Mr. Johnson, a compliance officer at ABC Corporation, is conducting due diligence on a potential business partner based in a foreign country. During the due diligence process, Mr. Johnson discovers that the potential partner's principal shareholder is a politically exposed person (PEP) from a country subject to OFAC sanctions. What is the most appropriate action for Mr. Johnson to take?

• A. Proceed with the business partnership but conduct enhanced monitoring of transactions involving the PEP.
• B. Seek guidance from OFAC on the permissibility of engaging with the potential partner.
• C. Reject the business partnership due to the involvement of a PEP from a sanctioned country.
• D. Proceed with the business partnership but disclose the involvement of the PEP to OFAC.

An individual has approached your securities firm with interest in opening an account After an interview, you establish that the individual is an attorney who states that she is representing a consulting company located in another country She saysthatshe is the company s agent and is authorized to open an account on its behalf.
You request the attorney to fill out a questionnaire to gather more information on the consulting company's ownership She takes the forms and agrees to return them within the next few days.
In themeantime,you research the consulting company using public records, social media and other online sources The company's website is vague and online searches return very few results.However,you do find an annual report Irom this year that lists company members and shareholders One minority shareholder appears to beanothercorporation.
The attorney later returns the completed questionnaire You note that several shareholders listed are not the same as those on the annual report When you ask follow-up questions regarding the nature of the business and expectedtransactions,she reiterates that the client is a consulting firm that works in a variety of fields and it expects to conduct transactions with clients located in several different countries.
Which is the BEST next step for your institution to take?

• A. Compare the listing of company members and shareholders to the information provided on the consulting firms website
• B. Ask the attorney to certify the owners of the consulting firm and do not move forward with account opening until they have been verified
• C. Research corporate registries and other sources to identify the owner of the company that is the minority shareholder of the consulting firm
• D. File a suspicious activity/suspicious transaction report on the grounds that the attorney may be involved in illicit activity

You are an examiner with Ihe regulatory agency in your jurisdiction that oversees money services businesses (MSBs).
You are conducting an examination of a midsize MSB with agents located domestically and in several countries. A previous examination last year found numerous weaknesses in Ihe MSB s anti-money laundering and fraud prevention programs, and you are reviewing these programs to determine if improvements have been made.
Which activity would MOST likely lead your agency to lake further regulatory action against the MSB?

• A. The MSB is not applying FATCA's withholding tax to its domestic money transactions
• B. The MSB has not updated the AML training it provides to its agents in almost four months
• C. The MSB has suspended agents found to be facilitating fraud schemes and allowed them to rejoin as a new company
• D. The MSB's suspicious activity/transaction report (SAR/STR) filings related to cybercrime have increased in the past year

In an attempt to ensure the selection of his bid for a government project in a foreign country Mr. Jones decided to pay off a foreign official who had the ability to influence the process Mr. Jones created a shell company to conduct the transaction.
In exchange for this influence Mr. Jones created a series of invoices that made it appear as if his shell company owed money to Ihe foreign official Mr. Jones wired money from his bank account in the US to the shell company in the foreign jurisdiction for credit to the government official Unfortunately for Mr. Jones, the official did not keep his promise and Jones did not gel the bid.
When did money laundering FIRST occurs?

• A. When Mr. Jones transferred funds from the shell company to the public official
• B. When Mr. Jones generated a series of false invoices
• C. When Mr. Jones created the shell company
• D. When Mr. Jones wired the funds to the shell company