AML/KYC Interview Questions: Advanced Preparation Guide (2025 Edition)

Top 15 Advanced AML/KYC Questions & Answers

1. What is FATF?
   

The Financial Action Task Force sets international standards to prevent money laundering and terrorist financing.

1. False Positive vs. False Negative?
   

False Positive: Genuine transaction flagged incorrectly

False Negative: Suspicious transaction that goes undetected

1. What is a Correspondent Banking Relationship?
   

When one bank provides cross-border services to another — considered high-risk due to lack of direct oversight.

1. What is a Beneficial Owner in KYC?
   

A person who directly or indirectly owns ≥25% of a legal entity or exercises control over it.

1. KYC vs. CDD?
   

KYC: Initial identity verification

CDD: Ongoing monitoring and risk assessment

1. What is Smurfing?
   

Splitting large illicit funds into smaller transactions to evade detection.

1. What is a Risk-Based Approach (RBA)?
   

Tailoring due diligence intensity to customer risk — focusing more on high-risk profiles.

1. Structuring vs. Smurfing?
   

Structuring: Breaking up transactions to avoid thresholds

Smurfing: Using multiple people to do so on behalf of one party

1. What is Trade-Based Money Laundering (TBML)?
   

Using trade (falsified invoices, mispriced goods) to conceal illicit funds.

1. What is an Ultimate Beneficial Owner (UBO)?
   

The individual who ultimately benefits from or controls a company, even behind layers of ownership.

1. What is Ongoing Monitoring?
   

Post-onboarding transaction and profile reviews to detect new risks.

1. Purpose of Customer Risk Rating (CRR)?
   

To classify clients as Low, Medium, or High risk and apply appropriate controls.

1. What is PEP Screening?
   

Identifying Politically Exposed Persons to mitigate corruption and reputational risk.

1. What is a Watchlist in AML?
   

A list of entities or persons flagged for sanctions, criminal history, or financial risk.

1. What is a Suspicious Activity Report (SAR)?
   

A confidential report filed with authorities to flag transactions that raise suspicion.

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