Question 1

Phillips Importers LLC. is a shell company owned by Jon Phillips Mr. Phillips is very active in his local church He has convinced a large number of individuals from his church to invest in the Phillips Fund, which guarantees 10% returns.He lakes the money he collects and puts itina bank account for Phillips Importers LLC. He uses that money to market the Phillips Fund to new investors, print statements, pay dividends to his investors and pay some of his personal expenses. Which types of fraud isMr.Phillips committing? Choose 2 answers

Options :

A : Pyramid scheme

B : Market manipulation

C : Ponzi scheme

D : Affinity fraud

Answer: C,D

Question 2

Your construction company wishes to hire Mr. X to provide consultancy services within his country. He has his own consulting firm and is also a board member of a state-owned bank Mr. X is known for having highlevel business connections and for charging exorbitant rales for his services Mr. X does not like to complete paperwork and prefers to work based on a verbal agreement. Which three facts are red flags requiring enhanced due diligence? Choose 3 answers

Options :

A : Mr. X may be considered to be a politically exposed person (PEP)

B : The price Mr. X charges is suspect if fees are not itemized and documented

C : As a board member of a stale-owned bank Mr. X may be considered a public official under the U.S. Foreign Corrupt Practices Act

D : The price Mr. X charges is suspect since he is in the business of helping companies obtain and retain business

Answer: A,B,C

Question 3

You are an auditor reviewing the financial statements of a firm that manufactures construction equipment The firm's sales have slowed in recent months. Within the last quarter it has closed one of its lactones, however the firm's management are still reporting a positive outlook. Concerned shareholders have asked you to investigate (or possible signs of improper accounting or fraud. You are reviewing two balance sheets from the start and end of the quarter below Given this information and your knowledge of the company s status which issue is MOST likely to be a red flag?

Options :

A : Receivables and inventory levels have increased over three months despite a reduction in sales

B : Wages payable has reduced by nearly $100,000 in the last three months

C : The firm's property plant and equipment have dropped substantially in the past three months

D : Other liabilities have remained roughly the same over the three-monlh period despite a decline in total liabilities

Answer: A

Question 4

During a review of its compliance program, XYZ Bank discovers that it has processed transactions involving individuals and entities on the Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) list. What is the most appropriate action for XYZ Bank to take?

Options :

A : Immediately report the findings to OFAC and await further instructions.

B : Suspend all transactions until the individuals and entities are removed from the SDN list.

C : Implement enhanced due diligence procedures for transactions involving high-risk countries.

D : Conduct a retrospective review of transactions to assess the extent of potential violations.

Answer: A

Question 5

John purchased a property live years ago Real estate records show that two years ago, John transferred his interest to a third parley Susan. Susan obtained a mortgage on the properly with a mortgage company Company Z. John maintains the properly and pays the mortgage and taxes John only lives there on the weekends John also rents a room to someone who lives at the property full time. You are the investigator tasked with identifying the property's beneficial owner Who is the beneficial owner?

Options :

A : John

B : Company Z

C : Susan

D : Renter

Answer: A

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