Getting Started
The Elevator Pitch
Learning Objectives
Know Your Customer (KYC) Basics
KYC Key Questions
Be Aware
The Bottom Line
Know the red flags that require you to escalate and do so as soon as possible!
Other Financial Crime Related Risks
Significant Financial Crimes
Select each card for definitions of some of the key financial crimes that we are exploring in this training.
Money Laundering via Cryptocurrency
Money laundering is the process of taking criminal proceeds and disguising their illegal sources to use the funds to perform legal or illegal activities in an attempt to make “dirty” money look “clean”. Cryptocurrency markets are particularly vulnerable to fraud and money laundering.
Terrorist Financing
Terrorist financing is the provision of funds providing financial support to terrorist acts or organizations. Terrorist financing can be challenging to detect due to the fact that terrorist activities can be funded by both legal and illicit sources. In addition, the funds may be used for mundane expenses like food and rent – not strictly for the terrorist acts.
Insider Trading
Insider trading or dealing is the buying or selling of a security while in possession of material, non-public information (MNPI). Violations may also include sharing or “tipping” this information to others, securities trading by the person “tipped”, and by those who misuse this information.
Identity Theft
Identity theft is a crime that occurs when an individual or group steals personal identifying information and uses it to commit fraud by misappropriating funds from a victim’s account, or by taking over the victim’s identity altogether.
Internal Fraud
Employees engaging in internal fraud may act alone or with others, including external parties, and evade firm policies and controls in an effort to steal funds, hide losses, defraud, or otherwise misappropriate firm property.
Tax Evasion
Tax evasion is the practice where an individual or organization illegally avoids paying taxes. This may involve a customer concealing beneficial ownership and taxable assets, income, or gains from tax authorities.
Microcap Fraud
Certain securities, particularly lower-priced and illiquid securities are more susceptible to fraud and manipulation. These include “penny stocks” (lower-priced shares of small companies that oftentimes trade for less than $5 per share), and microcap stocks (securities issued by companies with low or “micro” capitalization).
Market Manipulation
Market manipulation or abuse is the deliberate attempt to interfere with the free and fair operation of markets by creating false or misleading appearances with respect to the price or demand for a security, commodity or currency.
Marijuana-related Business
There are significant legal and reputational risks in many jurisdictions in which we operate when it comes to doing business with a marijuana-related business (“MRB”). This includes investing in MRBs and onboarding new relationships with MRBs or their principals.
Bribery / Corruption
Bribery involves improperly offering, paying, authorizing, promising, soliciting or receiving anything of value with the intent to obtain or retain business, any business advantage or to influence a government or regulatory action. Corruption can take many forms and is any unlawful or improper behavior that seeks to gain an advantage through illegitimate means or abuse of power for personal gain.
Sanctions Evasion
Sanctions evasion is the deliberate attempt to remove or conceal the involvement of sanctions indicators or touchpoints (e.g., restricted countries, entities, individuals) in a transaction or series of transactions in order to make the transaction(s) appear legitimate.
Modern Slavery and Human Trafficking (MSHT)
Modern slavery refers to the severe exploitation of other people for personal or commercial gain. It encompasses various forms of exploitation, including forced labor, debt bondage, human trafficking, and involuntary servitude, where people’s freedoms and rights are severely restricted.
Human trafficking is the illegal trade and exploitation of humans for the purpose of forced labor, sexual slavery, or commercial sexual exploitation for the trafficker or others. It can involve the recruitment, transport, transfer, harboring, or receipt of persons, often across borders, with the aim of exploiting them for personal or financial gain.
Red Flags Quiz
Question 1
That's correct.
Red flags for insider trading include trading activity appearing unusually timely in relation to a market-moving event or representing a significant percentage of the daily trading volume, in addition to a customer buying shares of a company to which they have a close connection.
A customer having a history of transacting in the security is not a red flag. Rather, it would be a red flag if the customer does not have a history of transacting in the security.
That's incorrect.
Red flags for insider trading include trading activity appearing unusually timely in relation to a market-moving event or representing a significant percentage of the daily trading volume, in addition to a customer buying shares of a company to which they have a close connection.
A customer having a history of transacting in the security is not a red flag. Rather, it would be a red flag if the customer does not have a history of transacting in the security.
That's incorrect.
Red flags for insider trading include trading activity appearing unusually timely in relation to a market-moving event or representing a significant percentage of the daily trading volume, in addition to a customer buying shares of a company to which they have a close connection.
