Which level of an organization is ultimately responsible for risk oversight?
A.
1st line compliance team
B.
2nd line compliance team
C.
Chief risk officer
D.
Board of directors
Correct Answer: D
Explanation:
The ultimate responsibility for risk oversight lies with the Board of Directors. Senior management
and the board have the fiduciary and governance duty to ensure that an effective risk management
framework, including AML/CFT controls and cryptoasset-specific risks, is in place and functioning
properly.
The DFSA GEN Module and AML Module explicitly allocate the highest accountability for compliance
and risk oversight to the Board of Directors, while first and second lines support implementation and
oversight respectively. The Chief Risk Officer (CRO) supports risk management but the board
maintains ultimate accountability.
Key extracts:
GEN Module, Chapter 5: “Responsibility for compliance lies with every member of senior
management, with ultimate oversight by the Board.”
AML Module Section 1.2 & 4.1: “Senior management and Board must ensure appropriate systems
and controls for AML/CFT risk management.”
FATF Recommendation 2 underscores that senior management and boards are accountable for
effective AML governance【GEN/VER64/05-24: Chapter 5; AML/VER25/05-24: Sections 1.2, 4.1】.
Thus, D is the correct answer.
Question #2 (Topic: Demo Questions)
What is indirect exposure in regards to blockchain analytics transaction monitoring?
A.
The crypto assets are absolutely linked to a specific user and identity on the blockchain.
B.
The crypto assets have a connection to risky activity via another crypto address or addresses.
C.
The crypto assets went through a mixing protocol to conceal source of funds.
D.
The fiat currency is not immediately linked to a known bank account
Correct Answer: B
Explanation:
Indirect exposure refers to a situation where cryptoassets are not directly associated with illicit
activity but have transactional links through other addresses that are associated with risky or illicit
behavior. Blockchain analytics tools detect these indirect links to flagged addresses, allowing firms to
assess risk based on network connections rather than direct ownership or activity.
The DFSA AML guidance and international FATF Virtual Assets guidance explain that indirect exposure
is a critical concept for transaction monitoring as it broadens the detection scope beyond direct
transactions, flagging assets that might be “tainted” through intermediary addresses.
Reference:
FATF Guidance on Virtual Assets and VASPs emphasizes monitoring both direct and indirect exposure
of wallets to illicit activity.
DFSA AML Module Section 13 on Suspicious Activity Reports requires firms to incorporate indirect
exposure assessments in their monitoring systems【AML/VER25/05-24: Sections 4.1, 6.3, 13.3; FATF
VA Guidance 2021】.
Therefore, B is the correct definition.
Question #3 (Topic: Demo Questions)
Which type of crypto asset is explicitly designed to maintain a stable value?
A.
Utility token
B.
Stable coin
C.
Governance token
D.
Privacy coin
Correct Answer: B
Explanation:
Stable coins aim to maintain value stability by pegging to assets like fiat currency or commodities. Regulators stress monitoring stable coin reserve transparency to prevent misuse for layering illicit funds.
Question #4 (Topic: Demo Questions)
Which blockchain features built-in privacy measures to prevent tracing and conceal ownership and flow of illicit funds?
A.
Cardano
B.
Polygon
C.
Ethereum
D.
Monero
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 #5 (Topic: Demo Questions)
Which of the following would you review as part of standard due diligence? (Select Two.)
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.