KYC/AML & COMPLIANCE- MODULE 3- Erroneous data while on-boarding of Customers MASTER

KEY

1. As per laid procedure for implementation of Section 51A of the Unlawful Activities
(Prevention) Act, 1967, in case of match of name of any of the customers with the
particulars of designated individuals/entities is beyond doubt, the banks and other REs shall
_________such designated persons from conducting financial transactions, under intimation
to the Central [designated] Nodal Officer for the UAPA.

Ans: prevent

1. Which of the following statement is /are correct regarding RBI instructions on Money
Laundering and Terrorist Financing Risk Assessment by Banks & other REs?

Ans: The regulator may provide guidelines, but it’s up to the individual institution/ RE to
determine the exact level of ‘Money Laundering (ML) and Terrorist Financing (TF) risk.

2. The procedure laid down in the UAPA Order dated February 2, 2021 requires the Banks to
run a check on given parameters on a _____basis to verify whether individuals or entities
listed are holding any funds, financial assets or economic resources or related services held
in the form of bank accounts

Ans: daily

3. Customer profiles are to be prepared for which type of customers?

Ans: All customers

4. Please select the wrong statement regarding unfreezing of assets inadvertently frozen of an
individual/ entity, as per the laid procedure for implementation of Section 51A of the
Unlawful Activities (Prevention) Act, 1967.

Ans: The concerned Bank/ RE should forward the application to the Central (Designated) Nodal
Officer for UAPA, received from the individual/ entity.

6. which of the following may NOT impact proper reporting to FIU-India in Cross Border Wire
Transfer Reports- (CBWTR).

Ans: Feeding of wrong information regarding marital status

7. Enhanced due diligence is required to be undertaken in respect of which type of customers?

Ans: High-risk customers

8. What is NOT true regarding RBI instructions on Money Laundering and Terrorist Financing
Risk Assessment by Banks & other REs?

Ans: The regulator will assess and determine the exact level of Money Laundering and Terrorist
Financing Risk for Individual institution/ RE.
 9. As per the laid procedure for implementation of Section 51A of the Unlawful Activities
(Prevention) Act, 1967 in case an application is received from an individual/ entity, having
evidence to prove that it's funds are inadvertently frozen, the application must be forwarded
to the Central Designated Nodal Officer for UAPA within _______ with full particulars.

Ans: 2 working days

10. The list of designated individuals and entities subject to the UN sanction measures, is
updated by _____.

Ans: Reserve Bank of India

11. Feeding of erroneous data regarding ‘Residential Status- RI/NRI’ may lead to _________

Ans: errors in alert generation for transaction monitoring.

12. Which of the following data error will impact generation of alert by system in name
screening process?

Ans: Name of the constituent

13. How many 'Occupation codes' are available in CBS?

Ans: 27

14. Periodic updation of KYC is to be carried out at least once in every _____ years for medium
risk customers.

Ans: 8

15. Due diligence as per Customer Identification Procedure may not be exercised properly due
to feeding of erroneous data regarding ______ .

Ans: All of the above

16. Enhanced due diligence is required to be undertaken in respect of which type of customers?

Ans: Accounts of Politically Exposed Persons (PEPs)

17. Which of the following additional information need to be collected for risk categorization ?
a) Father / Mother's maiden name, b) anticipated level and nature of the activity that is to
be undertaken, c) Marital Status, d) details of occupation / employment and sources of
wealth or income.

Ans: Only b & d

18. Customer Profile” of individual account holders is compiled from ______

Ans: mandatory/additional information submitted by the customer in the account opening
form
 19. All customers, individuals and non-individuals, are to be categorised as High, Medium and
Low risk for the purpose of_____

Ans: Both of the above

20. Mr Associate has selected 'Occupation Code' as 'Not Categorised" in CBS while creating a
CIF. Further when keying in the details of the occupation of the customer, the Maker
entered it as 'others" instead of keying in the exact details of occupation as mentioned in the
AOF in the description field. Is it a right practice, what are the provisions in this regard?

Ans: If junk/ incorrect data is keyed into the system instead of keying in the details as mentioned
in the AOF in the description field, necessary action may be initiated against the Maker/Checker
for data infringement.

21. Feeding of erroneous data regarding ‘Political exposed person (PEP) /Relative to PEP’ status
may not result in to ____

Ans: deduction of tax at source at incorrect rate

22. Not feeding of correct data regarding 'Nationality' may lead to which of the following-

Ans: on- boarding of customers of blacklisted nations

23. Transaction monitoring is carried out for which of the following purposes?

Ans: Both of the above

24. Customer profiles must be reviewed ______.

Ans: whenever the branch has doubt about the veracity or the adequacy of the previously
obtained customer identification data.