A customer having a history of transacting in the security is not a red flag. Rather, it would be a red flag if the customer does not have a history of transacting in the security.
That's incorrect. Please try again.
1st attempt feedback.
That's incorrect. Please try again.
2nd and subsequent attempts feedback.
Question 2
That's correct.
Red flags for identity theft are an inability to contact or verify a customer through established means on record, a customer providing identification or documentation that appears altered or forged, or a customer request for an international wire transfer that is inconsistent with typical account activity.
A customer who provides identification and all necessary documentation promptly on request is not a red flag. Rather, it would be a red flag if a customer refused to provide the requested identification or documentation.
That's incorrect.
Red flags for identity theft are an inability to contact or verify a customer through established means on record, a customer providing identification or documentation that appears altered or forged, or a customer request for an international wire transfer that is inconsistent with typical account activity.
A customer who provides identification and all necessary documentation promptly on request is not a red flag. Rather, it would be a red flag if a customer refused to provide the requested identification or documentation.
That's incorrect.
Red flags for identity theft are an inability to contact or verify a customer through established means on record, a customer providing identification or documentation that appears altered or forged, or a customer request for an international wire transfer that is inconsistent with typical account activity.
A customer who provides identification and all necessary documentation promptly on request is not a red flag. Rather, it would be a red flag if a customer refused to provide the requested identification or documentation.
That's incorrect. Please try again.
1st attempt feedback.
That's incorrect. Please try again.
2nd and subsequent attempts feedback.
A Crime on the Rise
Question 3
That's correct.
Red flags for internal fraud that appear in this scenario include Sally requesting access to systems that are not typically necessary for her to perform her responsibilities as this could be indicative of someone improperly accessing systems to misappropriate client assets. Sally's lack of interest to take consecutive days’ vacation is also a red flag as it could suggest that she is afraid her activity will be discovered if she misses work. As noted above, using personal e-mail when communicating with customers is a violation of firm policy and a red flag as it could be an attempt to prevent the firm from discovering improper activity.
Sally stepping away from her desk periodically throughout the day is not a red flag.
That's incorrect.
Red flags for internal fraud that appear in this scenario include Sally requesting access to systems that are not typically necessary for her to perform her responsibilities as this could be indicative of someone improperly accessing systems to misappropriate client assets. Sally's lack of interest to take consecutive days’ vacation is also a red flag as it could suggest that she is afraid her activity will be discovered if she misses work. As noted above, using personal e-mail when communicating with customers is a violation of firm policy and a red flag as it could be an attempt to prevent the firm from discovering improper activity.
Sally stepping away from her desk periodically throughout the day is not a red flag.
That's incorrect.
Red flags for internal fraud that appear in this scenario include Sally requesting access to systems that are not typically necessary for her to perform her responsibilities as this could be indicative of someone improperly accessing systems to misappropriate client assets. Sally's lack of interest to take consecutive days’ vacation is also a red flag as it could suggest that she is afraid her activity will be discovered if she misses work. As noted above, using personal e-mail when communicating with customers is a violation of firm policy and a red flag as it could be an attempt to prevent the firm from discovering improper activity.
Sally stepping away from her desk periodically throughout the day is not a red flag.
That's incorrect. Please try again.
1st attempt feedback.
That's incorrect. Please try again.
2nd and subsequent attempts feedback.
Question 4
That's correct.
Red flags for tax evasion include a customer providing false documentation showing income as capital, showing greater than normal interest in tax-related topics or in Goldman Sachs’ regulatory reporting, or a customer entity being structured to avoid providing beneficial ownership information to the firm.
A customer filing an extension request for their taxes is not a red flag.
That's incorrect.
Red flags for tax evasion include a customer providing false documentation showing income as capital, showing greater than normal interest in tax-related topics or in Goldman Sachs’ regulatory reporting, or a customer entity being structured to avoid providing beneficial ownership information to the firm.
A customer filing an extension request for their taxes is not a red flag.
That's incorrect.
Red flags for tax evasion include a customer providing false documentation showing income as capital, showing greater than normal interest in tax-related topics or in Goldman Sachs’ regulatory reporting, or a customer entity being structured to avoid providing beneficial ownership information to the firm.
A customer filing an extension request for their taxes is not a red flag.
That's incorrect. Please try again.
1st attempt feedback.
That's incorrect. Please try again.
2nd and subsequent attempts feedback.
