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Anti-Money Laundering (AML) — Most Important MCQs for Exam
50 high-probability MCQs based on previous exam patterns. Click “View Answer” below each question to check the correct answer.
Q1. What is the correct sequence of stages in money laundering?
a) Layering → Placement → Integration
b) Placement → Layering → Integration
c) Integration → Placement → Layering
d) Placement → Integration → Layering
View Answer
Answer: b) Placement → Layering → Integration
Q2. In which stage is illegal money first introduced into the financial system?
a) Layering
b) Integration
c) Placement
d) Conversion
View Answer
Answer: c) Placement
Q3. The stage where money is hidden through multiple complex transactions is called:
a) Placement
b) Layering
c) Integration
d) Structuring
View Answer
Answer: b) Layering
Q4. When laundered money returns to the criminal as legal-looking money, the stage is:
a) Placement
b) Layering
c) Integration
d) Realization
View Answer
Answer: c) Integration
Q5. The Prevention of Money Laundering Act (PMLA) was enacted in:
a) 2000
b) 2002
c) 2005
d) 2009
View Answer
Answer: b) 2002
Q6. PMLA came into force on:
a) 1st January 2002
b) 1st July 2005
c) 1st April 2005
d) 1st July 2002
View Answer
Answer: b) 1st July 2005
Q7. Punishment under PMLA for money laundering offence is:
a) 1 to 3 years
b) 3 to 7 years
c) 5 to 10 years
d) Life imprisonment
View Answer
Answer: b) 3 to 7 years
Q8. For drug-related money laundering, maximum punishment under PMLA can extend up to:
a) 7 years
b) 10 years
c) 14 years
d) Life imprisonment
View Answer
Answer: b) 10 years
Q9. PMLA offences are:
a) Bailable and non-cognizable
b) Cognizable and non-bailable
c) Compoundable
d) Civil in nature
View Answer
Answer: b) Cognizable and non-bailable
Q10. The Financial Intelligence Unit – India (FIU-IND) was established in:
a) 2002
b) 2004
c) 2005
d) 2009
View Answer
Answer: b) 2004
Q11. FIU-IND is headquartered at:
a) Mumbai
b) New Delhi
c) Chennai
d) Kolkata
View Answer
Answer: b) New Delhi
Q12. FIU-IND reports to:
a) RBI
b) SEBI
c) Finance Minister
d) Prime Minister
View Answer
Answer: c) Finance Minister
Q13. The Cash Transaction Report (CTR) threshold is:
a) ₹5 lakh and above
b) ₹10 lakh and above
c) ₹50,000 and above
d) ₹1 crore and above
View Answer
Answer: b) ₹10 lakh and above
Q14. CTR must be submitted to FIU-IND:
a) Within 7 days
b) Within 24 hours
c) By 15th of the next month
d) Quarterly
View Answer
Answer: c) By 15th of the next month
Q15. Suspicious Transaction Report (STR) must be filed within:
a) 24 hours
b) 7 working days of being satisfied
c) 15 days
d) 30 days
View Answer
Answer: b) 7 working days of being satisfied
Q16. STR is required to be filed for:
a) Cash transactions above ₹10 lakh only
b) Any suspicious transaction irrespective of amount
c) Foreign transactions only
d) Loan transactions only
View Answer
Answer: b) Any suspicious transaction irrespective of amount
Q17. FATF stands for:
a) Federal Action Task Force
b) Financial Action Task Force
c) Financial Anti-Terrorism Force
d) Foreign Action Task Force
View Answer
Answer: b) Financial Action Task Force
Q18. FATF is headquartered at:
a) Washington
b) London
c) Paris
d) Geneva
View Answer
Answer: c) Paris
Q19. FATF was established in:
a) 1985
b) 1989
c) 1995
d) 2002
View Answer
Answer: b) 1989
Q20. India became a member of FATF in:
a) 2002
b) 2005
c) 2010
d) 2015
View Answer
Answer: c) 2010
Q21. Banks must preserve transaction records for a minimum period of:
a) 3 years
b) 5 years
c) 7 years
d) 10 years
View Answer
Answer: b) 5 years
Q22. KYC records must be preserved for:
a) 5 years from account opening
b) 5 years from closure of account
c) 10 years from account opening
d) Permanently
View Answer
Answer: b) 5 years from closure of account
Q23. “Structuring” or “Smurfing” in AML refers to:
a) Combining multiple accounts
b) Breaking large amounts into smaller transactions to avoid reporting
c) Foreign currency exchange
d) Trust formation
View Answer
Answer: b) Breaking large amounts into smaller transactions to avoid reporting
Q24. “Tipping off” means:
a) Giving small payments to bank staff
b) Informing the customer that STR has been filed against them
c) Reporting suspicious transactions to RBI
d) Closing suspicious accounts
View Answer
Answer: b) Informing the customer that STR has been filed against them
Q25. Tipping off is:
a) Permitted with senior approval
b) Mandatory in some cases
c) Strictly prohibited under PMLA
d) Required for high-value transactions
View Answer
Answer: c) Strictly prohibited under PMLA
Q26. A “Politically Exposed Person” (PEP) refers to:
a) Any politician in India
b) Person holding prominent public position in a foreign country
c) Bank board member
