ACFCS Practice Test-with 100% verified solutions 2024-2025, Exams of Advanced Education

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ACFCS Practice Test-with 100% verified solutions 2024-

Your bank has recently received an online application for a new business account from a company named Integral Operations, LLC. By reviewing the operating agreement and other documents included in the application, you determine that Integral is incorporated in the U.S. State of Wyoming. A review of the Wyoming corporate registry online shows that Integral was formed 10 years ago. An initial internet search finds no company website, and no further information on the company. The registered agent contact information and address on the company's most recent annual filing is for Biz Management Solutions, a corporate services provider. Concerned that ACE Operations appears to be a shelf corporation, you are conducting further due diligence on the company's ownership structure. Which is the most appropriate next step to take? A) Research annual filings in the corporate registry to determine if Integral Operations had any previous owners. B) Request a company organizational chart that includes members, directors, and other stakeholders. C) Request a certificate of good standing from the Wyoming corporate registry for Integral Operations. D) Request that the registered agent submit a self-certification of any parties with a 51% or greater ownership stake in ACE Operations. B) Request a company organizational chart that includes members, directors, and other stakeholders. You are the compliance/risk officer at ABC Bank. Senior management recently released plans to issue the bank's first prepaid cards in the coming year. You are aware that drug trafficking cartels are active in regions in which your institution operates, and recent law enforcement cases have indicated that cartels may be using prepaid cards to move value across borders between your country and a neighboring country. As you evaluate the product team's proposed card features, which control may best mitigate the risk inherent in prepaid cards? A) Limit cash withdrawals to certain merchant category codes (MCCs).

B) Impose low dollar limits on cash loads and withdrawals. C) Limit the number of loads within a specific time frame. D) Control the number of accounts allowed per person. B) Impose low dollar limits on cash loads and withdrawals. You are investigating a Vietnamese clothing manufacturer that is allegedly laundering money for a human trafficking organization. Deposits to the manufacturer's bank account totaled $4.5 million (USD) for the year 2012. All deposits originated from a single source, a shipping corporation in Panama that makes payments through a bank account in Riga, Latvia. Payments are received through wire transfers. They are always in varying amounts of dollars and cents and the SWIFT messaging always states that the payments are for a line of men's suits. Which is LEAST likely to be a red flag for money laundering? A) The owner of the business who is the sole signatory of the bank account resides in another country. B) The shipping company is located in Panama, but payments originate from a Latvian bank in Riga. C) Payments to the manufacturer are only received from a single customer in another industry. D) The payments are in varying amounts and their purpose is always the same in the SWIFT messaging. D) The payments are in varying amounts and their purpose is always the same in the SWIFT messaging. Uniform Solutions is a wholesale clothing maker and retailer that produces and sells uniforms to government agencies and large institutions. Recently, the company has heard that Country Z is looking for a new supplier for its military uniforms. The country has a long history of governmental corruption. Uniform Solutions is eager to secure the contract but does not have many connections in Country Z. A company manager proposes to hire a group of sales agents in Country Z to help make contacts and negotiate with government officials. You have been asked to review the business arrangement with the sales agents before a contract is signed to ensure anti-corruption compliance. What would be

the best steps for Uniform Solutions to take before they execute the contract? A) The company should ensure the fees and commissions paid to the sales agents are higher than average to reduce the likelihood they will engage in bribery. B) The company should ensure the contract with the sales agents includes a provision explicitly forbidding bribery and corrupt payments, and require agents to sign it. C) The company should conduct a thorough search of public and paid databases for any negative news on the sales agents and their company. D) The company should conduct due diligence reviews of Country Z military officials to determine if any had been involved in corrupt business dealings in the past. B) The company should ensure the contract with the sales agents includes a provision explicitly forbidding bribery and corrupt payments, and require agents to sign it. C) The company should conduct a thorough search of public and paid databases for any negative news on the sales agents and their company. You are conducting a country-level corruption risk assessment for a corporation planning to expand into several new jurisdictions. Which of these sources would most likely provide the most useful starting point for your assessment? A) World Bank Stolen Asset Recovery Initiative reports. B) Interpol Notices. C) Transparency International Corruption Perceptions Index. D) Wolfsberg International Due Diligence Repository. C) Transparency International Corruption Perceptions Index. ABC Corporation is a closely held corporation based in Country X. A key executive of ABC Corporation is a US citizen. The executive is suspected of using fraudulent activity to disguise income to evade taxes. You are investigating this executive and believe that he may be concealing funds