Spotlight on Cryptocurrency
Question 5
That's correct.
All of the above are red flags with the exception of a prospect claiming source of wealth is crypto trading and providing verification and a client who invests in various types of virtual currency that is consistent with expected activity. It would be a red flag if the customer could not provide anything to verify their source of wealth or if their investments in virtual currency were inconsistent with expected activity.
A prospect who claims their source of wealth is crypto and/or who invests in various types of virtual currency, should still be escalated.
That's incorrect.
All of the above are red flags with the exception of a prospect claiming source of wealth is crypto trading and providing verification and a client who invests in various types of virtual currency that is consistent with expected activity. It would be a red flag if the customer could not provide anything to verify their source of wealth or if their investments in virtual currency were inconsistent with expected activity.
A prospect who claims their source of wealth is crypto and/or who invests in various types of virtual currency, should still be escalated.
That's incorrect.
All of the above are red flags with the exception of a prospect claiming source of wealth is crypto trading and providing verification and a client who invests in various types of virtual currency that is consistent with expected activity. It would be a red flag if the customer could not provide anything to verify their source of wealth or if their investments in virtual currency were inconsistent with expected activity.
A prospect who claims their source of wealth is crypto and/or who invests in various types of virtual currency, should still be escalated.
That's incorrect. Please try again.
1st attempt feedback.
That's incorrect. Please try again.
2nd and subsequent attempts feedback.
Question 6
That's correct.
Red flags for microcap fraud include a customer holding a significant percentage of total shares outstanding, an ambiguous or incomplete explanation of how the position was acquired and an immediate liquidation of shares followed by the transfer of proceeds away from the firm. These red flags could indicate an illegal unregistered distribution of shares where scammers look to sell shares that were unlawfully issued affecting existing shareholders.
The issuer having a bricks-and-mortar location is not a red flag. Rather it would be a red flag if the issuer did not have a brick-and-mortar location (i.e., virtual office or P.O. Box).
That's incorrect.
Red flags for microcap fraud include a customer holding a significant percentage of total shares outstanding, an ambiguous or incomplete explanation of how the position was acquired and an immediate liquidation of shares followed by the transfer of proceeds away from the firm. These red flags could indicate an illegal unregistered distribution of shares where scammers look to sell shares that were unlawfully issued affecting existing shareholders.
The issuer having a bricks-and-mortar location is not a red flag. Rather it would be a red flag if the issuer did not have a brick-and-mortar location (i.e., virtual office or P.O. Box).
That's incorrect.
Red flags for microcap fraud include a customer holding a significant percentage of total shares outstanding, an ambiguous or incomplete explanation of how the position was acquired and an immediate liquidation of shares followed by the transfer of proceeds away from the firm. These red flags could indicate an illegal unregistered distribution of shares where scammers look to sell shares that were unlawfully issued affecting existing shareholders.
The issuer having a bricks-and-mortar location is not a red flag. Rather it would be a red flag if the issuer did not have a brick-and-mortar location (i.e., virtual office or P.O. Box).
That's incorrect. Please try again.
1st attempt feedback.
That's incorrect. Please try again.
2nd and subsequent attempts feedback.
Question 7
That's correct.
Orders appearing to be placed with no apparent intention of being executed are linked to “spoofing” behavior, whereby multiple or large orders are submitted on one side of the order book to deceive the market and execute on the other side of the order book at a better price. Off-market trades can potentially manipulate the price of a security to move in a direction that is away from its normal range and thereby benefitting certain participants. Wash trading is intended to produce false appearance of trading activity with no change in beneficial ownership.
A large number of orders placed in succession by a company with significant trading history in the name is not a red flag. However, it would be a red flag if the orders were cancelled prior to execution.
That's incorrect.
Orders appearing to be placed with no apparent intention of being executed are linked to “spoofing” behavior, whereby multiple or large orders are submitted on one side of the order book to deceive the market and execute on the other side of the order book at a better price. Off-market trades can potentially manipulate the price of a security to move in a direction that is away from its normal range and thereby benefitting certain participants. Wash trading is intended to produce false appearance of trading activity with no change in beneficial ownership.
A large number of orders placed in succession by a company with significant trading history in the name is not a red flag. However, it would be a red flag if the orders were cancelled prior to execution.
That's incorrect.
