CAFCA Basic Latest Update 2025-2026 Exam 275
Questions with 100% Verified Correct Answers
Guaranteed A+
"Boolean expression" - CORRECT ANSWER: Boolean searches work by using words
such as "and" or "not" in between search terms. This links them together to extract
useful information.
"Open Banking" - CORRECT ANSWER: refers to information-sharing networks that use
application programming interfaces (API) to securely transfer data, only on request,
from one organization to another. This can enable an institution to share a
customer's identifying information with a second institution when she wishes to open a
new account.
A customer's account is suspended due to a suspicious activity alert and the customer
is demanding an immediate explanation. Who is responsible for how the response is
handled? - CORRECT ANSWER: Money Laundering Reporting Officer
A FinTech employee working in the compliance department asks a customer service
representative to follow up with a client to clarify the beneficial owners of an entity. The
customer service representative is serving as the: - CORRECT ANSWER: first line of
defense.
A forensic audit is one type of audit a FinTech might face. - CORRECT ANSWER: True
A law enforcement representative calls a compliance officer at a virtual asset service
provider (VASP) exchange company and requests information for an account in
connection with an ongoing terrorist financing investigation. Which action should the
compliance officer take? - CORRECT ANSWER: Request that the law enforcement
representative provide a court order.
,A money transfer business receives multiple requests for fund transfers to high-risk
jurisdictions just under the reporting threshold from a client. What risk does the client's
behavior potentially pose to the business? - CORRECT ANSWER: Evading reporting
A new customer appears to be structuring transactions to stay under the account
threshold. Which is the next best step in the transaction monitoring and investigation
process? - CORRECT ANSWER: Conduct additional research into the nature of the
account and transactions.
A product that allows its users to store value through a debit or credit card, a bank
account and/or other designated channels to pay for goods and services is a: -
CORRECT ANSWER: mobile wallet.
A risk associated with convertible virtual currency transactions is that: - CORRECT
ANSWER: they may allow for greater anonymity than other types of non-cash payment
methods.
A risk-based approach means always applying enhanced due diligence during customer
onboarding. - CORRECT ANSWER: False
This statement is false. When using a risk-based approach, all customers should not be
subject to the same level of due diligence. The registration flow should identify when
EDD is required.
above-the-line and below-the-line. - CORRECT ANSWER: An analyst is testing the
firm's transaction monitoring system's rule that is set to alert if a customer makes three
sequential transactions of 1,000 USD or greater. To test the rule, the analyst creates two
new scenarios: one which alerts if a customer makes three sequential transactions of
1,100 USD or greater and a second which alerts if a customer makes three sequential
transactions of 900 USD or greater. This testing process is known as:
According to Financial Action Task Force (FATF) guidance, which practices are crucial
for mitigating many risks associated with privacy and data protection? - CORRECT
ANSWER: Technical standards and preventative business practices
,According to Financial Action Task Force (FATF) Standards, a reliable independent
digital identification (ID) system: - CORRECT ANSWER: has the potential to reduce
costs, increase efficiencies, and allow for reallocation of resources.
Adverse Media Check - CORRECT ANSWER: As you conduct your research, you need
to determine whether your customer's name matches for adverse media, which is also
called negative news. Screening for adverse media involves entering your customer's
name, related account parties, signatories, and beneficial owners into the proprietary
tool to determine whether the name matches for negative news.
After an institution files a SAR/STR on a person, the institution will: - CORRECT
ANSWER: treat the report as non-disclosable.
Amazon Sanctions Screening (Case Example) - CORRECT ANSWER: OFAC found that
Amazon had provided goods and services to persons in Crimea, Iran, and Syria and to
persons named on OFACs SDN List. Amazon
also had processed orders for persons located in or employed by foreign missions of
Cuba, Iran, North Korea, Sudan, and Syria. At the root of the problem, Amazon's
automated sanctions screening
processes did not fully analyze all customer and transaction data relevant to compliance
with OFAC's sanctions regulations. Its screening software was
calibrated to apply very high screening thresholds, resulting in key words not being
detected.
AMEX Travel Related Services Company - CORRECT ANSWER: This case illustrates
the importance of sanctions compliance in the context of a common Fin Tech product:
prepaid cards. Human error and screening tool failures led to a sanction's violation at
Amex. However, no fines were issued because Amex remediated the issue and
disclosed it to OFAC. This case
illustrates how proactive communication regarding sanctions violations can prevent
serious financial penalties and reputational risk.
, AML Audits - CORRECT ANSWER: •Internal audits conducted by an internal audit
function
•External audits conducted by an outside firm
•Forensic audits
•Light-touch health checks
•Thematic audits
AML Compliance (2nd line of defense) - CORRECT ANSWER: AML officer is
responsible for developing policies to ensure AML compliance and to enable
the escalation of identified noncompliance or other issues to senior management and,
where appropriate, the board. The AML officer should be the contact point for all AML
issues for internal and external authorities and should have the responsibility for
reporting suspicious transactions.
AML monitoring solutions - CORRECT ANSWER: AML efforts are done mainly to
comply with regulations and ensure that your organization is not used for money
laundering.
An AI-based transaction monitoring system should result in the total number of flagged
transactions: - CORRECT ANSWER: decreasing as the software disqualifies more false
positives.
An anti-money laundering solution should: - CORRECT ANSWER: Focus on money
laundering, but also feed into wider anti-financial crime efforts, such as the fraud
function
An automated alert shows that a client is trying to transact from a country subject to
economic and trade sanctions. Which information about the client is most useful for an
analyst conducting an investigation? - CORRECT ANSWER: Internet Protocol (IP)
address access logs
Questions with 100% Verified Correct Answers
Guaranteed A+
"Boolean expression" - CORRECT ANSWER: Boolean searches work by using words
such as "and" or "not" in between search terms. This links them together to extract
useful information.