from reporting under the US Foreign Account Tax Compliance Act, or FATCA. Which fact BEST indicates an attempt to evade FATCA reporting? A) The executive holds accounts at bank that is not a registered FFI. B) The executive has created shell companies incorporated in US states. C) ABC Corporation filed an amended tax return the previous year. D) ABC Corporation has made several large wire transfers from Country X to the US A) The executive holds accounts at bank that is not a registered FFI. Securities King was a stock brokerage that collapsed after it was revealed to be running a Ponzi scheme. The scheme has left behind numerous defrauded investors and the brokerage is now being liquidated in bankruptcy court. You are an investigative professional who has been asked to look into a lawyer suspected of involvement in the Ponzi scheme. The lawyer is thought to have handled funds for Securities King through his firm's account. There has been no prior investigation of the lawyer, and you currently have little information him or his firm. What would be the most appropriate first step to take in your investigation? A) Contact the lawyer to schedule an interview B) Conduct physical surveillance of the lawyer to understand his movements C) Request that a bankruptcy court judge name you a receiver of Securities King D) Thoroughly research the lawyer and his firm online and in public records D) Thoroughly research the lawyer and his firm online and in public records

Your institution initiated a project to create new monitoring typologies related to terrorist financing and update existing ones. As part of this project, a team has gathered a sample of customer transactions and is reviewing them. Which activity would the team MOST likely flag as possibly related to terrorist financing? A) An account held for a restaurant that has substantial cash deposits and then transfers funds to other accounts. B) An account that appears to have funds transferred into an account held by an offshore, private investment company. C) A customer with a number of even-dollar wire transfers to accounts in jurisdictions with a reputation for financial secrecy. D) A customer whose banking account suddenly displays a pattern of sending checks to charities overseas. D) A customer whose banking account suddenly displays a pattern of sending checks to charities overseas. Which Black Market Peso Exchange (BMPE) method is LEAST likely to be employed by money brokers who are serving as intermediaries for drug cartels to place funds in the U.S. financial system? A) Exporting goods such as household appliances, liquor and precious metals B) The use of non-bank money remittance businesses C) The conversion of pesos to dollars at a discount to the normal exchange rate

D) Remittances to a third country that is not consistent with legitimate business activity C) The conversion of pesos to dollars at a discount to the normal exchange rate A defense contracting firm is attempting to win a bid for a large contract to supply helicopter parts to the military of a foreign country. During contract negotiations with the company's senior sales representative, the defense minister suggests that the company's bid may be viewed more favorably if the company were to make a $100,000 donation to a charitable foundation that the minister personally supports. An initial due diligence review by the defense firm reveals that the charitable foundation is led by the defense minister's cousin, and media reports suggest the foundation is tied to corruption and tax evasion allegations involving the minister's family members. Despite this, the senior sales representative decides to proceed with the donation. To distance the firm from the transaction, the representative first purchases a shelf corporation and opens an account in the corporation's name. He then creates invoices indicating the shelf corporation provided consulting services to his firm. The invoices are processed and a $100,000 payment is transferred to the shelf corporation's account. It is then wired in $5,000 increments to the charitable foundation. When did money laundering first take place in this series of events? A) When the defense minister requested the $100,000 donation B) When the senior sales representative purchased a shelf corporation C) When the $100,000 payment was made to the shelf corporation D) When the first $5,000 payment was wired to the charitable foundation C) When the $100,000 payment was made to the shelf corporation

