CAFCA sample questions

Question 1

A rapidly growing Neo-bank is preparing for a regulatory audit. The auditor requests evidence of the 'Three Lines of Defense' model implementation. Which of the following scenarios best demonstrates an effective separation of duties within this framework?

Accepted Answer

The Customer Support team (1st Line) executes CDD procedures, while the Compliance team (2nd Line) monitors regulatory changes and advises on policy, and Internal Audit (3rd Line) independently tests the effectiveness of the controls.

Answer

The Compliance Officer (2nd Line) conducts the initial KYC checks on high-risk customers to ensure accuracy before the Sales team (1st Line) onboards them.

Answer

The Internal Audit team (3rd Line) reports directly to the CEO and helps the Compliance team (2nd Line) draft the annual AML risk assessment to ensure it meets audit standards.

Answer

The MLRO (2nd Line) is responsible for owning the risk and executing daily transaction monitoring alert closures to maintain operational speed.

Question 2

Which of the following data points collected by a FinTech during onboarding constitutes Sensitive Personally Identifiable Information (SPII) under regulations like GDPR, requiring stricter handling controls than standard PII?

Accepted Answer

The customer's biometric facial scan data used for liveness detection.

Answer

The customer's full residential address.

Answer

The customer's personal email address.

Answer

The customer's mobile phone number.

Question 3

A Payment Service Provider (PSP) is launching a 'Regulatory Sandbox' initiative to test a new cross-border remittance product using blockchain. What is the primary compliance objective of operating within this sandbox?

Accepted Answer

To test innovative products in a controlled environment with regulatory supervision, allowing for the evaluation of risks and controls before a full-scale launch.

Answer

To operate indefinitely without the need for full AML/KYC controls to maximize user acquisition.

Answer

To bypass the requirement for obtaining a money transmitter license in the target jurisdictions.

Answer

To allow the regulator to take ownership of the product's intellectual property in exchange for compliance waivers.

Question 4

A FinTech company acting as a Banking-as-a-Service (BaaS) provider for non-finance brands must carefully manage its 'Risk Appetite'. Which statement best describes a well-defined Risk Appetite Statement for this business model?

Accepted Answer

We accept medium operational risks associated with innovative onboarding but have zero tolerance for willful sanctions violations or bribery.

Answer

We have zero tolerance for any financial crime risk and will block all transactions that trigger any monitoring alert.

Answer

We accept high risks in all categories to ensure rapid market expansion and will address compliance issues retrospectively.

Answer

We rely entirely on our partner bank's risk appetite and do not maintain our own internal risk thresholds.

Question 5

True or False: In a FinTech environment, 'De-risking' refers to the process where the FinTech proactively lowers its transaction monitoring thresholds to capture more alerts.

Accepted Answer

False

Answer

True

Question 6

Which of the following are considered 'Predicate Crimes' for money laundering? (Select TWO)

Accepted Answer

Drug Trafficking

Accepted Answer

Bribery and Corruption

Answer

Structuring

Answer

Know Your Customer (KYC) failure

Answer

Placement

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Free CAFCA sample questions