An exchange uses blockchain analytics to identify high-risk wallet clusters. This is an example of:
Answer : C
On-chain forensic analysis uses blockchain data to detect illicit wallet patterns and cluster associations.
Question 2
What is the ''Travel Rule'' under FATF guidance?
Answer : B
The Travel Rule, part of FATF Recommendation 16, requires VASPs to share sender and recipient information for virtual asset transfers above USD/EUR 1,000. The aim is to enable tracing and detection of illicit funds.
Question 3
Which consensus mechanism uses staked tokens to validate transactions instead of computational power?
Answer : B
Proof-of-Stake (PoS) replaces the energy-intensive mining process of Proof-of-Work by allowing validators to secure the network based on the amount of cryptocurrency they ''stake'' as collateral. Validators are rewarded for correctly validating transactions and risk losing their stake if they act dishonestly. Regulatory AML/CFT programs must consider validator concentration risks and the jurisdictional exposure of validators in PoS systems.
Question 4
An investigations manager at a cryptoasset exchange is developing an AML risk-rating framework for cryptoassets under consideration for support by the exchange. Which criteria is most important for rating the residual AML risk of a particular cryptoasset?
Answer : C
The ability to monitor the cryptoasset for unusual activity directly impacts the residual AML risk, as effective monitoring enables detection and prevention of illicit transactions. Even if a blockchain is public or private (A), or the asset is profitable (B), the lack of proper monitoring mechanisms increases risk. The number of exchanges supporting the asset (D) is less significant than monitoring capability.
AML frameworks and DFSA guidance stress that risk mitigation depends heavily on effective transaction monitoring.
Question 5
If a VASP suspects a transaction involves a sanctioned entity, it must:
Answer : B
Sanctions breaches require immediate reporting to competent authorities and freezing of assets where legally mandated.
Question 6
Under FATF guidelines, VASPs must file a Suspicious Transaction Report (STR) when:
Answer : B
FATF Recommendation 20 mandates that STRs be filed whenever there is suspicion or reasonable grounds to suspect criminal proceeds, regardless of the transaction value. This is mirrored in DFSA and FSRA AML regulations, ensuring that the reporting obligation is triggered by suspicion, not just thresholds.
Question 7
Under DIFC AML regulations, enhanced due diligence (EDD) is mandatory when:
Answer : B
EDD is required when dealing with customers or transactions from jurisdictions identified as high-risk for ML/TF. This aligns with FATF Recommendation 19 and local UAE regulations.
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