Between December 31, 2000, and December 31, 2001, the balance sheet of Company A changed from a positive net worth of $259,300 to a negative net worth of $37,500. What changes on the balance sheet did NOT contribute to the reduction in net worth? A) Accounts receivables decreased B) Inventories increased C) Other liabilities increased D) Accounts payable increased B) Inventories increased The CEO of Company X, a publicly traded corporation, caused Company X to enter into a transaction with Company Y in which the CEO is a shareholder. The CEO failed to inform the shareholders of Company X of his interest in Company Y. However, the transaction will greatly benefit Company X as well as Company Y. Which statement is true about this situation? A) The CEO has committed self-dealing. B) The CEO has not committed an ethical violation. C) The CEO has participated in insider-trading. D) The CEO has been involved with selling away. A) The CEO has committed self-dealing.

Chuck Smith conducted a Ponzi scheme by luring innocent domestic investors to invest. He claimed they would get a steady stream of payments over time and would receive a handsome return on their investments. The transaction worked as follows: • All investors reside in Smith's country and wired money to Smith in order to make an investment in reliance on his representations, which later turned out to be false. • Smith next moved the funds to an offshore bank account. • Smith then transferred some of the funds from new investors to previous investors claiming it was money generated by their investment. • Smith used the remaining funds to purchase cars and other luxury gifts to create the appearance that he was successful. The underlying criminal activity in this case was wire fraud. At which point did money laundering FIRST take place? A) When Smith used the remaining funds to purchase cars and other luxury gifts to create the appearance that he was successful. B) When the investor wired money to Smith in reliance on his false representations. C) When Smith wired funds to the offshore bank account. D) When Smith transferred some of the funds from new investors to previous investors claiming it was money generated by their investment. C) When Smith wired funds to the offshore bank account. You are a financial crime specialist who has been retained as part of a cross-border investigation into a complex money laundering scheme. You have been asked to investigate a company that is suspected to have played a role in laundering funds. The company is incorporated in the US state of Nevada. It is believed that the beneficial owner of the company is one of the key perpetrators behind the laundering scheme, and identifying him or her is a priority of the investigation. Which source below would be the most likely to lead to information on the shell company's beneficial owner?

A) Records provided by the offshore company service provider that assisted with incorporation. B) Contact information for a company formation agent in the company's records. C) Records listing the company's shareholders and directors. D) Company information provided by the Nevada corporate registry. C) Records listing the company's shareholders and directors. You are a compliance analyst at a multinational financial institution that provides banking and investment services to large institutional customers. Your institution is currently seeking new business opportunities providing services to universities, hospitals, and other institutions with potential ties to political officials and government agencies. Your institution plans to expand into Norway, India, Botswana and Chile and has asked you to assess the corruption risks of offering its services in each nation. What is an accurate risk rating for these countries? A) Providing investment and banking services in Norway poses the highest risk for corruption due to a history of bribery by Norwegian state-owned oil companies. B) Providing services in Chile poses the highest risk due to connections between the Chilean government and international organized crime rings. C) Providing services in India poses the highest risk for corruption due to the prevalence of state-owned entities and Politically-Exposed Persons (PEPs).