Orders appearing to be placed with no apparent intention of being executed are linked to “spoofing” behavior, whereby multiple or large orders are submitted on one side of the order book to deceive the market and execute on the other side of the order book at a better price. Off-market trades can potentially manipulate the price of a security to move in a direction that is away from its normal range and thereby benefitting certain participants. Wash trading is intended to produce false appearance of trading activity with no change in beneficial ownership.
A large number of orders placed in succession by a company with significant trading history in the name is not a red flag. However, it would be a red flag if the orders were cancelled prior to execution.
That's incorrect. Please try again.
1st attempt feedback.
That's incorrect. Please try again.
2nd and subsequent attempts feedback.
Quiz Results
Spotlight on Marijuana-related Business (MRB)
Terrorist Financing
Financial Indicators
Financial indicators for terrorist financing include:
- An unusually high volume of low value transactions that deviate from the client’s expected activity and are sent to unknown third parties
- A large number of incoming or outgoing transactions where no logical business or other economic purpose for the transfers is present, particularly when this activity involves higher-risk locations for terrorism
- Financial transactions that occur with an organization for which there appears to be no logical economic purpose or link between the stated activity of the organization and the other parties in the transaction
- Financial transactions with non-profit organizations (NPO) for which the NPO:
- Operates in or near locations known for terrorism
- Conducts operating or fundraising activities that are opaque
Behavioral Indicators
Rapid changes in a clients communication style or behavior online, in-person or over the phone may be indicative of extremist ideologies or terrorist financing when associated with one or more of the following:
- Client promotes or praises violence, extremist ideologies, and/or successful or attempted attacks
- Client expresses a desire, or is preparing to travel to a conflict zone to support an extremist group
- Client has prior travel activity to destinations where extremist groups are located and the travel is unusual for the client
- Client advocates violence toward individuals, military or government officials, law enforcement, or civilian targets
Account Indicators
Account indicators for terrorist financing include:
- An account is created in the name of entities or individuals linked to or involved with terrorist activities
- A client persistently attempts to conceal the identities of beneficial owners or counterparties located in or near high-risk locations for terrorism
MSHT – Know the Facts
Modern Slavery and Human Trafficking (MSHT)
Industries Susceptible to MSHT
Certain industries are more susceptible to exploitive labor practices, and involve the hiring of an economically and sociologically vulnerable workforce.
Select each card to learn more about some of these industries.
Manufacturing/
Construction
Multi-tiered supply chains spanning multiple less-developed countries, with labor-intensive processes involving large numbers of low-skilled, often migrant workers, exist across both industries.
This makes it difficult to monitor and ensure fair labor practices, increasing the risk of exploitation.
Textiles
Slavery and exploitation exist at all stages of the garment-making process. Intense competition in the textiles market puts pressure on textile manufacturers to minimize costs, often resulting in low wages and poor working conditions.
Agriculture
Seasonal and migrant labor in the agricultural sector involves a transient workforce often lacking legal protections. The nature of the agricultural work makes laborers easily replaceable and thus, more vulnerable and exploitable.
Transport
Similar to manufacturing and construction, the supply chains in the transport industry often involve numerous subcontractors and intermediaries, which can obscure labor abuses and create challenges in monitoring and enforcing labor standards.
Food Processing
The meat industry is notorious for modern slavery as people may be coerced to work using violence, ID-retention, and threat of denunciation to immigration authorities. Food processing jobs are typically low-wage and have high turnover rates, creating a workforce that is economically vulnerable.
The Bottom Line
Know the red flags that require you to stop and escalate!
Business and Country-specific Requirements
Your Business Requirements
Your Country Requirements
Sanctions — More than Just a List
A series of videos to depict the effects of war. The first video shows someone trying to open a door, but the door is locked and a sign on the door says Closed in both English and Russian. The second video shows queues at a food bank and someone serving noodle soup from a large pot. The third video shows an elderly woman in winter clothing sitting beside a signpost. The background is bleak with snow on the ground. She looks at something in her hand, which she puts into her pocket. In her other hand she holds an empty cup. This series of videos ends with the comment “This has nothing to do with me, right?”
Next a rewind sound effect is heard as the series of videos are rewound and another video plays of two businessmen in conversation. A speech bubble beside one of the businessmen says “I want to purchase these securities” and a Russian flag is visible on screen. As this video fades out, key messages are displayed on screen “Be vigilant. Be thoughtful. Recognize the potential far-reaching impact behind every transaction.”
Think about it...
That's correct.