d) Government employee
View Answer
Answer: b) Person holding prominent public position in a foreign country
Q27. For PEPs, account opening requires:
a) Branch manager’s approval only
b) Senior management approval
c) RBI approval
d) Customer’s affidavit only
View Answer
Answer: b) Senior management approval
Q28. Cross-Border Wire Transfer Report (CBWTR) is required for transfers of:
a) ₹1 lakh and above
b) ₹5 lakh and above
c) ₹10 lakh and above
d) ₹50 lakh and above
View Answer
Answer: b) ₹5 lakh and above
Q29. For walk-in customers, full KYC is required for transactions of:
a) ₹10,000 and above
b) ₹25,000 and above
c) ₹50,000 and above
d) ₹1 lakh and above
View Answer
Answer: c) ₹50,000 and above
Q30. Periodic KYC update for low-risk customers is required:
a) Every 2 years
b) Every 5 years
c) Every 8 years
d) Every 10 years
View Answer
Answer: d) Every 10 years
Q31. Periodic KYC update for high-risk customers is required:
a) Every 2 years
b) Every 5 years
c) Every 8 years
d) Every 10 years
View Answer
Answer: a) Every 2 years
Q32. Periodic KYC update for medium-risk customers is required:
a) Every 2 years
b) Every 5 years
c) Every 8 years
d) Every 10 years
View Answer
Answer: c) Every 8 years
Q33. For a company, beneficial owner is identified at ownership/control of:
a) 5% or more
b) 10% or more
c) 15% or more
d) 25% or more
View Answer
Answer: d) 25% or more
Q34. For partnership firms and trusts, beneficial owner is identified at ownership/control of:
a) 10% or more
b) 15% or more
c) 25% or more
d) 51% or more
View Answer
Answer: b) 15% or more
Q35. The senior officer responsible for AML compliance and reporting to FIU-IND is called:
a) Compliance Officer
b) Principal Officer
c) Designated Director
d) Vigilance Officer
View Answer
Answer: b) Principal Officer
Q36. A board-level director responsible for overall AML compliance is:
a) Principal Officer
b) Designated Director
c) Managing Director
d) Compliance Director
View Answer
Answer: b) Designated Director
Q37. Counterfeit Currency Report (CCR) is filed to:
a) RBI directly
b) Local Police
c) FIU-IND
d) CBI
View Answer
Answer: c) FIU-IND
Q38. Non-Profit Organization Transaction Report (NTR) is required for receipts of:
a) ₹1 lakh and above
b) ₹5 lakh and above
c) ₹10 lakh and above
d) ₹50 lakh and above
View Answer
Answer: c) ₹10 lakh and above
Q39. Which is NOT typically a red flag for money laundering?
a) Multiple cash deposits just below ₹10 lakh
b) Customer reluctant to provide ID
c) Salary credit by employer
d) Account used as transit (money in/out same day)
View Answer
Answer: c) Salary credit by employer
Q40. Enhanced Due Diligence (EDD) is required for:
a) All customers
b) Low-risk customers
c) Medium-risk customers
d) High-risk customers including PEPs
View Answer
Answer: d) High-risk customers including PEPs
Q41. The first stage of money laundering — placement — is considered:
a) Easiest stage
b) Most risky stage for the launderer
c) Final stage
d) Optional stage
View Answer
Answer: b) Most risky stage for the launderer
Q42. Money laundering offences in India are investigated by:
a) CBI
b) Enforcement Directorate
c) Income Tax Department
d) RBI
View Answer
Answer: b) Enforcement Directorate
Q43. Which of the following is NOT an authority under PMLA?
a) Enforcement Directorate
b) FIU-IND
c) Adjudicating Authority
d) SEBI
View Answer
Answer: d) SEBI
Q44. A customer making frequent cash deposits of ₹9.5 lakh on consecutive days is most likely engaged in:
a) Tax planning
b) Structuring/Smurfing
c) Normal business
d) Layering
View Answer
Answer: b) Structuring/Smurfing
Q45. STR should be filed even if the transaction is:
a) Above ₹10 lakh only
b) Only in cash
c) Of any amount, if found suspicious
d) International only
View Answer
Answer: c) Of any amount, if found suspicious
Q46. Which of the following is correctly matched?
a) CTR — ₹5 lakh, monthly
b) STR — Any amount, within 7 working days
c) CBWTR — ₹10 lakh, quarterly
d) NTR — ₹1 lakh, weekly
View Answer
Answer: b) STR — Any amount, within 7 working days
Q47. The global standard-setting body for AML is:
a) IMF
b) World Bank
c) FATF
d) BIS
View Answer
Answer: c) FATF
Q48. Which act is NOT directly related to anti-money laundering in India?
a) PMLA, 2002
b) FEMA, 1999
c) UAPA, 1967
d) RTI Act, 2005
View Answer
Answer: d) RTI Act, 2005
Q49. The Egmont Group is:
a) A network of FIUs of various countries
b) A bank regulatory body
c) An anti-terrorism agency
d) A division of FATF
View Answer
Answer: a) A network of FIUs of various countries
Q50. Master Direction on KYC and AML is issued by:
a) Government of India
b) RBI
c) SEBI
d) FIU-IND
View Answer
Answer: b) RBI
All 50 MCQs cover the most exam-relevant topics from Anti-Money Laundering (AML) Guidelines.