those with poor AML regulations, high levels of corruption,
inadequate frameworks to prevent financing of terrorism, and economic sanctions in place.
Jurisdictions that are tax havens and those known to host shell companies are also high risk.
Why are Fin Techs often considered to be high-risk companies? - CORRECT ANSWER -
Because of the lack of face-to-face encounters and the speed with which a person can access
financial products.
What are some Fin Tech risks and red flags? - CORRECT ANSWER - Non face-to-face
customer interactions and onboarding, cryptocurrencies and anonymity, faster payments, new
technologies and their potential vulnerabilities, unproven business models, and undeveloped
governance frameworks.
What are the benefits to using banking as a service provider? - CORRECT ANSWER - Faster
speed to market and overcoming regulatory complexities.
What are card schemes? - CORRECT ANSWER - Membership-based networks that enable a
payment method, such as Visa, JCB and MasterCard.
What are the three lines of defense in AML compliance? - CORRECT ANSWER - The first
line of defense is the line of business. The second line of defense is the compliance and internal
control functions. The third line of defense is internal audit.