In general, entities owned 50% or more, directly or indirectly, by one or more sanctions targets are also subject to the same sanctions (e.g., asset freeze/blocking), even if the entity does not appear on a published sanctions list.
That's incorrect.
In general, entities owned 50% or more, directly or indirectly, by one or more sanctions targets are also subject to the same sanctions (e.g., asset freeze/blocking), even if the entity does not appear on a published sanctions list.
That's incorrect.
In general, entities owned 50% or more, directly or indirectly, by one or more sanctions targets are also subject to the same sanctions (e.g., asset freeze/blocking), even if the entity does not appear on a published sanctions list.
That's incorrect. Please try again.
1st attempt feedback.
That's incorrect. Please try again.
2nd and subsequent attempts feedback.
Sanctions–More than Just a List
Types of Government Sanctions
Types of Government Sanctions
Comprehensive Sanctions
Comprehensive sanctions broadly prohibit most firm activity involving or provided directly or indirectly to an individual or entity domiciled in, or organized under the laws of, a comprehensively sanctioned country or region.
List-Based Asset Freeze Sanctions
List-based asset freeze sanctions target individuals and entities involved in certain illicit activities. Governments and international bodies create lists of individuals and entities with whom the firm is prohibited from transacting.
Capital Markets Restrictions
Capital markets restrictions apply to sectors of the Russian, Chinese and Belarussian economies, as well as the Government of Venezuela. Transactions and firm activity that may implicate any entities targeted by such restrictions must be escalated to FCC for review.
Comprehensive Sanctions
Spotlight on Russia
Put it into Practice
That's correct.
The current comprehensively sanctioned jurisdictions are Iran, Syria and Cuba, as well as North Korea, the Crimea region of Ukraine, and the so-called “Donetsk People’s Republic” and “Luhansk People’s Republic” regions of Ukraine. Colombia is not a comprehensively sanctioned country.
That's incorrect.
The current comprehensively sanctioned jurisdictions are Iran, Syria and Cuba, as well as North Korea, the Crimea region of Ukraine, and the so-called “Donetsk People’s Republic” and “Luhansk People’s Republic” regions of Ukraine. Colombia is not a comprehensively sanctioned country.
That's incorrect.
The current comprehensively sanctioned jurisdictions are Iran, Syria and Cuba, as well as North Korea, the Crimea region of Ukraine, and the so-called “Donetsk People’s Republic” and “Luhansk People’s Republic” regions of Ukraine. Colombia is not a comprehensively sanctioned country.
That's incorrect. Please try again.
1st attempt feedback.
That's incorrect. Please try again.
2nd and subsequent attempts feedback.
List-based Asset Freeze Sanctions
Capital Markets Restrictions
Russia
The expanded Russia sanctions in 2022 target many sectors of the Russian economy, including energy, defense, and technology. Sanctions now also include broad capital markets restrictions that generally prohibit trading of, or dealing in, new and existing debt and equity of all Russian entities.
These sanctions affect Goldman Sachs’ ability to deal with securities of companies that operate in, or derive predominant revenue, from Russia. Certain transactions related to the divestment of securities issued by Russian entities are permissible only with Compliance review and approval. Always escalate any Russia exposure to your manager, FCC or divisional Compliance.
Venezuela
The US government has imposed an asset freeze against the Government of Venezuela and its entities/agencies, including Venezuela’s state-owned oil company (Petroleos de Venezuela S.A., “PdVSA”).
Certain transactions related to the divestment of securities issued by the Government of Venezuela are permissible only with Compliance review and approval. Escalate any potential exposure to the Government of Venezuela and its entities/agencies to your manager or Compliance.
However, Venezuela is not subject to comprehensive sanctions and generally, it is not prohibited for US persons to conduct business in Venezuela or with non-governmental Venezuelan entities.
China
US sanctions prohibit any purchase or sale of publicly traded securities of entities identified by the US government as a Chinese Military-Industrial Complex company (CMIC).
This means that the firm and its US person clients are prohibited from making new investments in these companies’ securities, including through exchange-traded funds (ETFs) or other mutual funds that hold such securities. If you have questions about whether certain activity with a CMIC entity is permissible, always escalate to your manager or Compliance.
Belarus
In addition to asset freezes against individuals and entities, EU sanctions against Belarus include capital markets restrictions related to the Government of Belarus and import/export-related restrictions on certain Belarus-origin goods such as petroleum products and potash.
Put it into Practice
That's correct.
