1. XYZ Industries, Inc., is incorporated in the British Virgin Islands and is indebted to a US-based company. You are a financial investigator for a US-based firm and are aware of many properties owned by XYZ Industries both domestically and internationally. You have been hired to uncover the beneficial owner to identify available assets for repayment of outstanding debts and restitution of victims. Which document would best assist the investigator to identify the beneficial owner?

a. power of attorney or designation of corporate agent

b. a mail forwarding notice related to the property filed with the local postal service

c. articles of incorporation and board minutes for XYZ Industries, Inc. filed in the BVI

d. a mutual legal assistance treaty request filed with the BVI seeking all beneficial ownership records

e. none of the above

2. Your client invested in an international real estate investment company in the Cayman Islands. Recently, the client learned that her contact at the company was arrested in the USA on money laundering charges. She wants you to find out more information about the owners of the investment company. You have learned that the company she invested in was a shell corporation. You seek to identify the beneficial owners of the shell corporation. Which of the following describes a way to identify beneficial ownership?

a. determine if there are loans by the company to individuals for no equity

b. determine if a Certificate of Good Standing was filed with the Cayman Company Registry official

c. determine if the nominee directors hold positions with other companies in the Cayman Islands

d. determine who the authorized signatories are for the companys bank accounts

e. none of the above

3. Global Widget Co. recently acquired a local company in Pakistan, a country with a high level of state involvement in the economy and history of corruption. Before purchasing the company, Global Widget hired a major international law firm to conduct a due diligence review and uncover any potential violations of global anti-corruption laws. When the review came back free of problems or issues, Global Widget completed its acquisition.

Three years later, Global Widget executives were conducting their first anti-corruption compliance training with employees from the Pakistan office. During the training session, Global Widget was alerted by Pakistan-based employees that the distributors the company hires may be bribing local government officials. Global Widget had not conducted a review of the distributors in Pakistan. When it looked into the allegations, it found widespread potential Foreign Corrupt Practices Act and UK Bribery Act violations. What are two weaknesses in Global Widget anti-corruption compliance program?

a. Global Widget did not include its distributors in Pakistan when it conducted its anti-corruption due diligence and training

b. the due diligence review should have been conducted exclusively by local counsel in Pakistan because they would be better versed in the countrys culture and laws

c. Global Widget should have conducted anti-corruption compliance training as soon as possible after acquiring the company in Pakistan

d. Global Widget failed to reach out directly to government agencies in Pakistan to request information on any history of corrupt payments at the company it was acquiring

e. a and c

f. c and d

g. a and d

4. A financial institution holds an account for a charitable organization whose stated mission is to promote literacy in the local community. The charity derives most of its financial backing from periodic fundraising drives that take in hundreds of small donations from individual donors. Recently, the institution conducted a due diligence investigation and noticed anomalous activity in the charitys account. Which of these is a red flag for potential terrorist financing?

a. the charity recently purchased a large insurance policy which does not have a surrender clause and cannot be used as collateral

b. the charity has no long-term leasing agreement on a physical property in a nearby town

c. the transaction history indicates a pattern of wire transfers to countries with no previous connection to the charitys activities

d. the transaction history for the charity shows a large number of cash deposits

e. none of the above

5. People believe that deception is

a. associated with an increase in movements and actually is associated with the same

b. associated with an increase in movements and actually is related to a decrease in movements

c. associated with a decrease in movements and actually is related to a decrease in movements

d. associated with a decrease in movements and actually is related to an increase in movements

e. none of the above

6. Interviewing is:

a. the systematic questioning of individuals who have knowledge of events, people, and evidence involved in a case under investigation

b. the process of answering questions from an interviewer for the purpose of finding a job

c. by far the most common technique used in investigating and resolving fraud

d. both a and c

e. none of the above

7. The cognitive load framework emphasizes that

a. deception is a cognitively complex task and it is cognitively easier to fabricate a plausible and convincing lie consistent with everything the observer knows

b. deception is a cognitively easy task and it is cognitively easier to fabricate a plausible and convincing lie consistent with everything the observer knows

c. deception is a cognitively easy task and it is cognitively more difficult to fabricate a plausible and convincing lie consistent with everything the observer knows

d. deception is a cognitively complex task and it is cognitively more difficult to fabricate a plausible and convincing lie consistent with everything the observer knows

