KYC & AML IMP QUES

Q49. Layering under Money Laundering refers to______

a. Distinguish the origin of Initial Deposit through Multiple Transfers
b. Distinguish Origin of Initial Deposit through Multiple Transactions
c. Both of the above
d. None of the above

Q50. Smurfing means_______?

a. Large number of cash deposits into same account to avoid
reporting requirements
b. one voucher for high value deposit
c. Low value denominations of cash
d. None of the above

Q51. The periodicity of KYC updation should not be less than once in
__________ for low risk
a. 2 years
b. 10 years
c. 5 years
d. 7 years

Q52. In the context of PMLA Act, PEP stands for_______

a. Politically Exposed Persons
b. Politically experienced persons
c. Politically exiled persons
d. Politically exempted persons
Q53. KYC norms are applicable only to deposit accounts and not loan
accounts
a. TRUE
b. FALSE
c. any of above
d. None of above

Q54. The records u/s 12 as prescribed under PMLA, 2002 shall be

maintained for a period of _________ from the date of ______ between
the Clients and the Banking Company or Financial Institution or
Intermediary.
a. 10 years, Beginning of the transactions
b. 5 years, Beginning of the transactions
c. 5 years, Cessation of the transactions
d. 10 years, Cessation of the transactions

Q55. International trade in goods and services can be used for money
laundering mechanism. What is most important for the launderer when
engaging in this method?
a. The ability To sell the exported goods for as much as possible
b. The ability To use goods that do not need to be declared to the
customs
c. The ability To use high-value assets such as luxury cars or boats in
a trade.
d. The ability To over or under-invoice the goods.

Q56. Is India at present a member of the Egmont group?

a. India is a member of Egmont Group
b. India has applied for the membership and awaiting the same
c. India is a permanent member of Egmont Group from 1999
d. India is an observer of the Egmont group
 This has developed into The Egmont Group, and the FATF 2012
Standards require that every FIU becomes its member.
 The objective of the Group is to find ways to promote the
development of FIUS and to cooperate, especially in the areas of
information exchange, training and the sharing of expertise.
 According to 2022, it currently has 166 members.
 It gives guidelines to FIUS.

Q57. In which year was the Financial Intelligence Unit (FIU) set up in
Delhi?
a. 1999
b. 2002
c. 2004
d. 2006

Q58. Which of the following industries does the FATF guidelines

not cover
a. Notaries
b. Trust and Company service providers
c. Legal professionals
d. High value vehicle sales

Q59. If the balance in a small account where KYC norms was not
required to be followed exceeds Rs.50,000, what the Bankers
should do?
a. Bankers should immediately obtain all documents to satisfy KYC
norms.
b. Bankers should immediately close the account without notice.
c. Bankers should close the account after giving 30 days notice.
d. Bankers will give warning and ask the customer to withdraw excess
amount

Q60. KYC guidelines followed by the bank have been framed on

the recommendations of the _________
a. Indian bank association
b. Reserve Bank of India
c. Ministry of information technology and human resource
development
d. Ministry of home affairs

Q61. Due diligence is done at the time of opening an account to

enable bank to ensure :
a. Authenticity of the signatures of the customer at the time of
opening an account
b. Identification of the customer at the time of opening an account.
c. Correctness of the various denominations of notes given by the
customer while opening an account
d. Speeding up the process of account opening of the new customer.

Q62. Which of the following is/are not part of preventive

measures suggested by FATF?
a. Customer due diligence process should be in place
b. Record keeping requirements to be met by the financial institutions
c. Tipping off and confidentiality
d. None of the Above
Q63. Some institutions may be used by criminals to transfer
and hide illegal wealth. The institutions are often located in
countries with well-developed secrecy laws and attractive tax
structures. These institutions are called:
a. trusts
b. Shell Companies
c. front companies
d. offshore banks

Q64. Where the customer is an unincorporated association or

body of individuals, the beneficial owner is the natural
person(s), who, whether acting alone or together, or through
one or more juridical person, has/have ownership
of/entitlement to more than ________ percent of the property
or capital or profits of the unincorporated association or body
of individuals.
a. 5
b. 15
c. 25
d. 30

Q65. Under Rule 2 (ba) of PML Rules, the person who can be
nominated as the 'Designated Director' for a Partnership Firm
is ________
a. Managing Partner
b. Proprietor
c. Managing Director
d. Managing Trustee

CONSTITUTION OF THE CRITERIA

ENTITY
Company Managing director or a whole-time
Director
Partnership firm Managing partner
Proprietorship firm Proprietor
Trust Managing Trustee
An association or body of An individual who manages the affairs
individuals of the entity

Q66. Four eyes concept means ______?