Targeted individuals and entities can be based in any country, including those that are considered to be lower-risk, such as Canada and the UK.
Remember, even if a list-based program exists for a specific country, there could also be additional broad prohibitions within the same jurisdiction.
That's incorrect.
Targeted individuals and entities can be based in any country, including those that are considered to be lower-risk, such as Canada and the UK.
Remember, even if a list-based program exists for a specific country, there could also be additional broad prohibitions within the same jurisdiction.
That's incorrect.
Targeted individuals and entities can be based in any country, including those that are considered to be lower-risk, such as Canada and the UK.
Remember, even if a list-based program exists for a specific country, there could also be additional broad prohibitions within the same jurisdiction.
That's incorrect. Please try again.
1st attempt feedback.
That's incorrect. Please try again.
2nd and subsequent attempts feedback.
Higher Risk Commodities
Before you go…
Remember–You are the firm’s best defense in complying with government sanctions!
A customer is reluctant to provide information on controlling parties and underlying beneficiaries or does not want their identity revealed to regulatory authorities.
Which of the following actions should you take?
That's correct.
While the presence of a red flag does not automatically mean that a customer is engaged in illegal activity, you must report your suspicions to FCC or your Compliance Officer. FCC or Compliance will then take the necessary steps. Do not “tip off” your customer as instances of tipping can constitute a criminal offence.
Partially correct.
While the presence of a red flag does not automatically mean that a customer is engaged in illegal activity, you must report your suspicions to FCC or your Compliance Officer. FCC or Compliance will then take the necessary steps. Do not “tip off” your customer as instances of tipping can constitute a criminal offence.
That's incorrect.
While the presence of a red flag does not automatically mean that a customer is engaged in illegal activity, you must report your suspicions to FCC or your Compliance Officer. FCC or Compliance will then take the necessary steps. Do not “tip off” your customer as instances of tipping can constitute a criminal offence.
May Jones is a wealthy entrepreneur who is seeking a relationship with Goldman Sachs through Wealth Management (WM). May has discussed her prospect with a Private Wealth Advisor (PWA) and meets the criteria to be a WM client.
During her outreaches with her prospective PWA, May indicates that a part of her wealth is derived from investments and sales of cryptocurrency, and that cryptocurrency sales account for a high proportion of her wealth.
As a WM Professional assigned to help cover May, which of the following actions should you take?
That's correct.
Prospective clients whose source of wealth are linked to a high amount of investments and sales of cryptocurrency present a potential risk from an AML perspective. Such prospects should be escalated to Compliance to ensure proper verification and diligence occurs as needed.
Partially correct.
Prospective clients whose source of wealth are linked to a high amount of investments and sales of cryptocurrency present a potential risk from an AML perspective. Such prospects should be escalated to Compliance to ensure proper verification and diligence occurs as needed.
That's incorrect.
Prospective clients whose source of wealth are linked to a high amount of investments and sales of cryptocurrency present a potential risk from an AML perspective. Such prospects should be escalated to Compliance to ensure proper verification and diligence occurs as needed.
Stark Capital, a customer of the firm for over 15 years, attended a health, wellness and fitness conference and participated in a one-on-one meeting with the CEO of ABC Global Fit (ABC). The customer’s trading profile with the firm was primarily of options in the technology sector with no history of trading in ABC.
A few days after the conference, Stark Capital gave an order to initiate a short position of 100,000 shares of ABC. You recognize this as the company from the conference one-on-one meeting.
Which of the following actions should you take?
That's correct.
Insider trading red flags involve circumstances that imply that customers were privy to or likely exposed to MNPI and have or will potentially act on such information. Acting on MNPI and sharing MNPI both qualify as insider trading violations.
Partially correct.
Insider trading red flags involve circumstances that imply that customers were privy to or likely exposed to MNPI and have or will potentially act on such information. Acting on MNPI and sharing MNPI both qualify as insider trading violations.
That's incorrect.
Insider trading red flags involve circumstances that imply that customers were privy to or likely exposed to MNPI and have or will potentially act on such information. Acting on MNPI and sharing MNPI both qualify as insider trading violations.
Mary in Client Onboarding receives an email from a customer asking her to transfer funds to their new bank account. The email is full of grammatical errors and written in a manner that appears to be inconsistent with prior correspondence. The customer provides the details and insist that the request is urgent and must be completed immediately.
Which of the following actions should Mary take?
That's correct.