e. none of the above

8. Which of the following is a characteristic of a good interview?

a. make the interview as concise as possible

b. the interviewer should announce his or her bias at the outset, because the interviewee will

cooperate better when the interviewee knows the type of information the interviewer is seeking

c. friendly interviewees appear very helpful, but they may have hidden motives and may provide

bad information

d. it is important to schedule interviews ahead of time, especially if you are planning to interview

a potentially hostile interviewee

9. The expert interviewer achieves more success in interviews by

a. instilling fear and intimidation in the interviewee

b. creating a comfortable environment by showing cordiality and respect for the interviewee

c. being willing to explain the process and purpose of the interview and seeking the interviewees commitment to full disclosure

d. b and c

e. none of the above

10. Experts agree that if when asked a question the hands gesture away from the body

a. the answer is probably false

b. the answer may be either false or true

c. the answer is probably true

d. the interviewee is uncertain of the correct answer

e. none of the above

11. MLATs between the U.S. and foreign governments establish procedures by which evidence may be obtained from foreign nations. MLATs allow federal prosecutors to request that foreign law enforcement officers gather evidence in their countries for use in U.S. proceedings. MLATs offer the advantage that

a. investigators may use a letter rogatory in conjunction with the MLAT to speed up evidence gathering

b. compliance on the part of signatory nations is mandatory

c. foreign authorities may honor a request by using evidence-gathering tools allowed them by their own laws

d. they require the actual involvement of U.S. officials in the foreign investigation

e. none of the above

12. Professionals seem to perform poorly in detecting lies via examining nonverbal behavior because

a. they do not pay sufficient attention to facial expressions and hand movements of interviewees

b. they do not know where to look and have false beliefs about which behaviors might be clues to deception

c. they do not pay sufficient attention to facial expressions and have false beliefs about which behaviors might be clues to deception

d. they do not know where to look and do not pay sufficient attention to facial expressions

13. Various tricks can increase the credibility of paintings and other artwork. These tricks include the following:

a. an item may be introduced to the public at the home of a well-known collector

b. an item may be introduced to the public in the window of a ritzy store

c. an item may also go through a small auction house

d. an item may be passed through some pseudo sales among collaborating dealers before arriving in an upscale art mart

e. all of the above

14. Civil forfeiture laws allow law enforcement to seize property in the absence of a criminal charge or the establishment of guilt if police believe they find any evidence of a drug-related crime. Which of the following assertions is not correct regarding civil forfeiture?

a. the law has been used against drug cartel leaders, but state and local law enforcement have used the law whenever possible

b. in a majority of cases, the property owner is never charged with a crimes yet government officials usually keep the seized property

c. a property owner may secure the return of property by showing that no crime ever occurred or the government lacked probable cause

d. there is a proportionality test which requires that more highly valued property may be seized only for more serious violations of the law

e. none of the above

15. A device used by Hans Van Meegeren and other art fraudsters to bring forgeries to market is

a. to exploit a time gap in an artists record of productivity often indicated by an incomplete catalogues raisonnes

b. to forge documents that indicate the provenance of a fake work or art object to make it seem real

c. to master the style of the painter involved and use the same kind of pigments and other materials as the artist

d. a, b, and c

e. none of the above

16. Each of these statements is true about the net worth method for determining embezzled amounts except:

a. the net worth method generally understates amounts stolen

b. much of the information necessary for determining an individuals assets, liabilities, living

expenses, and income is available through public searches

c. courts are generally suspicious of dollar amounts determined by the net worth method because

courts realize that the net worth method can only provide approximation of the amount stolen

d. the net worth method is useful for obtaining confessions from suspects during interviews or

interrogations

e. none of the above

.

17. Based upon the following facts, determine a persons preliminary understatement of income:

Schedule C receipts. $280,000

Schedule C expenses. 135,000

Personal living expenses 65,000

an overstatement

$80,000

$135,000

$280,000

None of the above

18. Which statement is false?

a. The source and application of funds technique is a variation of the net worth method that shows increases and decreases in a taxpayers accounts at the end of the year.

b. Often the IRS agent will use the expenditure approach when a taxpayer is spending income lavishly rather than purchasing assets or investments.

c. The expenditure approach is similar to the Cash T, except that the data used are the increases and decreases in the taxpayers accounts.

d. The source and application of funds method is a variation of the bank deposit method.

e. None of the above.

