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CAFCA EXAM
WITH CORRECT SOLUTIONS.
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 1 / 2
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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
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