An urgent email request to transfer money from an existing customer that includes information not on file or otherwise seems uncharacteristic of the client are automatic red flags. You should authenticate the customer by contacting them directly using the established means of communication on record, other than email in this case, and escalate the incident to Compliance.
Partially correct.
An urgent email request to transfer money from an existing customer that includes information not on file or otherwise seems uncharacteristic of the client are automatic red flags. You should authenticate the customer by contacting them directly using the established means of communication on record, other than email in this case, and escalate the incident to Compliance.
That's incorrect.
An urgent email request to transfer money from an existing customer that includes information not on file or otherwise seems uncharacteristic of the client are automatic red flags. You should authenticate the customer by contacting them directly using the established means of communication on record, other than email in this case, and escalate the incident to Compliance.
Sam, a trader in GBM Public, receives a phone call from Marc Settle, a longstanding customer who holds positions in illiquid bonds. Marc is concerned about his positions as there is a significant selling interest in one of his illiquid bonds recently which is causing the value of his positions to drop and his fund is under pressure. Earlier in the day a different holder of the same bond requested Sam to sell off his position. Marc wants to take this opportunity and asks Sam if GS can work with him to “help his fund out” by selling his bond for which he is willing to pay significantly over market value. Marc tells Sam, "I need the bond prices back up in the market to a certain level by the end of the quarter", and asks him to give him a call back when he has the bond. The conversation abruptly ends.
Which of the following represents the complete correct answer?
That's correct.
Given the client has a large position in the bonds and is willing to pay significantly above market price, it is possible they are seeking to artificially inflate the price of the bond, which could benefit his fund in their quarterly reporting. This situation is a red flag for market manipulation and needs to be investigated.
Sam should not disregard the suspicious activity and should immediately escalate to Compliance and his supervisor.
Partially correct.
Given the client has a large position in the bonds and is willing to pay significantly above market price, it is possible they are seeking to artificially inflate the price of the bond, which could benefit his fund in their quarterly reporting. This situation is a red flag for market manipulation and needs to be investigated.
Sam should not disregard the suspicious activity and should immediately escalate to Compliance and his supervisor.
That's incorrect.
Given the client has a large position in the bonds and is willing to pay significantly above market price, it is possible they are seeking to artificially inflate the price of the bond, which could benefit his fund in their quarterly reporting. This situation is a red flag for market manipulation and needs to be investigated.
Sam should not disregard the suspicious activity and should immediately escalate to Compliance and his supervisor.
Juan receives a client onboarding request from a company named Global Asset Holdings Ltd. The company claims to be a trust established in a jurisdiction known for its lack of beneficial ownership disclosure requirements. The potential client provides minimal information about the beneficiaries and emphasize the desire for strict confidentiality.
Which of the following actions should Juan take?
That's correct.
You need to escalate the red flags to Compliance so that they can determine if enhanced due diligence is required. The potential risks associated with tax evasion or other illicit activities will also need to be assessed.
Partially correct.
You need to escalate the red flags to Compliance so that they can determine if enhanced due diligence is required. The potential risks associated with tax evasion or other illicit activities will also need to be assessed.
That's incorrect.
You need to escalate the red flags to Compliance so that they can determine if enhanced due diligence is required. The potential risks associated with tax evasion or other illicit activities will also need to be assessed.
A client requests a payment to cover the medical expenses of a family member in Havana, Cuba. The client assures you that their lawyer received US government approval to make the payment and implies that any delays by Goldman Sachs will be viewed as disruptive and create a client relationship issue.
Which aspect of this transaction raises a sanctions concern?
That's correct.
Cuba is a comprehensively sanctioned country. While it may be a permissible transaction, if you discover that the beneficiary of any transaction resides in a comprehensively sanctioned country or region, escalate to Compliance.
Compliance needs to review all matters related to comprehensively sanctioned jurisdictions (or other sanctions-related concerns), and if the payment is authorized, additional information and documentation may need to be obtained.
Partially correct.
Cuba is a comprehensively sanctioned country. While it may be a permissible transaction, if you discover that the beneficiary of any transaction resides in a comprehensively sanctioned country or region, escalate to Compliance.
Compliance needs to review all matters related to comprehensively sanctioned jurisdictions (or other sanctions-related concerns), and if the payment is authorized, additional information and documentation may need to be obtained.
That's incorrect.