a. Opening and verifying of account by one person two times
b. Opening and verifying of account by electronic device/s
c. Opening and verifying of account by two different persons
d. None of the above

Q67. A Small account means a Savings account in a banking

company where-
a. The aggregate of all credits in a financial year does not exceed
rupees one lakh
b. The balance at any point of time does not exceed rupees fifty
thousand
c. The aggregate of all withdrawals and transfers in a month does not
exceed rupees ten thousand
d. All of the above

Q68. A SB A/c Customer asks the cashier as to what the bank

would do if he deposits Rs.2 Crore in cash from him. The total
turnover in the customer’s account has thus far been in the
range of Rs 3 Lakhs in a year. However the customer never
carries out the transaction. In this case What the bank has to
do?
a. Banks should report all attempted transactions in STR only if the
transaction is completed by the customer
b. Banks should file a STR in the matter for an attempted suspicious
activity
c. Banks need not file STR since the customer has merely enquired
and has not done any transaction
d. Banks should report all attempted transactions in STR even if the
transaction is not completed by the customer provided the transaction
is above Rs.10 Lakhs

Q69. During customer acceptance and identification activities,

on which of the following customers should enhanced due
diligence be conducted?
a. non-face-to-face customers
b. trustees, nominees, and fiduciaries
c. correspondent accounts
d. All of the above

Q70. Notes determined as counterfeit shall be stamped as

_______ and impounded in the prescribed format. Each such
impounded note shall be recorded under authentication, in a
separate register.
a. Counterfeit note
b. Fake note
c. Duplicate note
d. Any of these

Q71. The minimum prison term for the offences under PMLA
2002 is _________
a. 3 years
b. 5 years
c. 7 years
d. 2 years

Q72. In case the deposits are in the name of Minor then

a. Photograph of Guardian only is required
b. Photograph of Minor alone is required
c. Photograph of both Guardian and Minor is required
d. Photograph, Signature of Minor and Guardian is required

Q73. Which of the following is a correct statement?

a. Smurfers travel from bank to bank withdrawing cash from ATMs
b. Smurfing is a way to avoid triggering a reporting threshold
c. Smurfers are dead people who's accounts have been taken over by
money launderers
d. Smurfing requires an insider at a financial institution

Q74. Where a client submits a KYC Identifier to a reporting

entity, then such reporting entity shall retrieve the KYC records
online from the Central KYC Records Registry by using the KYC
Identifier and shall not require a client to submit the same KYC
records or information or any other additional identification
documents or details
a. TRUE
b. FALSE
c. any of above
d. None of the above
Q75. While opening an account by transfer from another
branch, a new set of account opening forms along with a Fresh
Customer Profile needs to be obtained.
a. TRUE
b. FALSE
c. any of above
d. None of the above

Q76. As per KYC policy, the banks should not allow opening
and/or holding of an account on behalf of a client/s by
professional intermediaries, like Lawyers and Chartered
Accountants, etc., :
a. who refuse to disclose true identity of the owner of the
account/funds due to any professional obligation of customer
confidentially.
b. who disclose true identity of the owner of the account/funds
c. who cooperate with banking entities in full disclosure about the
client particulars
d. all the above

Q77. A well-established and well-regarded customer of your

bank refers a new customer to you. The new customer is a
leasing company that does business in the Philippines. It is also
listed on the Philippine Stock Exchange. What level of due
diligence would be required?
a. This situation requires a normal degree of due diligence. It is a
public company and has been introduced by a trusted customer.
b. This situation requires a very limited degree of due diligence
because the new customer is a public company and has been introduced
by a trusted customer.
c. This situation requires a enhanced degree of due diligence. The
customer is a non-bank financial company based overseas.
d. Low level of Due Diligence since the Customer is a Financial
Institution

Q78. Which of the following laws are included in The legal

framework for AML/CFT in The United States of America?
a. Money Laundering Control Act (1986)
b. Bank Secrecy Act
c. Both of the above
d. None of the above

Q79. Branches may open accounts for those customers who are
not able to provide KYC documents, provided, the total credit
summation in all the accounts taken together is not expected
to exceed Rs. __________ in a year.
a. Rs.1 Lakh
b. Rs.2 Lakhs
c. Rs.50,000
d. Rs.5000 per month

Q80. In the context of AML/CTF rules the main reason behind

conducting a CDD process is
a. To know the identity and the personal Background of the client
b. To know the nature and objectives of client business
c. To assess the business risk profile of the client
d. To assess the possibility of linkage with Money Laundering and
Terrorist Financing activities.
Q81. The customers can be classified into the following
categories as per the sensitivity of the inherent risk as
enumerated in the Risk Management under KYC Policies. They
are:
a. High Risk, Moderate Risk and No Risk
b. High Risk, Medium Risk, and Low Risk
c. High Risk, Moderate Risk, and Low Risk
d. Extremely High Risk, High Risk, Medium Risk and Low Risk

