ACFCS Cram Set Questions and
Answers Latest Version (2024/2025)
Already Passed
How does the Bank Secrecy Act (BSA) contribute to preventing financial crimes?
✔✔The BSA requires financial institutions to keep detailed records of financial transactions and
report certain activities to the authorities, helping to detect and prevent money laundering and
other financial crimes.
What is the significance of a Suspicious Activity Report (SAR)?
✔✔A Suspicious Activity Report (SAR) is a document that financial institutions file with
regulatory authorities when they detect potentially suspicious or unusual activity that may
indicate money laundering or fraud.
Why is Know Your Customer (KYC) important in financial services?
✔✔KYC procedures help financial institutions verify the identity of their clients, assess potential
risks, and prevent illegal activities such as money laundering and fraud by ensuring that they
know who they are doing business with.
What is the difference between money laundering and terrorist financing?
1
,✔✔Money laundering involves concealing the origins of illegally obtained funds, while terrorist
financing refers to the act of providing funds for terrorist activities, regardless of whether the
funds are illicit or legitimate.
What is the role of a financial institution’s internal controls in preventing money laundering?
✔✔Internal controls, such as transaction monitoring, employee training, and reporting
procedures, help financial institutions detect suspicious activity, comply with regulations, and
reduce the risk of money laundering within their operations.
How does transaction monitoring help identify money laundering?
✔✔Transaction monitoring systems analyze patterns in financial transactions to detect unusual
or suspicious activity, which could be indicative of money laundering, allowing institutions to
investigate and report potential violations.
What is a red flag in money laundering detection?
✔✔Red flags in money laundering detection include large, unexplained transactions, frequent
transfers to high-risk countries, or sudden changes in account activity that don’t align with the
customer’s usual behavior.
Why are Politically Exposed Persons (PEPs) considered high-risk in AML compliance?
2
,✔✔PEPs are considered high-risk because they are individuals who hold or have held prominent
public positions, which may expose them to greater risks of involvement in corruption or other
illicit activities, making monitoring and scrutiny essential.
What is the purpose of a risk-based approach in anti-money laundering programs?
✔✔A risk-based approach helps financial institutions allocate resources more effectively by
identifying and focusing on higher-risk customers and transactions, allowing for more efficient
detection and mitigation of potential money laundering risks.
How does the concept of beneficial ownership impact AML compliance?
✔✔Beneficial ownership refers to the natural persons who ultimately own or control a legal
entity, and understanding this is crucial for preventing money laundering, as it helps institutions
identify the true parties behind financial transactions.
What is the role of the Financial Action Task Force (FATF) in global anti-money laundering
efforts?
✔✔The FATF sets international standards and promotes policies to combat money laundering
and terrorist financing, providing recommendations and guidelines that help countries and
institutions establish effective AML frameworks.
3
, Why is it essential for financial institutions to conduct ongoing due diligence?
✔✔Ongoing due diligence ensures that financial institutions continually assess and monitor their
customers' activities, ensuring that any changes in behavior or risk profile are detected and
addressed promptly to prevent money laundering.
What is the significance of enhanced due diligence (EDD) for high-risk customers?
✔✔EDD involves a more in-depth investigation into high-risk customers to understand the
source of their funds and their financial activities, helping to mitigate the risk of money
laundering and financial crimes.
What are the main components of an effective AML program?
✔✔An effective AML program includes customer identification procedures (KYC), transaction
monitoring, employee training, internal controls, and reporting mechanisms for suspicious
activities.
Why is cross-border cooperation important in anti-money laundering efforts?
✔✔Cross-border cooperation is vital because money laundering often involves international
transactions, and collaboration between countries helps to track illicit financial flows, enforce
regulations, and combat global financial crimes.
4
Answers Latest Version (2024/2025)
Already Passed
How does the Bank Secrecy Act (BSA) contribute to preventing financial crimes?
✔✔The BSA requires financial institutions to keep detailed records of financial transactions and
report certain activities to the authorities, helping to detect and prevent money laundering and
other financial crimes.
What is the significance of a Suspicious Activity Report (SAR)?
✔✔A Suspicious Activity Report (SAR) is a document that financial institutions file with
regulatory authorities when they detect potentially suspicious or unusual activity that may
indicate money laundering or fraud.
Why is Know Your Customer (KYC) important in financial services?
✔✔KYC procedures help financial institutions verify the identity of their clients, assess potential
risks, and prevent illegal activities such as money laundering and fraud by ensuring that they
know who they are doing business with.
What is the difference between money laundering and terrorist financing?
1
,✔✔Money laundering involves concealing the origins of illegally obtained funds, while terrorist
financing refers to the act of providing funds for terrorist activities, regardless of whether the
funds are illicit or legitimate.
What is the role of a financial institution’s internal controls in preventing money laundering?
✔✔Internal controls, such as transaction monitoring, employee training, and reporting
procedures, help financial institutions detect suspicious activity, comply with regulations, and
reduce the risk of money laundering within their operations.
How does transaction monitoring help identify money laundering?
✔✔Transaction monitoring systems analyze patterns in financial transactions to detect unusual
or suspicious activity, which could be indicative of money laundering, allowing institutions to
investigate and report potential violations.
What is a red flag in money laundering detection?
✔✔Red flags in money laundering detection include large, unexplained transactions, frequent
transfers to high-risk countries, or sudden changes in account activity that don’t align with the
customer’s usual behavior.
Why are Politically Exposed Persons (PEPs) considered high-risk in AML compliance?
2
,✔✔PEPs are considered high-risk because they are individuals who hold or have held prominent
public positions, which may expose them to greater risks of involvement in corruption or other
illicit activities, making monitoring and scrutiny essential.
What is the purpose of a risk-based approach in anti-money laundering programs?
✔✔A risk-based approach helps financial institutions allocate resources more effectively by
identifying and focusing on higher-risk customers and transactions, allowing for more efficient
detection and mitigation of potential money laundering risks.
How does the concept of beneficial ownership impact AML compliance?
✔✔Beneficial ownership refers to the natural persons who ultimately own or control a legal
entity, and understanding this is crucial for preventing money laundering, as it helps institutions
identify the true parties behind financial transactions.
What is the role of the Financial Action Task Force (FATF) in global anti-money laundering
efforts?
✔✔The FATF sets international standards and promotes policies to combat money laundering
and terrorist financing, providing recommendations and guidelines that help countries and
institutions establish effective AML frameworks.
3
, Why is it essential for financial institutions to conduct ongoing due diligence?
✔✔Ongoing due diligence ensures that financial institutions continually assess and monitor their
customers' activities, ensuring that any changes in behavior or risk profile are detected and
addressed promptly to prevent money laundering.
What is the significance of enhanced due diligence (EDD) for high-risk customers?
✔✔EDD involves a more in-depth investigation into high-risk customers to understand the
source of their funds and their financial activities, helping to mitigate the risk of money
laundering and financial crimes.
What are the main components of an effective AML program?
✔✔An effective AML program includes customer identification procedures (KYC), transaction
monitoring, employee training, internal controls, and reporting mechanisms for suspicious
activities.
Why is cross-border cooperation important in anti-money laundering efforts?
✔✔Cross-border cooperation is vital because money laundering often involves international
transactions, and collaboration between countries helps to track illicit financial flows, enforce
regulations, and combat global financial crimes.
4