"Open Banking" - CORRECT ANSWER: refers to information-sharing networks that use
application programming interfaces (API) to securely transfer data, only on request,
from one organization to another. This can enable an institution to share a
customer's identifying information with a second institution when she wishes to open a
new account.
A customer's account is suspended due to a suspicious activity alert and the customer
is demanding an immediate explanation. Who is responsible for how the response is
handled? - CORRECT ANSWER: Money Laundering Reporting Officer
A FinTech employee working in the compliance department asks a customer service
representative to follow up with a client to clarify the beneficial owners of an entity. The
customer service representative is serving as the: - CORRECT ANSWER: first line of
defense.
A forensic audit is one type of audit a FinTech might face. - CORRECT ANSWER: True
A law enforcement representative calls a compliance officer at a virtual asset service
provider (VASP) exchange company and requests information for an account in
connection with an ongoing terrorist financing investigation. Which action should the
compliance officer take? - CORRECT ANSWER: Request that the law enforcement
representative provide a court order.
,A money transfer business receives multiple requests for fund transfers to high-risk
jurisdictions just under the reporting threshold from a client. What risk does the client's
behavior potentially pose to the business? - CORRECT ANSWER: Evading reporting
A new customer appears to be structuring transactions to stay under the account
threshold. Which is the next best step in the transaction monitoring and investigation
process? - CORRECT ANSWER: Conduct additional research into the nature of the
account and transactions.
A product that allows its users to store value through a debit or credit card, a bank
account and/or other designated channels to pay for goods and services is a: -
CORRECT ANSWER: mobile wallet.
A risk associated with convertible virtual currency transactions is that: - CORRECT
ANSWER: they may allow for greater anonymity than other types of non-cash payment
methods.
A risk-based approach means always applying enhanced due diligence during customer
onboarding. - CORRECT ANSWER: False
This statement is false. When using a risk-based approach, all customers should not be
subject to the same level of due diligence. The registration flow should identify when
EDD is required.
above-the-line and below-the-line. - CORRECT ANSWER: An analyst is testing the
firm's transaction monitoring system's rule that is set to alert if a customer makes three
sequential transactions of 1,000 USD or greater. To test the rule, the analyst creates two
new scenarios: one which alerts if a customer makes three sequential transactions of
1,100 USD or greater and a second which alerts if a customer makes three sequential
transactions of 900 USD or greater. This testing process is known as:
According to Financial Action Task Force (FATF) guidance, which practices are crucial
for mitigating many risks associated with privacy and data protection? - CORRECT
ANSWER: Technical standards and preventative business practices
,According to Financial Action Task Force (FATF) Standards, a reliable independent
digital identification (ID) system: - CORRECT ANSWER: has the potential to reduce
costs, increase efficiencies, and allow for reallocation of resources.
Adverse Media Check - CORRECT ANSWER: As you conduct your research, you need
to determine whether your customer's name matches for adverse media, which is also
called negative news. Screening for adverse media involves entering your customer's
name, related account parties, signatories, and beneficial owners into the proprietary
tool to determine whether the name matches for negative news.
After an institution files a SAR/STR on a person, the institution will: - CORRECT
ANSWER: treat the report as non-disclosable.
Amazon Sanctions Screening (Case Example) - CORRECT ANSWER: OFAC found that
Amazon had provided goods and services to persons in Crimea, Iran, and Syria and to
persons named on OFACs SDN List. Amazon
also had processed orders for persons located in or employed by foreign missions of
Cuba, Iran, North Korea, Sudan, and Syria. At the root of the problem, Amazon's
automated sanctions screening
processes did not fully analyze all customer and transaction data relevant to compliance
with OFAC's sanctions regulations. Its screening software was
calibrated to apply very high screening thresholds, resulting in key words not being
detected.
AMEX Travel Related Services Company - CORRECT ANSWER: This case illustrates
the importance of sanctions compliance in the context of a common Fin Tech product:
prepaid cards. Human error and screening tool failures led to a sanction's violation at
Amex. However, no fines were issued because Amex remediated the issue and
disclosed it to OFAC. This case
illustrates how proactive communication regarding sanctions violations can prevent
serious financial penalties and reputational risk.
, AML Audits - CORRECT ANSWER: •Internal audits conducted by an internal audit
function
•External audits conducted by an outside firm
•Forensic audits
•Light-touch health checks
•Thematic audits
AML Compliance (2nd line of defense) - CORRECT ANSWER: AML officer is
responsible for developing policies to ensure AML compliance and to enable
the escalation of identified noncompliance or other issues to senior management and,
where appropriate, the board. The AML officer should be the contact point for all AML
issues for internal and external authorities and should have the responsibility for
reporting suspicious transactions.
AML monitoring solutions - CORRECT ANSWER: AML efforts are done mainly to
comply with regulations and ensure that your organization is not used for money
laundering.
An AI-based transaction monitoring system should result in the total number of flagged
transactions: - CORRECT ANSWER: decreasing as the software disqualifies more false
positives.
An anti-money laundering solution should: - CORRECT ANSWER: Focus on money
laundering, but also feed into wider anti-financial crime efforts, such as the fraud
function
An automated alert shows that a client is trying to transact from a country subject to
economic and trade sanctions. Which information about the client is most useful for an
analyst conducting an investigation? - CORRECT ANSWER: Internet Protocol (IP)
address access logs
