Which of the following statements is the responsibility of the Model Risk Committee?
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A Model Risk Committee is responsible for assisting the board of directors in fulfilling its obligations in respect to all the models used by the financial institution, ensuring the integrity of the information about all the models stored in the model inventory, ensuring the composition of the committee membership is appropriate, providing reports to the risk management committee, the board of directors and senior management on the status of model risk management.
Question 2 of 30
2. Question
There are assigned people to whom periodic reports are provided about the status of model risk management, who are these people specifically?
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Incorrect
The status of model risk management is provided to the risk management committee, the board of directors, senior management and the audit committee.
Question 3 of 30
3. Question
What does “Basel Core Principles for Effective Banking Supervision (bcbs230)” state?
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“Basel Core Principles for Effective Banking Supervision (bcbs230) state that “Where banks use models to measure components of risk, the supervisor determines that: banks comply with supervisory standards on their use, banks’ boards and senior management understand the limitations and uncertainties relating to the output of the models and the risk inherent in their use, they shall perform regular and independent validation and testing of the models and that the supervisor assesses whether the model outputs appear reasonable as a reflection of the risks assumed.”
Question 4 of 30
4. Question
Which of the statements is true about internal sanctions screening controls?
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Incorrect
It controls the training staff in the intricacies of international sanctions.
Question 5 of 30
5. Question
What are the two categories of the sanctions and watch list?
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Incorrect
The sanctions and watch lists fall under two categories are black and white lists.
Question 6 of 30
6. Question
In sanction entities, what should be ensured to promptly execute the screening process?
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It must ensure that they use the most current list of sanctioned entities and execute the screening process promptly after each new version of the list is made available.
Question 7 of 30
7. Question
Who of the following clients should be screened periodically by a financial institution?
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Incorrect
These are the names that should be screened periodically include employees, consultants and third-party service providers such as vendors, landlords, and tenants of properties owned by the financial institution.
Question 8 of 30
8. Question
Once a financial institution suspects that it has identified a case of potential terrorist financing it is considered a best practice to notify law enforcement immediately after filing the suspicious transaction report. Which of the following is a correct funding flow?
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Incorrect
Examples of correct funding flows are from the point of origin to a terrorist organization, from the organization to a specific operation, and to the individual operative.
Question 9 of 30
9. Question
Inherent Risk Factors have three types, high, medium and, low. Which of the statements is NOT a low inherent risk?
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The Low Inherent Risks is no exposure to high-risk jurisdictions, normal retail domestic products such as checking and savings accounts, stable domestic customer base without significant growth and face to face contact at account opening for new customers.
Question 10 of 30
10. Question
To identify and prevent the funding of terrorism is a major responsibility for financial institutions and it is extremely difficult to achieve. What are the characteristics of terrorist funding?
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Incorrect
Terrorist funding has the following characteristics, funding requirements, funding sources, and funding mechanisms.
Question 11 of 30
11. Question
Which of these statements is not a recommended guideline for Anti-Bribery and Corruption (ABC) program?
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Some of the elements for Anti-Bribery and Corruption (ABC) program are governance, firm-wide policy, a controlled environment, and customer-related corruption risks
Question 12 of 30
12. Question
Typology has thresholds, how do you confirm its period of validity?
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In confirming the validity of the typology thresholds and reduce the volume of false-positive alerts, the testing has to establish that the number of false negatives is not significant.
Question 13 of 30
13. Question
Transaction monitoring operations comprise a committee, policy and procedures, department and data management. What does a transaction monitoring committee do?
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The committee is responsible for managing the global standards and guidelines for the transaction monitoring component of the AML/CTF Compliance program of the financial institution. It ensures that the transaction monitoring program is globally consistent, effective and sustainable as it regards typology, maintenance and tuning.
Question 14 of 30
14. Question
The risk governance framework is a comprehensive, written approach with policies and procedures enabling financial institutions to implement the framework across the entire financial institution. What is the definition of a policy according to Risk Management?
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Incorrect
For Risk Management, a policy is a high-level statement of intent defining the scope of coverage, identifying areas that are included and those which are explicitly excluded which are governed by the risk appetite statement.
Question 15 of 30
15. Question
In the policies and procedures of each institution record retention requirements are present, which of the following are record retention requirements?
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Incorrect
The record retention requirements includes currency transaction reports, suspicious activity reports, wire transfer records, PATRIOT Act Section 314(a) and 314(b) requests, special measures, national security letters, and exempt person designation.
Question 16 of 30
16. Question
A critical component of the AML/CTF compliance program is transaction monitoring, which of the following can be included during monitoring transactions?
