Money Laundering Legal Quiz Questions
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- 1.
What document must be filed if a customer pays with over $10,000 in cash or cash equivalents?
- A.
IRS Tax Prepayment Form
- B.
Sales Tax Exemption Form
- C.
Large Bills Currency Conversion Form
- D.
IRS Form 8300
Correct Answer
D. IRS Form 8300Explanation
If a customer pays with over $10,000 in cash or cash equivalents, the document that must be filed is IRS Form 8300. This form is used to report cash payments received by businesses that exceed $10,000 in a single transaction or a series of related transactions. It helps the IRS track and prevent money laundering and other illegal activities.Rate this question:
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- 2.
A purpose of our AML (Anti-Money Laundering) Program is to:
- A.
Recognize the “red flags” of money laundering and be prepared to act when appropriate
- B.
To meet the National Jewelers Association’s requirement of minimum educational training hours for employees
- C.
To give our employees something productive to do in their free time
- D.
To prevent theft
Correct Answer
A. Recognize the “red flags” of money laundering and be prepared to act when appropriateExplanation
The purpose of our AML (Anti-Money Laundering) Program is to recognize the "red flags" of money laundering and be prepared to act when appropriate. This means that the program aims to educate employees on the signs and indicators of money laundering activities, so that they can identify suspicious transactions and take necessary actions to prevent money laundering. This is an important measure to combat financial crimes and ensure compliance with regulations.Rate this question:
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- 3.
Money laundering is the process of converting “dirty” (illegally obtained) money into “clean” (coming from a legitimate source) money.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Money laundering is the process of converting illegally obtained money into money that appears to come from a legitimate source. This typically involves a series of transactions and activities designed to obscure the true origin of the funds. The purpose of money laundering is to make the money appear "clean" and legitimate, thereby avoiding suspicion and enabling its use without detection by authorities.Rate this question:
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- 4.
Who is our compliance officer?
- A.
Danny Govberg
- B.
JVC Auditing
- C.
Beth Bross
- D.
Michael Nutter
Correct Answer
C. Beth BrossExplanation
Beth Bross is our compliance officer.Rate this question:
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- 5.
If I see something suspicious what should I do?
- A.
Contact the police
- B.
Ask the customer reasonable questions about the unusual circumstance
- C.
Inform the customer that you suspect criminal activity and immediately terminate the transaction
- D.
Begin a formal investigation and file a SAR (Suspicious Activity Report)
Correct Answer
B. Ask the customer reasonable questions about the unusual circumstanceExplanation
If you see something suspicious, it is important to gather more information before taking any further action. Asking the customer reasonable questions about the unusual circumstance allows you to assess the situation and understand if there is any potential criminal activity involved. This step helps in determining the seriousness of the situation and deciding the appropriate course of action, such as contacting the police or terminating the transaction.Rate this question:
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- 6.
Gift cards are safe from money laundering risks because they are not cash.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
This statement is false because gift cards can be used as a tool for money laundering. Criminals can purchase gift cards with illicit funds and then use or sell them for clean money. Gift cards provide a convenient way to move and convert money without raising suspicion, making them attractive for money laundering activities. Therefore, gift cards do pose money laundering risks.Rate this question:
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- 7.
The jewelry industry is at a low risk for money laundering.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The jewelry industry is not at a low risk for money laundering. This is because the high value and portability of jewelry make it an attractive target for money launderers. They can easily convert illicit funds into jewelry and then sell it to legitimize the money. Additionally, the lack of transparency and regulation in the industry makes it easier for money laundering to occur. Therefore, the correct answer is False.Rate this question:
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- 8.
In important role you play in the companies AML (Anti-Money Laundering) Program is
- A.
To acquire proper info/documents from your customers like (ID, Name, Address, Company Name)
- B.
Recognize red flags when they arise
- C.
Make reasonable inquiries when an unusual circumstance arises
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
The correct answer is "All of the above" because in an important role you play in the company's AML Program, you are required to acquire proper information and documents from customers such as ID, Name, Address, and Company Name. Additionally, you need to recognize red flags when they arise, which could indicate potential money laundering activities. Furthermore, when an unusual circumstance arises, you are expected to make reasonable inquiries to ensure compliance with AML regulations. Therefore, all of these actions are part of your responsibilities in the company's AML Program.Rate this question:
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- 9.
When unusual circumstances are not explained with reasonable inquires you should
- A.
Inform your manager or compliance officer
- B.
Do nothing and hope the customer is not laundering money
- C.
Inform the customer of your suspicions and demand answers
- D.
Contact the IRS and request an investigation of the customer
Correct Answer
A. Inform your manager or compliance officerExplanation
In unusual circumstances where there is a lack of explanation, it is important to inform your manager or compliance officer. This is because they are the designated individuals within an organization who are responsible for handling compliance issues and ensuring that all regulations and protocols are followed. By informing them, you are taking the necessary steps to address any potential concerns or suspicions, and allowing them to handle the situation appropriately.Rate this question:
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- 10.
What is a red flag of money laundering?
- A.
Using a undisclosed third party for payment or shipping of product
- B.
Frequent purchases and returns
- C.
Reluctance to provide identifying information
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
A red flag of money laundering refers to any suspicious activity that may indicate the illegal process of making illegally-gained proceeds appear legal. Using an undisclosed third party for payment or shipping of a product can be a red flag as it may indicate an attempt to hide the true source of funds. Frequent purchases and returns can also be a red flag as it may indicate an attempt to create a paper trail and confuse the audit trail. Reluctance to provide identifying information can be seen as a red flag as it may indicate an attempt to hide one's true identity and avoid detection. Therefore, all of the above options are red flags of money laundering.Rate this question:
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