CAFP: Certified AML and Fraud Professional Exam (Latest 2023/ 2024 Update) Questions and Verified Answers| 100% Correct| Grade A

CAFP Exam (Latest 2023/ 2024 Update)

Questions and Verified Answers| 100%

Correct| Grade A

Q: Please give an example of how a bank failed due to criminal activity? Explain how it

happened.

Answer:

Riggs Bank - The failures in Riggs Bank's AML controls contributed to its demise — due in

large part to the manner in which Riggs Bank staff administered the accounts of, among others,

Augusto Pinochet, the former President of Chile and Teodoro Obiang, the President of

Equatorial Guinea.

Q: Among the additional challenges for financial institutions that rely on the proceeds of crime

are:

Answer:

A&C

A. Loss of profitable business.

C. Termination of correspondent banking facilities.

Q: Reputational risk is described as the potential that adverse____(1)_____ whether accurate or

not, will cause a loss of public ____(2)______ in the integrity of the organization.

Answer:

1) Publicity

2) Confidence

Q: Operational risk is described as the potential for loss resulting from inadequate internal

______(1)______, personnel or systems or from external events. Such losses occur when

institutions incur reduced or terminated inter-bank

or______(2)_______ banking services or an increased cost for these services.

Answer:

1) Processes

2) Correspondent

Q: ___________ risk is the potential for lawsuits, adverse judgments, unenforceable contracts,

fines and penalties generating losses, increased expenses for an organization, or even the closure

of financial institutions that rely on the proceeds of crime.

Answer:

Legal

Q: What is concentration risk?

Answer:

The potential for loss resulting from too much credit or loan exposure to one borrower or group

of borrowers.

Q: Why would a bank like Guardian Bank want to open U.S. correspondent accounts?

Answer:

To provide access to the US financial system to its clients (and) to be able to provide financial

services in US dollars to its clients.

Q: Describe the ML risks for the U.S. Correspondent Bank when offering correspondent

banking services to

banks like Guardian Bank.

Answer:

The US correspondent bank does not know the clients of the foreign bank whose transactions

will flow through the foreign bank's correspondent account.

Q: What AML measures should the U.S. Correspondent Banks take at the account opening

moment?

Answer:

Conduct CDD on the Guardian Bank and its AML/CDD program; request the Patriot Act

Certificate, Wolfsberg AML Questionnaire for correspondent banking.

Q: Are the accounts described in the excerpts correspondent accounts or Payable Through

Accounts?

Answer:

They seem to be regulator correspondent accounts, because Guardian bank did not create

subaccounts for its clients.

Q: Which statement is true?

Answer:

In Payable Through Accounts, respondent bank's customers can conduct their own transactions:

sending wire transfers, making and withdrawing deposits and maintaining checking accounts

through the respondent bank's

correspondent account without needing to clear the transactions through the respondent bank.

Q: Which statement is true?

Answer:

Concentration accounts are internal accounts established to facilitate the processing and

settlement of multiple or individual customer transactions within the bank, usually on the

same day.

Q: Why is a Payable Through Account vulnerable to money laundering?