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Question 1 of 10
1. Question
Each member initiating discretionary trades must adopt and enforce written procedures:
I. Not necessarily maintain a written record
II. The trading activity must be regularly reviewed
III. Designated security futures principal to make a written record
IV. A designated security futures principal monthly reviews discretionary security futures trading activityCorrect
According to NFA Rule 2-8, Each Member initiating such trades must adopt and enforce written procedures: (a) That ensures that a Member's partner, agent, administrator, branch manager or supervisory employee reviews discretionary trading activities regularly and that a designated security future principal regularly reviews discretionary security futures trading activities. (b) That allows any partner, agent, director, branch office manager or a supervisory employee or appointed security future manager to report. (c) The discretionary trading activity must be regularly reviewed, and a written record of the review must be made.
Incorrect
According to NFA Rule 2-8, Each Member initiating such trades must adopt and enforce written procedures: (a) That ensures that a Member's partner, agent, administrator, branch manager or supervisory employee reviews discretionary trading activities regularly and that a designated security future principal regularly reviews discretionary security futures trading activities. (b) That allows any partner, agent, director, branch office manager or a supervisory employee or appointed security future manager to report. (c) The discretionary trading activity must be regularly reviewed, and a written record of the review must be made.
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Question 2 of 10
2. Question
For what time period no member FCM or IB shall allow an Associate to exercise discretion over a customer’s commodity futures account unless that Associate has been continuously registered under the Act?
Correct
According to NFA Rule 2-8, No Member FCM or IB shall authorize an Associate to exercise discretion over a customer’s commodity futures account unless the Associate has been continuously registered under the Act for at least two years and has served for that time in such registered capacity. No person registered as a CTA shall be subject to this provision.
Incorrect
According to NFA Rule 2-8, No Member FCM or IB shall authorize an Associate to exercise discretion over a customer’s commodity futures account unless the Associate has been continuously registered under the Act for at least two years and has served for that time in such registered capacity. No person registered as a CTA shall be subject to this provision.
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Question 3 of 10
3. Question
What are the necessary factors that should be considered while accepting an order from a third party?
Correct
According to NFA Rule 2-8, No FCM or IB shall accept an order from a third party, not an FCM or IB Associate, without first obtaining a copy of the written trading authorization of the account controller or the customer’s written acknowledgment that such authorization has been given.
Incorrect
According to NFA Rule 2-8, No FCM or IB shall accept an order from a third party, not an FCM or IB Associate, without first obtaining a copy of the written trading authorization of the account controller or the customer’s written acknowledgment that such authorization has been given.
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Question 4 of 10
4. Question
On what key factors the exact form of program adopted by a Member will be based upon:
I. Member’s type of business
II. Independent from the size of its operations
III. Depends upon the complexity of its operations
IV. Scope with its customer baseCorrect
According to NFA Rule 2-9, NFA acknowledges that the exact form of a Member’s system can vary depending on the type of business of a Member, the size and nature of its activities, the length, and range of its customer base, the number of company employees, its threats and exposure to money laundering and the assets of the organization.
Incorrect
According to NFA Rule 2-9, NFA acknowledges that the exact form of a Member’s system can vary depending on the type of business of a Member, the size and nature of its activities, the length, and range of its customer base, the number of company employees, its threats and exposure to money laundering and the assets of the organization.
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Question 5 of 10
5. Question
What are the three basic steps and sequence of steps of money laundering?
Correct
According to NFA Rule 2-9, There are typically three phases of money laundering. Next, in the financial system, cash or cash equivalents are put. Second, through a sequence of financial transactions designed to conceal the source of the cash, the money is transferred or shifted to other accounts. Finally, the funds are reintroduced into the economy so that they seem to come from legitimate sources.
Incorrect
According to NFA Rule 2-9, There are typically three phases of money laundering. Next, in the financial system, cash or cash equivalents are put. Second, through a sequence of financial transactions designed to conceal the source of the cash, the money is transferred or shifted to other accounts. Finally, the funds are reintroduced into the economy so that they seem to come from legitimate sources.