19. Which statement is true?

a. Beauty and barber shops are cash intensive businesses.

b. Where the application of funds is less than the sources, a taxpayer is deemed to have an understatement of income.

c. Where the application of funds is greater than the sources, a person is deemed to have an overstatement of income.

d. The Cash T is appropriate for persons where a substantial amount of income is deposited in banks and the expenditures are proportionate to the income reported.

e. None of the above is true.

20. Which statement is false?

a. The net worth analysis may be used when searching for hidden income in drug trafficking and insurance fraud situations.

b. Whereas the focus of the net worth method is on the year-end balances as well as other assets and liabilities, the bank deposit technique looks at the funds deposited during the year.

c. The bank deposit method attempts to reconstruct gross taxable receipts rather than adjusted taxable income.

d. The bank deposit method is appropriate when most of the income is deposited in banks and most of the expenses are paid by checks.

e. All of the above are true.

21. In computing income under the net worth method, the following facts are found:

Total assets $1,600,000

Total liabilities 825,000

Nondeductible expenses 120,000

Net worth at beginning of year 560,000

Adjusted gross income is:

$170,000

215,000

290,000

335,000

None of the above.

22. Which of the following is a step in locating offshore assets?

a. determine if a subject traveled overseas

b. locate the subjects travel agency

c. identify the means employed to move cash offshore

d. all of the above

e. none of the above

23. Which of the following are specialized bank accounts, in connection with wire transfer services, that invite misuse by sophisticated and professional money launderers?

a. basic checking accounts

b. threshold accounts

c. cupo accounts

d. b and c

e. none of the above

24. The government can seize property under the following methods except?

a. initiating a forfeiture procedure under the Federal Rules of Criminal Procedure

b. beginning a summary or administrative procedure under federal customs law

c. seizing the property if it is in the possession of a known felon

d. none of the above

25. Which of the following sentences uses the passive voice?

a. mistakes were made

b. I saw the incident myself

c. both a and b are in the passive voice

d. none of the above

26. One important initial goal in asset tracing for the professional is

a. to establish a cooperative relationship with the foreign government involved

b. to attach any assets hidden offshore

c. to establish some paper trail that evidences communication, either initially or ongoing, with the holder of the assets

d. a and b

e. none of the above

27. Which type of semantic dodger is most likely to use sentences throughout a statement that begin with phrases such as I think, I guess, and I believe?

a. the term-shifter

b. the nonconformist

c. the joker

d. Mr. I cannot commit

e. none of the above

28. Which statement contains a qualifying word that suggests that the speaker is evading a straightforward statement of the facts?

a. I saw him a week ago.

b. The last time I saw him was a week ago.

c. The last time I actually saw him was a week ago.

d. I saw him less than a week ago.

e. None of the above

29. In civil forfeiture, once probable cause is established, the burden of proof

a. shifts to the property owner to show beyond a reasonable doubt that the property is not related to the crime

b. shifts to the property owner to show by a preponderance of the evidence that the property is not related to the crime

c. belongs to the government to show beyond a reasonable doubt that the property is implicated in the crime

d. belongs to the government by a preponderance of the evidence that the property is implicated in the crime

e. none of the above

30. Which of the following statements is true?

a. it matters whether the owner of property was involved in the crime for purposes of civil forfeiture

b. the owner does not even have to be accused or even suspected of involvement in the criminal activity for his property to be forfeited

c. it matters whether the owner of property was even aware that criminal activity was taking place

d. even if the owner can prove the objects innocence, the government still has a right to the property that relates back to the time of its illegal use

e. none of the above

31. The threat of art forgeries has waxed and waned over the years but it presents a greater threat to commerce

a. when a larger number of paintings by masters come to the market in a relatively short period of time

b. the art market becomes infused with streams of capital invested by less sophisticated buyers with a newfound interest in art

c. when art buyers spend less money on establishing the provenance and value of artworks

d. when the global economy is in a recession

e. none of the above

32. The presence of forgeries is a drag on the art economy by:

a. defrauding consumers

b. threatening integrity and trust in the marketplace

c. decreasing the value of authentic art which is limited in supply

d. all of the above

e. a and b

33. Which of the following is not a method used to move funds offshore?

a. wire transfers

b. professional intermediaries

c. personal checks

d. all of the above

e. none of the above

34. What semantic strategy is signaled by the use of the following words and phrases?

I would say

About

Approximately

More or less

rationalization

lack of conviction

joking

euphemization

None of the above

35. When looking at the details given in a statement to determine truthfulness, the investigator should recall that which of the following is true?