25. Enhanced due diligence is NOT required to be undertaken in respect of which type of
customers?

Ans: Accounts of Persons, opened under Liberalised KYC

26. Non-compliance with KYC/AML/CFT standards can expose the bank to which of the following
combination of Risks?

Ans: Operational Risk, Reputation Risk, Compliance Risk and Legal Risk

27. Feeding of erroneous data regarding ‘Date of Birth’ may lead to

Ans: All of the above

28. Which of the following statement is NOT correct?

Ans: A financial institution (FI) would not face any fines, sanctions, and reputational damage, if it
deals with a money launderer or a terrorist in the absence of correct data.
 29. Review of risk categorization of customers should be carried out at a periodicity of not less
than once in _____ .

Ans: 6 months

30. Which of the following fields are very important For Monitoring of Transaction?
Ans: Occupation type, monthly income and threshold limit

1. Which of the following statement is not true regarding obtention of Permanent Account Number
(PAN)/ Form No. 60.

ANS: In case original PAN card is produced for verification, the same is not required to be verified
from the online verification facility of the issuing authority.

2. Which type of erroneous data may NOT have impact on FATCA/CRS compliance related issues

Ans. Data regarding Educational qualification

3. The list of designated individuals and entities subject to the UN sanction measures, is updated by
_____.

Ans: Reserve Bank of India

4. The process of Name Screening is carried out to ensure ________

Ans: that the identity of the customer does not match with any person or entity, whose name
appears in the sanctions lists circulated by the Reserve Bank of India

5. Reporting Entities are required to carry out ‘Money Laundering (ML) and Terrorist Financing (TF)
Risk Assessment’ exercise periodically in respect of______

Ans: Clients, countries or geographical areas

6. Enhanced due diligence is NOT required to be undertaken in respect of which type of customers?

Ans: Accounts of Persons, opened under Liberalised KYC

7. Customer profiles must be reviewed ______.

Ans: whenever the branch has doubt about the veracity or the adequacy of the previously
obtained customer identification data.

8. Enhanced due diligence is required to be undertaken in respect of which type of customers?

Ans: High risk customers

9. All customers, individuals and nonindividuals, are to be categorised as High, Medium and Low
risk for the purpose of_____

Ans: Both of the above

10. The 27 'Occupation codes' available in CBS have been divided in to _____ categories.

Ans: 4 (4 categories)

11. Poor data entry implies____

Ans: misspellings, typo errors, transpositions, and variations in spelling, naming or formatting

12. Feeding of erroneous data regarding ‘Customer Type’ may result into ______ .

Ans: denial of some benefits that accrue to some category of customers

13. Wrong filing of statutory returns at Bank level may result due to feeding of erroneous data
regarding _____

Ans: All of the above

14. Which of the following actions banks are required to take in case the match of any of the
customers with the particulars of designated individuals/entities is beyond doubt as per laid
procedure for implementation of Section 51A of the Unlawful Activities (Prevention) Act, 1967?

Ans: The banks shall prevent such designated persons from conducting financial transactions
under intimation to the Central [designated] Nodal Officer for the UAPA.

15. Not feeding of correct data regarding 'Nationality' may lead to which of the following-

Ans: on- boarding of customers of blacklisted nations

16. As per laid procedure for implementation of Section 51A of the Unlawful Activities (Prevention)
Act, 1967, in case of match of name of any of the customers with the particulars of designated
individuals/entities is beyond doubt, the banks and other REs shall _________such designated
persons from conducting financial transactions, under intimation to the Central [designated] Nodal
Officer for the UAPA.

Ans: prevent

17. Feeding of erroneous data regarding ‘Date of Birth’ may lead to

Ans: All of the above

18. Which of the following statement is NOT correct regarding 'Small Account' opened under
Liberalised KYC?

Ans: There is no requirement of further regulatory compliance for such accounts opened under
Liberalised KYC.

19. Which of the following statement is NOT correct?

Ans: A financial institution (FI) would not face any fines, sanctions, and reputational damage, if it
deals with a money launderer or a terrorist in the absence of correct data.
20. The 27 'Occupation codes' available in CBS have been divided in four categories, out of which
three types are namely Service, Business and Others. What is the name of the fourth one?

Ans: Not Categorised

21. It is very important to key in the correct details and codes regarding the Occupation of the
customer in the AOF as well as in CBS. Which of the following options are correct in this regard?

Ans: All of the above are correct.

