CAFCA Sample Questions & Answers
Payment screening and transaction monitoring carries the heaviest weight, ahead of three evenly weighted areas: fintech governance, verifying customer identity, and investigations and reporting, with scaling anti-financial-crime programs the smallest share.
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- Question 1Advanced
Governance, Guidance, and Regulation · Risk-Based Approach and Risk Assessment
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?
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Correct answer: B
A robust Risk Appetite Statement is nuanced. It acknowledges that 'zero risk' is impossible in operations (e.g., fraud attempts happen) but sets strict boundaries (zero tolerance) for legal/regulatory breaches like sanctions. It defines the level of risk the firm is willing to accept to achieve its goals.
- Question 2Beginner
Governance, Guidance, and Regulation · FinTech Risk Categorization by Traditional Institutions
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.
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Correct answer: B
False. 'De-risking' typically refers to financial institutions (banks) terminating or restricting business relationships with entire categories of clients (like FinTechs or MSBs) because the compliance cost or risk is perceived as too high, rather than managing the risk of individual clients.
- Question 3BeginnerSelect 2
Governance, Guidance, and Regulation · Types of Financial Crime
Which of the following are considered 'Predicate Crimes' for money laundering? (Select TWO)
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Correct answers: A, C
Drug trafficking is a classic predicate offense; the money generated is 'dirty' and needs laundering.
Bribery generates illicit proceeds, making it a predicate crime to money laundering.
- Question 4Intermediate
Governance, Guidance, and Regulation · Internal Threat Mitigation
A FinTech startup is establishing its internal threat mitigation framework. Which control is MOST effective at preventing internal fraud where an employee might authorize payments to their own account?
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Correct answer: A
Segregation of Duties (SoD) is the primary control for internal fraud. By ensuring no single employee can initiate and approve a transaction alone (dual authorization), the risk of insider theft is significantly reduced.
- Question 5Beginner
Governance, Guidance, and Regulation · Definition and Types of FinTechs
Which type of FinTech organization primarily focuses on allowing users to lend and borrow money directly from one another without a traditional financial intermediary?
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Correct answer: A
P2P lending platforms match borrowers directly with lenders (investors), bypassing traditional bank intermediaries. This model carries unique AML risks regarding the source of funds for lenders and identity verification for borrowers.
- Question 6Intermediate
Governance, Guidance, and Regulation · Risk-Based Approach and Risk Assessment
The Money Laundering Reporting Officer (MLRO) at a FinTech is updating the company's 'Risk Assessment'. Which of the following factors should be treated as a high-risk indicator necessitating Enhanced Due Diligence (EDD)?
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Correct answer: B
Complex ownership structures, especially those using bearer shares or nominees, are classic red flags for obscuring beneficial ownership. This transparency risk requires Enhanced Due Diligence (EDD) to identify the ultimate beneficial owner (UBO).
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