A difference in the level of detail in different parts of the statement is usually the best indicator of deception

A lack of detail always indicates a sensitivity or intent to deceive

An overabundance of details more often than not indicates an intent to deceive

None of the above

36. What narrative strategy is evidenced in the following exchange?

Investigator Right. My concern is that you transacted the order and there was no return merchandise.

Suspect First of all, I do not do things like that, and second, I would never do it under my number.

Scheming

Second-person point of view

Explaining

Diversive dissonance

None of the above

37. When someone rearranges the words of a sentence, he is modifying his ______________.

Vernacular

Syntax

Speech

Manners

Grammar

None of the above

38. Funds from unknown sources equals:

a. Assets-liabilities

b. Net worth increase + living expenses

c. Income-funds from known sources

d. Net worth-prior years net worth

e. None of the above

39. Using the net worth method, compute an individuals income from unknown sources. The following information is available:

Salary $60,000

Known income $80,000

Increase in net worth $100,000

a. $ -0-

b. $20,000

c. $10,000

D. $40,000

e. It cannot be determined.

40. What of the following makes the net worth method ineffective in some situations?

a. Embezzlers typically spend their money on food, jewelry, vacation, and other luxuries that are difficult to track

b. It gives a conservative estimate of stolen funds which are not readily accepted as evidence by courts

c. It rarely facilitates obtaining confessions from the suspects

d. When people have income, they either purchase additional assets, pay off debts, or improve their lifestyle, thus increasing living expenses

Using the data given below, compute the income from unknown sources for years 2 and 3, respectively:

Year 1 Year 2 Year 3

Total Assets $252,000 $266,000 $309,000

Total Liabilities $244,000 $134,000 $64,000

Known Income $30,000 $69,000 $74,000

Total Living Expenses $17,500 $10,800 $8800

41. The income from unknown sources for year 2 is

a. -3,200

b. 65,800

c. 76,600

d. 69,000

e. None of the above

42. The income from unknown sources for year 3 is

a. $2,390.00

b. $-26,200

c. $47,800

d. $56,600

e. None of the above

43. The two primary themes of the FCPA are that

a. bribery is unethical and should not go unpunished

b. if payment is made to an official of a foreign government, whether proper or corrupt, the payment must be reported according to GAAP

c.no entity or person may offer or pay anything of value to a foreign official that would cause the official to misuse power or influence

d. b and c

e. a and b

f. none of the above

44. Which of the following statements is correct?

a. the accounting provisions of the FCPA are broader than the anti-bribery provisions

b. officers, directors, employees, agents, and stockholders of foreign persons are not subject to the FCPA if they commit a violation while in the US

c. a foreign citizen who is an agent of a US concern is subject to the FCPA for acts committed outside the US

d. under the FCPA, corruptly makes clear that an offer, payment, promise or gift must be intended to induce the recipient to misuse an official position to wrongfully direct business to the payer or obtain a favorable regulation

e. none of the above

45. What grammatical abnormality is evidenced in the following sentence?

You know, you always try to make sure that the totals are correct and that receipts are all documented, but sometimes you miss things.

Using out of sequence information

Omitting the pronoun I

Using present tense verbs for past events

Ending a sentence with a preposition

None of the above

46. When looking at the details given in a statement to determine truthfulness, the investigator should remember that which of the following is true?

A difference in the level of detail in different parts of the statement is usually the best indicator of deception

A lack of details always indicates a sensitivity or intent to deceive

An overabundance of details always indicates an intent to deceive

Greater details shows an intent to tell the truth or make full disclosure

None of the above

47. Using the data below, compute living expenses:

Assets $100,000

Liabilities $37,500

Prior years net worth $32,500

Income $55,000

$57,500

$17,500

$20,000

$25,000

It cannot be determined

48. Which of the following is a limitation of the net worth method?

It only includes assets and liabilities that can be discovered

The resulting amounts presented in court are usually lower than the actual theft amount

The net worth method only gives an estimate of net worth increases or decreases

When presented with the net worth amounts, suspects sometimes confess

None of the above