High-Risk Sectors in Know Your Customer Profession
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Questions and Answers

What is the primary goal of applying risk mitigating factors in the Know Your Customer profession?

  • To lower the risk associated with customers (correct)
  • To avoid potential customers becoming clients
  • To increase the number of high-risk sectors
  • To conduct more frequent investigations on customers

    • In the context of Know Your Customer, how can understanding risk factors and mitigating factors benefit the analysts?

  • By increasing the risk ratings for clients
  • By avoiding application of mitigating factors
  • By providing tools to lower risk ratings (correct)
  • By complicating the risk assessment process

    • How can high-risk sectors be defined under the Prevention of Money Laundering and Terrorist Financing Act?

  • Sectors where money laundering risks are negligible
  • Industries with low likelihood of illegal financial activities
  • Industries with higher risks of illegal financial activities (correct)
  • Sectors that require minimal customer due diligence

    • What is the significance of sector knowledge for CDD and Transaction Monitoring analysts?

    <p>It helps in identifying money laundering risks</p> Signup and view all the answers

    How can mitigating factors impact the risk rating given to a client's business activities?

    <p>They can lower the risk rating</p> Signup and view all the answers

    Why is it important for CDD analysts to assign risk ratings of low, medium, or high to clients' business activities?

    <p>To better understand and communicate the level of risk</p> Signup and view all the answers

    Which of the following is NOT considered a high-risk sector related to money laundering according to the text?

    <p>The banking sector</p> Signup and view all the answers

    What is the main reason the transportation sector is considered a high-risk area for money laundering according to the text?

    <p>All of the above</p> Signup and view all the answers

    What is a key technique used in trade-based money laundering (TBML) according to the text?

    <p>All of the above</p> Signup and view all the answers

    What is the main reason TBML is difficult to detect and investigate according to the text?

    <p>All of the above</p> Signup and view all the answers

    What is a key challenge in monitoring the transportation sector for money laundering?

    <p>There is often too much freight and too little time to properly inspect all shipments</p> Signup and view all the answers

    Which of the following is NOT mentioned in the text as a high-risk sector for money laundering?

    <p>The trust service provider sector</p> Signup and view all the answers

    What is a key technique used in the 'multiple billing' method of trade-based money laundering?

    <p>Generating multiple invoices for a single shipment or transaction, each with different values, quantities or descriptions</p> Signup and view all the answers

    What is a key factor that makes the transportation sector vulnerable to trade-based money laundering?

    <p>There is often too much freight and too little time to properly inspect all shipments</p> Signup and view all the answers

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