Which blockchain features built-in privacy measures to prevent tracing and conceal ownership and flow of illicit funds?
Correct Answer: D
Explanation:
Monero is a privacy-focused blockchain designed with built-in features like ring signatures, stealth addresses, and confidential transactions to obfuscate sender, receiver, and transaction amounts, making tracing difficult. Cardano, Polygon, and Ethereum are not designed primarily with these privacy features and have publicly traceable ledgers, although privacy solutions may be layered on.
Question 2
Which of the following would you review as part of standard due diligence? (Select Two.)
Correct Answer: A, C
Explanation:
Standard due diligence typically involves reviewing negative news and verifying beneficial ownership to understand the customer’s background and potential risk factors. Dark web forums (B) and blockchain exposure (D) are more advanced or enhanced due diligence techniques, used when higher risk is identified.
Question 3
Which of the following are red flag indicators specifically related to anonymity? (Select Two.)
Correct Answer: A, B
Explanation:
Anonymity red flags in crypto include the use of: Decentralized or hardware wallets (A): These wallets are often unhosted and can facilitate anonymous transfers across borders, complicating AML controls. Mixing services (B): These obscure transaction trails by blending multiple users’ funds, enhancing anonymity and increasing ML risk. Privacy-oriented email services (C), fraudulent scheme-linked assets (D), and unusual sign-on activity (E) are also risk indicators but not specifically tied to anonymity in cryptoasset transactions. AML guidance and thematic reviews emphasize A and B as key anonymity-related red flags.
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