Q82. Full KYC exercise will be required to be done ___________

for high risk customers and ____________ for low risk
customers
a. At least every 2 year, 10 year
b. At least every 1 year, 7 year
c. At least every 3 year, 8 year
d. None of the above

Q83. Trusts can act as a layering tool because they enable

creation of false paper trails and transactions?
a. FALSE
b. TRUE
c. any of above
d. None of the above

Q86. A new customer approaches a bank to open a CURRENT

account. The customer provides an address for the account
located away from the city where the branch is situated. When
asked by the Bank representative if the customer requires any
additional banking services, the customer responds that He is
also interested in opening a PMS account. The bank
representative refers the customer to their PMS department.
The customer tells the representative that he has never had a
PMS account before and has a few questions about how an
investment account works. The customer asks how deposits
can be made into the account, if there are any reporting
requirements, and how to go about moving balances out of the
account using wire transfers. No questions are asked about
fees associated with these transactions. Which three items
would be considered suspicious?
A. The customer asks many questions about the PMS account, but none
of them are related to investing.
B. The customer is opening a current account and at the same time a
PMS account.
C. The address of the account holder and the branch where the customer
came to open the account are not close to each other.
D. That the customer appears unconcerned about the fees.
a. A,B,C
b. B,C,D
c. A,C,D
d. A,B,D

Q87. Whoever commits the offence of money-laundering

where the proceeds of the crime relates to offences specified
under Narcotic Drugs and Psychotropic Substances Act shall be
punishable with
a. Min - 6 Months; Max - 7 Yrs
b. Min - 3 Yrs; Max - 10 Yrs
c. Min - 3 Yrs; Max - 5 Yrs
d. Min - 3 Yrs; Max - 7 Yrs
Q88. The Financial Action Task Force on Money Laundering in
South America (GAFISUD) consists of __________
organisations, as observers?
a. 10 Organisations
b. 9 Organisations
c. 5 Organisations
d. 7Organisations

Q89. Where are all the details of the company available ?

a. telephone directory search
b. Income Tax website
c. MCA website
d. None of the above

Q90. Simplified Due Diligence is applicable for _________

a. Small Deposit Accounts
b. Low Income Group from Urban and Rural Areas
c. Low value or Non-Recurring Transactions
d. All of the above

Q91. Which among the following is correct about

Correspondent banking?
a. Correspondent banking involves one bank providing services to
another bank to move funds, exchange currencies, or to carry out other
financial transactions
b. Correspondent banking involves one bank obtaining funds from
another respondent bank
c. It is the name given to a bank, broker, dealers or financial
institution that acts on behalf of another financial institution
d. Smaller financial corporations that do not necessarily have the
capital to enter into foreign markets commonly do the correspondent
banking

Q92. In accordance with AML-KYC, what is the full form of RE?

a. Regular Education
b. Registered Entity
c. Research and Education
d. Regulated Entity

Q93. The period of retention for Transaction records under

Prevention of Money Laundering Act (PMLA) is _____________.
a. 3 years from transaction
b. 2 years from transaction
c. 5 years from transaction
d. 7 years from transaction

Q94. Cash Transaction where fake currency notes or bank notes

have been used as genuine or where any forgery of a valuable
security has taken place have to be reported to FIU-India within
__________.
a. 7 days
b. 6 days
c. 17 days
d. 13 days

Q95. Which of the following provisions are provided by the

Money Laundering Control Act (USA) ?
(A) For money laundering as a federal crime
(B) Prohibiting structuring transactions
(C) Civil and Criminal forfeiture
(D) Banks to have procedures to meet obligations.
a. A, B
b. C,D
c. B, C
d. All of the above

Q96. ____ refers to the separation of illicit proceeds from their

source by creating complex layers of financial transactions.
a. Placement
b. Layering
c. Integration
d. Smurfing

Q97. What is the consequence of declaring 'money laundering'

as a criminal offense?
a. The offended will be called as a terrorist
b. The government (the 'state') will prosecute the offender
c. The offender cannot be charged
d. The court will only require direct evidence to provide the offense

Q98. Which of the following is NOT a component of AML?

a. Customer Due Diligence
b. Suspicious Activity Reporting
c. Risk Assessment
d. Fraud Detection
Q99. Which of the following is an example of a high-risk
customer?
a. A retired school teacher
b. A small business owner
c. A politician
d. A college student

Q100. Which of the following is an example of a red flag for

money laundering?
a. A customer requesting a copy of their account statement
b. A customer making a large purchase with a credit card
c. A customer making frequent deposits and withdrawals of large
amounts of cash
d. A customer transferring funds to a family member