D) Providing investment and banking services in Botswana poses the highest risk for corruption due to widespread graft in government contracts. C) Providing services in India poses the highest risk for corruption due to the prevalence of state-owned entities and Politically-Exposed Persons (PEPs). Arjun runs a textile manufacturing firm based in India. He is very successful and has business partners in different countries, including suppliers in China and distributors in the United States. To assist trusted friends, relatives, and business associates, he sometimes asks his distributors in South Florida to take payments from relatives there and record the amounts. Arjun then gives roughly that amount to family members close to him in Pakistan, and he gives the distributors a percentage of the transaction. Arjun also periodically asks distributors to supply funds to individuals in South Florida and record them as payments related to his firm. He tells them he can easily settle any money they give to individuals on his behalf through under and over invoicing in his shipments. Based on these facts, in which financial crime scheme is Arjun most likely involved? A) Arjun is running a trade-based money laundering operation. B) Arjun is operating an unlicensed hawala. C) Arjun's firm is evading taxes by moving funds offshore. D) Arjun's manufacturing firm is committing VAT fraud. B) Arjun is operating an unlicensed hawala. A large grocery store company has four stores located in a neighboring country. The company's chief compliance officer has recently received a tip from an anonymous whistleblower indicating that managers at one of

the stores in the neighboring country may be paying bribes to local government officials. The whistleblower's information is credible, but the compliance officer does not know which of the store managers is involved in the bribery scheme. You are asked to review internal records at each of the four stores for evidence of corrupt payments. Which finding is the strongest indicator that the store managers are paying bribes? A) Sales records from Store A indicate a sharp increase in sales of a line of cereals that was previously unpopular in its market area. B) Invoices from Store C show that the store has hired a consultant whose only prior experience was organizing an event for a political campaign. C) A document from Store D shows that the managers paid bonuses to sales agents after they secured a major contract to stock groceries for a chain of department stores. D) Transaction records from Store B show a series of payments to an offshore account held by a well-known international law firm. B) Invoices from Store C show that the store has hired a consultant whose only prior experience was organizing an event for a political campaign. Mr. White deposited a large amount of cash over the course of several months in a bank headquartered on an island nation known for strict secrecy laws. Some of the funds were then transferred into several accounts held in the name of various corporations at Paradise Bank in France, of which you are the compliance officer. Which is the best red flag that money laundering is occurring? A) The funds held at accounts at Paradise Bank have been further transferred into the account of an import/export company. B) The accounts held by the corporations transact business in various jurisdictions around the world.

C) The account held in the island nation lists Mr. White as the sole signatory. D) The corporations to which Mr. White has been transferring funds are beneficially owned by him. A) The funds held at accounts at Paradise Bank have been further transferred into the account of an import/export company. You are a law enforcement agent investigating a suspected money laundering operation connected to a large drug cartel. The gang is thought to be laundering cash from narcotics sales through a convenience store in your region. To date, you have been unsuccessful in connecting the store to any money laundering tied to the organized crime ring. You have obtained deposit records for the an account the gas station holds at a local bank, but due to the cash-intensive nature of the business, it has been difficult to distinguish possible dirty cash from legitimate proceeds. However, a trusted informant has indicated she is confident the gas station is somehow being used as a laundering front. Which of the steps below would be most likely support your investigation into the gas station for money laundering? A) File a civil asset forfeiture suit against the property of the store's owner as an instrumentality of a drug trafficking operation. B) Obtain inventory records and sales receipts from the convenience store to determine if income appears to match with inventory C) Research property records to determine if the store has recently been sold or had its title transferred to a new owner. D) Request a judge issue a court order that will allow you to freeze the convenience store's bank account.

B) Obtain inventory records and sales receipts from the convenience store to determine if income appears to match with inventory A government agency purchases products from Company A. You are investigating allegations that an outside sales agent is paying bribes to an employee of the government agency on behalf of Company A. Which is the LEAST likely method for the payment of bribes? A) An agreement with the outside sales agent that the commission on all sales to a particular customer will be divided and then wired to two different bank accounts. B) Commissions are paid into an account after the customer makes payment that can be drawn down by the outside sales agent as commissions accrue. C) Commissions paid to the outside sales agent when the purchase order and letter of credit is received from the customer. D) Invoices issued by the company through the outside sales agent to the customer that lists a sales price that includes the commission to be retained by the agent upon collection. B) Commissions are paid into an account after the customer makes payment that can be drawn down by the outside sales agent as commissions accrue.