CFCI Study Guide Updated Latest Update -

CFCI Study Guide – Updated Latest Update -

300+ Questions and Verified Correct Answers Golden Ticket to Guaranteed A+ Verified by Professor

2 categories that encompass Fraud - CORRECT ANSWER: Theft (stealing money, ID,

or assets) and deception (cooking the books, lying to shareholders, employees or partners)

2 types of employee level embezzlement - CORRECT ANSWER: 1. Looting customer

accounts such as savings and checking by teller skimming of bank funds.

• Exploiting control weakness in the bank's operations such as account payable and

procurement.

2 types of insider fraud threat - CORRECT ANSWER: Employee level fraud and

management level fraud

20-60-20 rule of human component of fraud - CORRECT ANSWER: 20% of people will

never commit fraud 60% are fence sitters and may commit fraud if given the opportunity 20% of people are inherently dishonest

Accounts Payable (AP) or Billing Fraud - CORRECT ANSWER: Fraud committed by a

person responsible for paying company invoices, thus giving them ample opportunity to send checks to fake invoices or shell companies.

ACH fraud - CORRECT ANSWER: A perpetrator provides the routing number and the

account number of the victim's account to the receiving company (utility, car loans, etc) to make the required payments.

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AML Investigation Techniques - CORRECT ANSWER: 1. Evidence Collection

• Subject Profiling
• Covert Evidence Gathering
• Semi-overt Evidence Gathering
• Overt Evidence Gathering

Approximately how many primary federal laws and regulations are there that affect

banking operation? - CORRECT ANSWER: 50

Are credit rating agencies regulated by Dodd-Frank? - CORRECT ANSWER: Yes.

Dodd-Frank created an Office of Credit Rating at the Securities and Exchange Commission (SEC), to regulate credit ratings agencies such as Moody's and Standard & Poor's. The agencies were harshly criticized for helping to create the 2008 recession, by misleading investors through overrating derivatives and mortgage-backed securities— and stating that the investment tools were worth more than their actual value.

Asset-based or working capital loan fraud - CORRECT ANSWER: Business borrowers

create false invoices to document bogus receivables, or otherwise cook the books to appear financially sound to a lending institution.

Automated Clearing House (ACH) - CORRECT ANSWER: An electronic network for

financial transactions in the U.S. The network processes batches of debits and credits to various financial institutions allowing for fast, safe and efficient transfer of funds.

Bank employee Collusion with outsiders - CORRECT ANSWER: Organized crime rings

recruit individuals who apply for bank jobs and over time steal the PII of customers and give it to their handlers.

Bank Secrecy Act (BSA) - CORRECT ANSWER: The BSA was the first anti-money-

laundering law passed by the federal government. It was initially designed to deter the use of secret foreign bank accounts and to establish a mandatory audit trail for law enforcement by establishing regulatory reporting and recordkeeping requirements to help the government track the movement of cash and other monetary instruments into and out of the country through the use of financial institutions. 2 / 4

Bid pooling. - CORRECT ANSWER: A process by which several bidders conspire to split contracts, thereby ensuring that each gets a certain amount of work, which does not require collusion with an insider.

Bid-Rigging Schemes or collusion - CORRECT ANSWER: Collusive fraud wherein an

employee helps a vendor illegally obtain a contract that was supposed to involve competitive bidding, by the employee getting a kickback.

Billing Schemes - CORRECT ANSWER: Using false documentation to cause a targeted

organization to issue a payment for false services and/or purchases.

Bribery - CORRECT ANSWER: When something of value is offered or given to

influence a business decision.

Builder Bailout Scheme - CORRECT ANSWER: Straw buyers or legitimate buyers who

are led to believe that they are getting a good deal in buying a new home such as incentives or loan for down payments.

Business Email Compromise (BEC) - CORRECT ANSWER: These scams often begin

with a phishing email that gives a fraudster access to an executive's Email account.Typically, the fraudster will then send an Email purporting to be from the CEO requesting a wire transfer of a specified amount to a specified bank account. The trusting treasury or finance employee never thinks to question its legitimacy.

C.N.P - CORRECT ANSWER: Card not present transactions

CAATs - CORRECT ANSWER: computer assisted audit techniques

Carding - CORRECT ANSWER: An offense in which the Internet is used to traffic in and exploit the stolen credit card, bank account, and other personal identification information of hundreds of thousands of victims globally.

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Cashier check fraud - CORRECT ANSWER: Suspect agrees to purchase an item from a

victim and sends a check for more than the agreed upon price. The victim is instructed to send the difference. Check bounces victim is out.

Certificate of Deposit (CD) fraud - CORRECT ANSWER: Since the CD is usually not

touched by the account holder until maturity it gives the employee opportunity to not record deposits.

Chapter 1 review points - CORRECT ANSWER: • Statistical picture of fraud. The

numbers do not lie: Fraud is a huge worldwide problem—for all organizations.

• Financial services fraud. Seventy-four percent of financial institutions experienced attempted payment fraud (check fraud, ACH fraud, or credit card fraud in 2020).• Definitions of fraud. The broad definition of fraud is illegal activity representing either theft or deception, or a combination of both.• Myths about fraud. It is easy to become complacent about fraud but doing so can be very costly. Fraud does occur in every organization and is potentially serious enough to cause major long-term damage.• Main types of fraud. Countless varieties of fraud threaten financial institutions.Fraudsters are constantly thinking up new ways to target financial services institutions.

Chapter 2 Review points - CORRECT ANSWER: • External fraudsters are a varied and demographically diverse group, which makes it difficult for fraud fighters to profile these criminals. The best approach to detecting and preventing external fraud against financial institutions is to understand the red flags of these crimes.• Internal fraudsters do have common behavioral and personality traits, which helps to detect suspicious activity before it is too late.• Up to 80 percent of employees are either totally honest or honest to the point that they will not steal except in situations in which the opportunity to do so presents itself. And even then, these "fence sitters" may err on the side of honesty. The remaining 20 percent of your organization's employees are fundamentally dishonest and will go out of their way to commit fraud.• Internal fraud can be divided into two categories: employee level and management level. There is an inverse ratio between the level of the organization at which fraud is committed and the amount of financial loss resulting from frauds committed at each level. Thus, while management-level frauds are committed less frequently than

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