22. As per section 51A of UAPA, 1967, for the prevention of, and for coping with terrorist activities
Central Govt has been given certain powers. Please select all correct statement from the
following- a. freeze, seize or attach funds and other financial assets or economic resources held by
listed individuals or entities. b. prohibit any individual or entity from making any funds, financial
assets available for the benefit of the listed individuals or entities. c. prevent the entry into or the
transit through India of listed individuals. d. impose penalty equal to the value of funds/ assets
held by such individuals or entities.

Ans: only a, b & c

23. Data which has been entered in wrong field is called _______

Ans: inappropriate data.

24. Section 51A of the Unlawful Activities (Prevention) (UAPA) Act, 1967 requires Banks/REs to
ensure_____

Ans: Both of these

25. which of the following additional information need to be collected for risk categorization ? a)
Father / Mother's maiden name, b) anticipated level and nature of the activity that is to be
undertaken, c) Marital Status, d) details of occupation / employment and sources of wealth or
income.

Ans: Only b & d

26. The procedure laid down in the UAPA Order dated February 2, 2021 requires the Banks to run
a check on given parameters on a _____basis to verify whether individuals or entities listed are
holding any funds, financial assets or economic resources or related services held in the form of
bank accounts

Ans: Daily

27. What is NOT true regarding RBI instructions on Money Laundering and Terrorist Financing Risk
Assessment by Banks & other REs?

Ans: The regulator will assess and determine the exact level of Money Laundering and Terrorist
Financing Risk for Individual institution/ RE.

28. Which among the following does not lead to data impurity?
Ans: Conforming data

29. Reporting Entities are NOT required to carry out ‘Money Laundering (ML) and Terrorist
Financing (TF) Risk Assessment’ exercise periodically in respect of_____

ANS: Auditors

30. How many 'Occupation codes' are available in CBS?

Ans: 27

1. All customers, individuals and non-individuals, are to be categorised as High, Medium and
Low risk for the purpose of_____

Ans: Both of the above

2. The procedure laid down in the UAPA Order dated February 2, 2021 requires the Banks to
maintain the updated list of designated individuals & entities, approved by UNSC, in which
form?

Ans: Electronic form

3. which of the following additional information need to be collected for risk categorization ? a)
Father / Mother's maiden name, b) anticipated level and nature of the activity that is to be
undertaken, c) Marital Status, d) details of occupation / employment and sources of wealth
or income.

Ans: Only b & d

4. Data which has been entered in wrong field is called _______

Ans: inappropriate data.

5. Feeding of erroneous data regarding ‘Date of Birth’ may lead to

Ans: All of the above

6. Which of the following is not the objective of Customer Risk Categorisation?

Ans: To ensure proper classification of loan accounts

7. RBI directions make it mandatory for Banks/REs to report details of accounts resembling any
of the individuals/entities in the negative lists to various authorities. Which set of the
institutions given in the following options is the correct one?

Ans: FIU -IND & Ministry of Home Affairs

8. As per laid procedure for implementation of Section 51A of the Unlawful Activities
(Prevention) Act, 1967, in case of match of name of any of the customers with the
particulars of designated individuals/entities is beyond doubt, the banks and other REs shall
_________such designated persons from conducting financial transactions, under intimation
to the Central [designated] Nodal Officer for the UAPA.
Ans: prevent

9. The process of Name Screening is carried out to ensure ________

Ans: that the identity of the customer does not match with any person or entity, whose name
appears in the sanctions lists circulated by the Reserve Bank of India

10. Which of the following statement is not true regarding obtention of Permanent Account
Number (PAN)/ Form No. 60.

Ans: In case original PAN card is produced for verification, the same is not required to be verified
from the online verification facility of the issuing authority.

11. As per the laid procedure for implementation of Section 51A of the Unlawful Activities
(Prevention) Act, 1967 in case an application is received from an individual/ entity, having
evidence to prove that it's funds are inadvertently frozen, the application must be forwarded
to the Central Designated Nodal Officer for UAPA within _______ with full particulars.

Ans: 2 working days

12. It’s not enough to apply Customer Due Diligence (CDD) measures, once at the time of
onboarding, a reporting entity, should exercise due diligence _____________ in respect of
customers to monitor transactions to ensure that they are consistent with the customer’s
personal profile, business / risk profile and source of funds.

Ans: on daily basis

13. Enhanced due diligence is required to be undertaken in respect of which type of customers?

Ans: Accounts of Politically Exposed Persons (PEPs)

14. Please select the wrong statement regarding unfreezing of assets inadvertently frozen of an
individual/ entity, as per the laid procedure for implementation of Section 51A of the
Unlawful Activities (Prevention) Act, 1967.