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Question 6 of 10
6. Question
Which of the following are mapped as a duty of an FCMs and IBs:
I. Aware of potential money laundering abuses
II. May avoid risk detection
III. Involves in risk deduction
IV. Report potentially suspicious activityCorrect
According to NFA Rule 2-9, FCMs and IBs need to be aware of potential money laundering abuses that may occur in a customer account and enforce a compliance system to prevent, identify and report suspicious activity, among other items.
Incorrect
According to NFA Rule 2-9, FCMs and IBs need to be aware of potential money laundering abuses that may occur in a customer account and enforce a compliance system to prevent, identify and report suspicious activity, among other items.
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Question 7 of 10
7. Question
What should be included in a policy statement(the starting point for an FCM and IB members):
I. Make clear that all employees of the firm have a responsibility to follow the firm’s written anti-money laundering procedures
II. Should not discuss the consequences of not following these procedures
III. How to recognize suspicious customers
IV. Summarizes that all employees of the firm have a responsibility to follow the firm’s written controlsCorrect
According to NFA Rule 2-9, The policy statement should also make it clear that all of the firm’s staff have a responsibility to follow the company’s formal anti-money laundering policies and controls and comply with all relevant anti-money laundering laws and regulations. The policy statement should also discuss the consequences of failing to follow these procedures.
Incorrect
According to NFA Rule 2-9, The policy statement should also make it clear that all of the firm’s staff have a responsibility to follow the company’s formal anti-money laundering policies and controls and comply with all relevant anti-money laundering laws and regulations. The policy statement should also discuss the consequences of failing to follow these procedures.
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Question 8 of 10
8. Question
What are the firm’s procedures and controls used to determine and then act upon?
I. Recognize suspicious customers
II. Ensure that the firm maintains an adequate audit trail
III. Identify transactions
IV. Doesn’t report suspicious or unusual activityCorrect
According to NFA Rule 2-8, The processes and controls of the company should allow appropriate staff to develop a reasonable belief that they know each customer’s true identity; identify suspicious customers and transactions; and require staff to report suspicious or irregular behavior to appropriate supervisory staff, including senior management, as required, and FinCEN. The firm’s procedures and controls should also ensure that an adequate audit trail is maintained by the firm to assist law enforcement agencies in any investigation.
Incorrect
According to NFA Rule 2-8, The processes and controls of the company should allow appropriate staff to develop a reasonable belief that they know each customer’s true identity; identify suspicious customers and transactions; and require staff to report suspicious or irregular behavior to appropriate supervisory staff, including senior management, as required, and FinCEN. The firm’s procedures and controls should also ensure that an adequate audit trail is maintained by the firm to assist law enforcement agencies in any investigation.
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Question 9 of 10
9. Question
What basic set of elements should be included in a CIP?
Correct
According to NFA Rule 2-8, the CIP must include the following elements:
(a) Required procedures for identification of information and identity
(b) Recordkeeping Procedures
(c) Comparison with Government List Procedures
(d) Customer Notice Procedures
(e) Reliance on Other Financial Institutions ProceduresIncorrect
According to NFA Rule 2-8, the CIP must include the following elements:
(a) Required procedures for identification of information and identity
(b) Recordkeeping Procedures
(c) Comparison with Government List Procedures
(d) Customer Notice Procedures
(e) Reliance on Other Financial Institutions Procedures -
Question 10 of 10
10. Question
Apart from the basic responsibilities of a CPI. What are the additional responsibilities that comes under them?
Correct
According to NFA Rule 2-8, Also, the CIP must include risk-based protocols to confirm each customer’s identity to the degree appropriate and feasible. Verification may take place before or after the customer’s account is opened within a reasonable time. Nonetheless, the CIP must describe the circumstances in which each of these techniques will be used by the company. Additionally, the CIP will define instances where the business will need further confirmation based on the new account’s risk assessment by the FCM or IB.
Incorrect
According to NFA Rule 2-8, Also, the CIP must include risk-based protocols to confirm each customer’s identity to the degree appropriate and feasible. Verification may take place before or after the customer’s account is opened within a reasonable time. Nonetheless, the CIP must describe the circumstances in which each of these techniques will be used by the company. Additionally, the CIP will define instances where the business will need further confirmation based on the new account’s risk assessment by the FCM or IB.