Cuba is a comprehensively sanctioned country. While it may be a permissible transaction, if you discover that the beneficiary of any transaction resides in a comprehensively sanctioned country or region, escalate to Compliance.
Compliance needs to review all matters related to comprehensively sanctioned jurisdictions (or other sanctions-related concerns), and if the payment is authorized, additional information and documentation may need to be obtained.
When reviewing documents provided by a prospective client you notice that the company derives 9% of their revenue from Iran and has two subsidiaries in Venezuela that are involved in the local energy sector. The prospective client insists they are in compliance with all applicable sanctions.
Is there a sanctions compliance concern?
That's correct.
Iran is a comprehensively sanctioned country, and the US government has imposed an asset freeze against the Government of Venezuela and its subsidiaries, including Venezuela’s state-owned oil company. Any sanctions exposure should be reviewed by Compliance – always escalate if you identify any touchpoints to sanctioned countries.
Partially correct.
Iran is a comprehensively sanctioned country, and the US government has imposed an asset freeze against the Government of Venezuela and its subsidiaries, including Venezuela’s state-owned oil company. Any sanctions exposure should be reviewed by Compliance – always escalate if you identify any touchpoints to sanctioned countries.
That's incorrect.
Iran is a comprehensively sanctioned country, and the US government has imposed an asset freeze against the Government of Venezuela and its subsidiaries, including Venezuela’s state-owned oil company. Any sanctions exposure should be reviewed by Compliance – always escalate if you identify any touchpoints to sanctioned countries.
A US client requests to purchase new securities in a Chinese company that you know has certain activity-specific prohibitions and is internally listed as a restricted security. The client insists that this activity is permissible because he is located in Singapore and that other institutions have executed similar trades for them in the past.
Which of the following actions should you take?
That's correct.
Capital markets sanctions limit or prohibit specific activity related to targeted entities. These prohibitions are highly complex and require extensive analysis, and you should not attempt to assess sanctions risk without engaging Compliance and/or Legal.
Engaging Compliance to engage in a thorough investigation and due diligence ensures adherence to relevant regulations and risk management practices, while also addressing the client's concerns and providing an opportunity for clarification before making a final decision.
Partially correct.
Capital markets sanctions limit or prohibit specific activity related to targeted entities. These prohibitions are highly complex and require extensive analysis, and you should not attempt to assess sanctions risk without engaging Compliance and/or Legal.
Engaging Compliance to engage in a thorough investigation and due diligence ensures adherence to relevant regulations and risk management practices, while also addressing the client's concerns and providing an opportunity for clarification before making a final decision.
That's incorrect.
Capital markets sanctions limit or prohibit specific activity related to targeted entities. These prohibitions are highly complex and require extensive analysis, and you should not attempt to assess sanctions risk without engaging Compliance and/or Legal.
Engaging Compliance to engage in a thorough investigation and due diligence ensures adherence to relevant regulations and risk management practices, while also addressing the client's concerns and providing an opportunity for clarification before making a final decision.
A Frankfurt-based client requests to purchase securities issued by a Russian bank owned by a prominent Russian oligarch. The client provides a written attestation that the bank is not subject to any sanctions restrictions applicable to the client.
Which of the following actions should you take?
That's correct.
Goldman Sachs may not make or facilitate any new investment in Russia, either on a principal basis or on behalf of any clients, including investments (e.g., purchases) of new and existing debt and equity securities issued by any entity in Russia. Additionally, several Russian oligarchs are subject to list-based asset-freeze sanctions. You should never attempt to assess sanctions risk without engaging Compliance.
Partially correct.
Goldman Sachs may not make or facilitate any new investment in Russia, either on a principal basis or on behalf of any clients, including investments (e.g., purchases) of new and existing debt and equity securities issued by any entity in Russia. Additionally, several Russian oligarchs are subject to list-based asset-freeze sanctions. You should never attempt to assess sanctions risk without engaging Compliance.
That's incorrect.
Goldman Sachs may not make or facilitate any new investment in Russia, either on a principal basis or on behalf of any clients, including investments (e.g., purchases) of new and existing debt and equity securities issued by any entity in Russia. Additionally, several Russian oligarchs are subject to list-based asset-freeze sanctions. You should never attempt to assess sanctions risk without engaging Compliance.
Test Results
Share Your Feedback
Use the tab key to access the options for a statement. Then use the up and down arrow keys to navigate between each option. Use the space bar or enter key to make a selection.
When you have completed this page the Next Page button will become available.