Ans: The concerned Bank/ RE should forward the application to the Central (Designated) Nodal
Officer for UAPA, received from the individual/ entity.

15. Which of the following additional information is not required for risk categorization of
customers?

Ans: Reason for opening the account/Family details

16. Enhanced due diligence is NOT required to be undertaken in respect of which type of
customers?

Ans: Accounts of Persons, opened under Liberalised KYC

17. Customer profiles are to be prepared for which type of customers?

Ans: All customers

 18. Which of the following statement is /are correct regarding RBI instructions on Money
Laundering and Terrorist Financing Risk Assessment by Banks & other REs?

Ans: The regulator may provide guidelines, but it’s up to the individual institution/ RE to
determine the exact level of ‘Money Laundering (ML) and Terrorist Financing (TF) risk.

19. Which of the following information is not required for creating customer profile?

Ans: Year of Graduation

20. As per laid procedure for implementation of Section 51A of the Unlawful Activities
(Prevention) Act, 1967, in case, the results of the verification indicate that the properties are
owned by or are held for the benefit of the designated individuals/entities, an order to
freeze these assets would by issued by Central (Designated) Nodal Officer under
Section____.

Ans: Section 51 A of UAPA

21. which of the following may NOT impact proper reporting to FIU-India in Cross Border Wire
Transfer Reports- (CBWTR).

Ans: Feeding of wrong information regarding marital status.

22. Feeding of erroneous data regarding ‘Political exposed person (PEP) /Relative to PEP’ status
may not result in to ____

Ans: deduction of tax at source at incorrect rate

23. Feeding of erroneous data regarding ‘Residential Status- RI/NRI’ may lead to _________

Ans: errors/ effect on the periodicity for the obtention of KYC documents.

24. Due diligence as per Customer Identification Procedure may not be exercised properly due
to feeding of erroneous data regarding ______ .

Ans: All of the above

25. Which of the following problems would be caused by erroneous feeding of Address proof
details of Resident Indians?

Ans: Errors in name screening by AMLOCK software

26. Mr Associate has selected 'Occupation Code' as 'Not Categorised" in CBS while creating a
CIF. Further when keying in the details of the occupation of the customer, the Maker
entered it as 'others" instead of keying in the exact details of occupation as mentioned in the
AOF in the description field. Is it a right practice, what are the provisions in this regard?

Ans: If junk/ incorrect data is keyed into the system instead of keying in the details as mentioned
in the AOF in the description field, necessary action may be initiated against the Maker/Checker
for data infringement.
 27. Feeding of erroneous data regarding ‘Gender- Male/Female/Transgender’ may lead to-

Ans: non-compliance of Government guidelines in the extension of Gender-specific subsidy

benefits

28. Which of the following will be consequence of feeding of erroneous data regarding
‘Permanent Account Number (PAN)/ Form No. 60’ -

Ans: All of the above

29. Not feeding of correct data regarding 'Nationality' may lead to which of the following-

Ans: on- boarding of customers of blacklisted nations

30. It is very important to key in the correct details and codes regarding the Occupation of the
customer in the AOF as well as in CBS. Which of the following options are correct in this
regard?
Ans: All of the above are correct

31.Not categorising a PEP’s account properly may lead to non-compliance of guidelines of

_________.

Ans: PMLA Act 2002

31. Periodic updation of KYC is to be carried out at least once in every _____ years for
Accounts of Politically Exposed Persons (PEPs).
Ans: 2

32. Review of risk categorization of customers should be carried out at a periodicity of not less
than once in _____ .
Ans: 6 months

33. Which of the following is not the objective of Customer Risk Categorisation?
Ans: To ensure proper classification of loan accounts

34. Which of the following parameters is NOT considered for Customer Risk Categorisation-
Ans: Assets & outstanding liabilities of the customer

35. The process of Name Screening is carried out to ensure ________

Ans: that the identity of the customer does not match with any person or entity, whose
name appears in the sanctions lists circulated by the Reserve Bank of India

36. Non-conforming data is the data which …

Ans: has not been normalized as per the system of records
37. In the process of Name screening, a positive match is said to occur when_____
Ans: the name and at least two other identifiers as given in negative list match.

38. As per the laid procedure for implementation of Section 51A of the Unlawful Activities
(Prevention) Act, 1967 in case an application is received from an individual/ entity, having
evidence to prove that it's funds are inadvertently frozen, the application must be
forwarded to the Central Designated Nodal Officer for UAPA within _______ with full
particulars.
Ans: 2 working days