Free ICA Certificate in Anti Money Laundering Practice Questions

Sample Practice Questions

Try these 10 sample questions from the ICA Certificate in Anti Money Laundering practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

1. 1Which feature makes the processing of criminal proceeds money laundering?

   1. A.Disguising the illegal origin of the proceedsCorrect answer: A
   2. B.Increasing the tax payable on the proceeds
   3. C.Reducing the market value of the proceeds
   4. D.Returning the proceeds to the original victim

   Explanation: The source states: "Money laundering is the processing of criminal proceeds to disguise their illegal origin." The defining feature is concealment of criminal origin; tax, value and restitution are different issues.

   Reference: UNODC — Money laundering, terrorist financing and proliferation financing — Money Laundering, opening paragraph

2. 2Which mental element is addressed by FATF's terrorist-financing offence standard for providing or collecting funds?

   1. A.An expectation that the transfer will earn interest
   2. B.Unlawful intention or knowledge that funds will support terrorismCorrect answer: B
   3. C.A preference for moving funds in foreign currency
   4. D.A wish to make the donor's identity publicly known

   Explanation: The source states: "Terrorist financing offences should extend to any person who wilfully provides or collects funds or other assets by any means, directly or indirectly, with the unlawful intention that they should be used, or in the knowledge that they are to be used, in full or in part: (a) to carry out a terrorist act(s); (b) by a terrorist organisation; or (c) by an individual terrorist." The standard concerns intended or known terrorist use, not currency, investment income or public donor identity.

   Reference: FATF Recommendations — Interpretive Note to Recommendation 5, para. 2

3. 3How should countries implement the FATF Recommendations when their legal and financial systems differ?

   1. A.Use measures adapted to their particular circumstancesCorrect answer: A
   2. B.Replace domestic criminal laws with bank policy manuals
   3. C.Copy one country's legal text without adapting it
   4. D.Restrict implementation to countries with identical systems

   Explanation: The source states: "The FATF Recommendations, therefore, set an international standard, which countries should implement through measures adapted to their particular circumstances." FATF supplies an international standard with implementation adapted to national circumstances; it does not require identical legal wording or replace law with private policies.

   Reference: FATF Recommendations — Introduction, international implementation

4. 4Why can a retail bank's large transaction volumes and simple onboarding increase money-laundering vulnerability?

   1. A.Criminal transactions may be harder to distinguish within mass-market activityCorrect answer: A
   2. B.Simple onboarding means customer ownership information is already verified
   3. C.Large transaction volumes mean each individual customer's risk is necessarily low
   4. D.Mass-market products prevent criminals from using a bank to store proceeds

   Explanation: The source states: "The risk rating is assessed as high due to the structural nature of the sector: its transaction volume, simple onboarding processes and mass market nature." High volumes, accessible onboarding and mass-market reach can be exploited. They do not assure verified ownership, low individual risk or exclusion of criminal users.

   Reference: HM Treasury and Home Office — National Risk Assessment 2025 — Retail Banking, para. 5.7

5. 5How can an accountant's confirmation be misused in a laundering scheme?

   1. A.By supporting falsified accounts that make criminal funds appear legitimateCorrect answer: A
   2. B.By identifying discrepancies and documenting them for review
   3. C.By refusing to verify information the accountant cannot substantiate
   4. D.By reconciling stated transactions against original records

   Explanation: The source states: "Accountancy service providers can be used to provide the appearance of legitimacy to transactions that feature criminal funds, for example, through the use of accountant’s certificates of confirmation to support the falsification of documents such as accounts and invoices." Misused professional confirmation can provide credibility to false records. Identifying discrepancies, refusing unsupported confirmation and reconciliation are controls rather than this misuse.

   Reference: HM Treasury and Home Office — National Risk Assessment 2025 — Accountancy Service Providers, para. 5.208

6. 6Which customer feature does FATF identify as potentially higher risk?

   1. A.An unexplained ownership structure unusually complex for the businessCorrect answer: A
   2. B.An ownership structure proportionate to a documented business need
   3. C.A verified beneficial owner consistent with the declared business
   4. D.A payment pattern matching the customer's documented activities

   Explanation: The source states: "The ownership structure of the company appears unusual or excessively complex given the nature of the company’s business." The qualifier is unexplained complexity relative to the business, not corporate ownership alone. The other descriptions remove the identified mismatch.

   Reference: FATF Recommendations — Interpretive Note to Recommendation 10, para. 15(a)

7. 7Under FATF Recommendation 20, what should trigger prompt reporting by a financial institution to the FIU?

   1. A.Only a conviction for the customer's predicate offence
   2. B.Only the customer's written admission of laundering
   3. C.Only transactions above a universal reporting amount
   4. D.Suspicion or reasonable grounds to suspect criminal proceeds or terrorist financingCorrect answer: D

   Explanation: The source states: "If a financial institution suspects or has reasonable grounds to suspect that funds are the proceeds of a criminal activity, or are related to terrorist financing, it should be required, by law, to report promptly its suspicions to the financial intelligence unit (FIU)." The standard is suspicion or reasonable grounds, rather than conviction, confession or a universal monetary threshold.

   Reference: FATF Recommendations — Recommendation 20 — Reporting of suspicious transactions

8. 8Under UK MLR regulation 19, what should an AML policy and control framework be designed to do?

   1. A.Mitigate and manage the risks identified in the business's risk assessmentCorrect answer: A
   2. B.Replace the business's risk assessment with a standard policy title
   3. C.Apply lower-risk checks to every customer for consistency
   4. D.Transfer the business's AML responsibility to its largest customer

   Explanation: The source states: "establish and maintain policies, controls and procedures to mitigate and manage effectively the risks of money laundering and terrorist financing identified in any risk assessment" The framework must respond to the assessed risks. A template label, uniform reduced checks or transfer of responsibility does not fulfil that purpose.

   Reference: Money Laundering Regulations 2017 — regulation 19 — Regulation 19(1)(a)

9. 9Under the UN Organized Crime Convention provision quoted by UNODC, when can acquiring property itself fall within money-laundering criminalisation?

   1. A.When its market price rises after the purchase
   2. B.When its owner has used a foreign bank account
   3. C.When the recipient knows at receipt that it is proceeds of crimeCorrect answer: C
   4. D.When the recipient intends to sell it at a later date

   Explanation: The source states: "The acquisition, possession or use of property, knowing, at the time of receipt, that such property is the proceeds of crime;" The quoted provision turns on knowledge at receipt, subject to the basic concepts of the state's legal system. Price, foreign banking and resale alone do not establish that condition.

   Reference: UNODC Organized Crime Module 4 — Money-laundering — Money-laundering — Article 6(1)(b)(i)

10. 10A person deliberately finances a terrorist organisation's running costs, but no specific attack is identified. How should the scope of the FATF offence standard be understood?

    1. A.A specific completed attack must first be proved
    2. B.Only funds used to buy weapons fall within its scope
    3. C.Financing the organisation can fall within its scopeCorrect answer: C
    4. D.Operating costs are excluded from terrorist financing

    Explanation: The source states: "Countries should criminalise terrorist financing on the basis of the Terrorist Financing Convention, and should criminalise not only the financing of terrorist acts but also the financing of terrorist organisations and individual terrorists even in the absence of a link to a specific terrorist act or acts." Organisational financing is covered without a link to a specific attack. The distractors impose attack, weapon or expenditure restrictions contrary to the standard.

    Reference: FATF Recommendations — Recommendation 5 — Terrorist financing offence