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Incorrect
Transaction monitoring can include the number of alerts generated analyzed by front line units, number of alerts raised to case analyzed by front line units, the average time to review each alert and Backlog of alert review.
Question 17 of 30
17. Question
In the Risk Assessment Program, a Combination risk was discussed and identified its compositions to help with AML/CFT aiming to support the development of prevention and mitigation measures that are commensurate to the AML/CTF risks identified, which of the statements below is a combination risk?
Correct
Incorrect
Combination risk includes client risk, country risk, and product risk.
Question 18 of 30
18. Question
Under the Universal Beneficial Ownership (UBO), FATF Recommendation 24 stated which of the following?
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It states that countries should take measures to prevent the misuse of legal persons for money laundering or terrorist financing. It should ensure that there is adequate, accurate and timely information on the beneficial ownership and control of legal persons that can be obtained or accessed in a timely fashion by competent authorities.
Question 19 of 30
19. Question
Inherent Risk Factors include Inherent Risk Rating, under this is a high inherent risk, which of the following statements that do not apply as a high inherent risk?
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Incorrect
Some of the high inherent risks are crossing the border or international wire transfers, private banking services, and trade finance.
Question 20 of 30
20. Question
What should be included in the risk governance framework that covers all the risks relevant to the financial institution?
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The risk governance framework should cover all the risks relevant to the financial institution including those related to credit, interest, price, operational, liquidity, strategic, reputational and compliance.
Question 21 of 30
21. Question
As an AML/CTF committee, recurring responsibilities will be given, which of the statements best describe this?
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AML/CTF committee has the following principal recurring responsibilities such as Feedback loop management, AML/CTF policy and related policies and procedures and approving any changes and manages the charter for AML/CTF committee and the charters of the subcommittee.
Question 22 of 30
22. Question
A financial institution while considering the implications in all aspects will set forth the future direction by which step or guideline?
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Incorrect
A strategic plan will set forth the future direction of the financial institution in all aspects and appropriately consider the risk implications of each initiative. The initiative should be designed ultimately to either increase or maintain existing revenue directly or indirectly.
Question 23 of 30
23. Question
In Risk Management, there are several components two of which are technology and cybersecurity risks, what are the difference between the two?
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Technology risk is the potential for technology failures to disrupt the business such as information security incidents or service outages while cybersecurity risk is exposure to financial loss, disruption or damage to an organization as a result of a failure of its information technology systems.
Question 24 of 30
24. Question
What should be created by the risk management of financial institutions to be effective and consistent across the enterprise?
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An aide to be effective and consistent across the enterprise is for risk management to create a standardized methodology.
Question 25 of 30
25. Question
In Section 352 of the US PATRIOT Act, the Four Pillars were clearly mentioned, but the “fifth pillar” issued by FinCEN in the United States came into effect in 2018, namely
Correct
Incorrect
The 5th Pillar or The new Customer Due Diligence rule means that information is required to be collected from certain legal entities.
Question 26 of 30
26. Question
What is the type of risk where the danger that the value of investments will suffer as the result of a change in interest rates?
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Incorrect
Interest rate risk
is solely the danger that the value of investments will suffer as the result of a change in interest rates.
Question 27 of 30
27. Question
In what particular occasion it is considered necessary to re-process transaction monitoring and/or Sanctions Screening with historical data?
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Incorrect
It can be through the request of the supervisory agency or because of a self-identified issue. The main reason for identification of any transactions or names that may have been missed and should have been reported. And possibly, some issue with a typology or filter.
Question 28 of 30
28. Question
The statements below apply to Universal Beneficial Ownership (UBO) except:
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Incorrect
Universal Beneficial Ownership (UBO) means that the “natural persons” behind the legal entity must be identified including the person whereas benefits is being operated. In 2015, the Panama Papers were released. The 11.5 million documents revealed that Mossack Fonseca, had created over 214,000 offshore entities for their clients during the previous forty years.
Question 29 of 30
29. Question
What implies effective control at the enterprise level?
Correct
An effective control at the enterprise level is the board of directors and senior management continually promulgate the importance of the culture of compliance with visible processes to enforce the clearly expressed expectations.
Incorrect
Question 30 of 30
30. Question
Which is applicable in a financial institution to set policies?
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Incorrect
A financial institution needs to set policies which are the principles and rules designed to establish the parameters that the enterprise has to respect while reaching the long-term business goals as defined in the strategic plan. These policies are approved by the board of directors and reviewed annually. Subsequently, these are high-level statements of principle and do not require frequent changes in wording. There must be a formal change management process in place that ensures that all changes are appropriately authorized, published and included in the relevant training.