Acams CKYCA Exam Questions Instant Access

Question 1

According to the Financial Action Task Force (FATF) Risk-Based Approach Guidance, institutions should

Aincorporate only higher risk customers into its risk profile.

Badjust customers' EDD processes independent from the institution's risk profile.

Cincorporate customer risks into the business line risk profiles, but not into the institutional risk profile

Dadjust the extent and depth of EDD monitoring in line with their risk profile.

Answer : D

FATF's Risk-Based Approach Guidance advises that the scope and intensity of Enhanced Due Diligence (EDD) should be proportionate to the institution's overall risk profile, ensuring resources are directed where risks are greatest.

Question 2

During an EDD process for a business customer, which document is the best source to identify and obtain details on the source of funds?

AFinancial statements

BCompany's website

CUtility bill

DArticles of incorporation

Answer : A

Financial statements provide verifiable details about a company's income sources, profitability, and cash flow, making them the most reliable document for identifying and confirming the source of funds during EDD.

Question 3

An Ultimate Beneficial Owner (UBO) with a control prong is an individual with:

Aindirect ownership greater than a certain percent value.

Bdirect and indirect ownership greater than a certain percent value but who lacks management and operational control.

Cdirect and indirect ownership less than a certain percent value who exercises management and operational control.

Ddirect ownership greater than a certain percent value.

Answer : C

Under the control prong, a UBO is identified as an individual who may not meet the ownership threshold but still exercises significant management or operational control over the entity, thereby having effective influence over its activities.

Question 4

Which is an example of an EDD measure?

AVerifying the identity of the customer after the establishment of the business relationship

BMonitoring an account's transactions based on a monetary threshold

CObtaining information on the source of wealth of the customer

DIdentifying the purpose and nature of the business relationship

Answer : C

Obtaining and verifying the customer's source of wealth is a key Enhanced Due Diligence (EDD) measure, especially for high-risk customers such as PEPs, as it helps assess the legitimacy of their funds.

Question 5

The owner of a local flower shop makes cash deposits on a regular basis to the shop's business account. Following the deposits, the owner wires the money to a high-risk country. Which action should a KYC analyst perform when conducting the periodic CDD review?

AReview the account activity with respect to the transaction profile of the customer.

BReview the business activities and update where necessary.

CEnd the business relationship due to wiring money to a high-risk country.

DReport a suspicious transaction with respect to wiring money to a high-risk country.

Answer : A

During a periodic CDD review, the analyst should assess whether the account activity, including cash deposits and transfers to high-risk countries, aligns with the customer's stated transaction profile. This step determines if further escalation or reporting is necessary.

Question 6

An owner of several trading companies worldwide is advised to register a new company for the legitimate purpose of controlling foreign assets of their trading companies. This new company is commonly referred to as a:

Asubsidiary company.

Bspecial purpose vehicle.

Cshell company.

Dholding company.

Answer : A

A holding company is established to own and control shares or assets of other companies, often for organizational, tax, or asset protection purposes, without engaging directly in the day-to-day operations of those businesses.

Question 7

Assets under management show an increase of investors whose income originates from high-risk jurisdictions. This indicates higher risk in which area?

ACustomer

BGeographical

CPolitical

DEconomic

Answer : B

FATF considers jurisdictions with weak AML/CFT controls as high-risk. An increase in investors from such regions raises geographical risk, since the customers' funds originate from locations with elevated money laundering or terrorism financing threats.

Acams Certified Know Your Customer Associate CKYCA Exam Questions