CKYCA

Review 60 CKYCA practice questions with answer explanations and community insights.

Question 1

A legal entity applies to open an account in a financial institution. The owners of the entity are 20 individuals with equal shareholding. Who should be identified as the Ultimate Beneficial Owner (UBO), per Financial Action Task Force (FATF) guidelines?

  1. Any six shareholders whose collective shareholding exceeds 25%
  2. All 20 shareholders, because none exceeds the 25% threshold
  3. No one; this is an orphan legal entity because it has no UBOs
  4. The person(s) exercising control and/or acting as a senior management official(s)

Question 2

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

  1. Customer
  2. Geographical
  3. Political
  4. Economic

Question 3

During a routine CDD update in a financial institution, a junior member of the compliance department identifies that the spouse of the reviewed client was elected as a member of government. Which action should the junior member take?

  1. Inform the relationship manager about the election of the client’s spouse.
  2. Make a note on the client’s account of this fact and continue operations as usual.
  3. File a suspicious transaction report because the client did not notify the financial institution. D. Update the client’s information to reflect that the client is related to a politically exposed person.

Question 4

A KYC analyst is onboarding a high-net-worth client and, during the screening process, notices that the prospective client is the parent of a government minister. After the analyst performs a source of wealth analysis, whose approval is needed before opening the account?

  1. Relationship management
  2. Senior management
  3. Team management
  4. Project management

Question 5

A politically exposed person (PEP) is eager to open a private account with an international bank. In addition to performing the normal CDD, which measure should be required from the AML officer?

  1. Conduct enhanced ongoing monitoring of the business relationship each quarter.
  2. Obtain senior management approval for establishing such business relationships.
  3. Contact law enforcement, as PEPs pose enhanced risks to an institution.
  4. Make a note of a PEP business relationship and file a suspicious transaction report to the local financial intelligence unit.
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