CTMA Sample Questions & Answers
Investigating alerts for money-laundering and other red-flag typologies carries the largest share, ahead of documenting investigation outcomes, the broader role transaction monitoring plays in preventing financial crime, and how alerts first get generated and validated.
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- Question 1Beginner
Role of Transaction Monitoring in Financial Crime Prevention · Effectiveness and Quality Assurance
True or False: A high rate of false positive alerts in a transaction monitoring system indicates that the system is ineffective and requires immediate replacement.
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Correct answer: B
False. High false positive rates are common in TM systems and do not necessarily mean the system is broken. They often indicate a need for tuning thresholds or segmenting customers more effectively. Replacing the system is a last resort; optimization/tuning is the standard response.
- Question 2Advanced
Alert Investigation · Non-AML Financial Crime Typologies
An investigator is reviewing a series of alerts for a corporate customer involved in import/export. The alerts indicate large payments to a company in a high-risk jurisdiction with no clear business relationship. The investigator finds that the counterparty's name is similar to a sanctioned entity but not an exact match. What is the most appropriate immediate next step?
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Correct answer: A
Before taking drastic action like closing the account or filing a SAR, the investigator must determine if the partial match is a true positive. This involves gathering additional information (EDD) on the counterparty's address, ownership, and business activities to verify if it is indeed the sanctioned entity.
- Question 3Intermediate
Transaction Monitoring Alert Generation · Determining Alert Validity
Which of the following scenarios describes a 'non-productive' alert rather than a 'false positive'?
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Correct answer: C
Non-productive alerts are those that provide no value to the investigation process, often caused by data errors, system glitches, or poor configuration (like flagging internal transfers). A 'false positive' usually refers to activity that correctly met the rule criteria but turned out to be benign after investigation.
- Question 4Intermediate
Outcomes of Transaction Monitoring Investigations · Documenting Rationales and Audit Trails
When documenting the rationale for closing an alert without escalation, which element is MOST critical to include for audit purposes?
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Correct answer: A
Auditors and regulators need to understand the investigator's thought process. Simply stating 'activity is normal' is insufficient. The rationale must explain why the activity is normal for that specific customer (e.g., 'Cash deposits align with the customer's stated business as a restaurant').
- Question 5Advanced
Alert Investigation · Money Laundering Typologies and Red Flags
Case Study: Global Trade Corp Investigation
Global Trade Corp is a long-standing client of the bank, dealing in electronics import/export. Recently, the transaction monitoring system generated multiple alerts for wire transfers.
Alert Details:
- 5 outgoing wires of $45,000 each to 'Tech Supplies Ltd' in a jurisdiction known for weak AML controls.
- 5 incoming wires of $48,000 each from 'Tech Supplies Ltd' the following day.
- The stated purpose is 'inventory purchase' and 'refunds'.
Customer Profile:
- Expected monthly turnover: $500,000
- Primary counterparties: Manufacturers in Asia
- No prior history of 'refund' activity.
Based on the scenario, what is the most likely financial crime typology indicated?
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Correct answer: C
The pattern of sending funds out and receiving similar amounts back shortly after as 'refunds' is a classic indicator of round-tripping or Trade-Based Money Laundering. It creates the appearance of legitimate trade to move value or justify funds, without actual goods necessarily changing hands.
- Question 6Beginner
Outcomes of Transaction Monitoring Investigations · Regulatory Requirements for Reporting Suspicious Activity
The command to create a new resource group is: New-AzResourceGroup -Name 'MyRG' -Location '_____' (Note: This is a placeholder question format, replacing with relevant content: 'The primary regulatory body in the US that receives Suspicious Activity Reports is _____')
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Correct answer: D
FinCEN (Financial Crimes Enforcement Network) is the US financial intelligence unit (FIU) that receives SARs. OFAC deals with sanctions, the SEC with securities, and the IRS with taxes.
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