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ACFE CFE-Law Certified Fraud Examiner (CFE) - Law Exam Practice Test

Demo: 47 questions
Total 158 questions
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Certified Fraud Examiner (CFE) - Law Questions and Answers

Question 1

Which of the following is an example of a trade-based money laundering scheme?

Options:

A.

An importer and an exporter conspire to conceal illicit funds by creating invoices that understate the quantity of goods shipped internationally

B.

An accountant overstates a restaurants revenues to hide illegal funds that are secretly laundered through the business

C.

A drug cartel outside of the United States launders illicit funds by hiring runners to deposit small amounts of money in bank accounts throughout the United States

D.

A businessperson deposits illicit funds into the bank account of a company they secretly own which then lends the funds back to them

Question 2

Which of the following examples of judicial systems would BEST be described as a civil law system?

Options:

A.

The courts are allowed to consider both codified statutes and previous court decisions but are bound by neither

B.

The courts are bound by both previous court decisions and codified principles or statutes

C.

The courts are bound primarily by previous court decisions to reserve legal issues

D.

The courts are bound by codified principles or statures but are not bound by previous court decisions

Question 3

Which of the following scenarios MOST ACCURATELY represents a suitability violation in a jurisdiction that imposes a suitability requirement on broker-dealers?

Options:

A.

A broker-dealer is unfamiliar with their client's risk appetite, so they refuse to make any investments on the client's behalf without additional information.

B.

A broker-dealer learns about a promising investment and recommends it to their new client without knowing the client's relevant personal and financial information.

C.

A broker-dealer makes an extremely conservative recommendation to a client that aligns with their risk profile and financial information.

D.

A broker-dealer makes an investment for a client without first obtaining the client's approval to make that specific transaction on their behalf.

Question 4

In common law jurisdictions, which of the following scenarios would MOST LIKELY result in sanctions for an organization for failing to preserve evidence?

Options:

A.

An employee intentionally destroys a relevant document prior to the company announcing the possibility of litigation.

B.

An employee unintentionally alters a digital document that is not directly relevant to any potential litigation that the company has announced to its staff.

C.

An employee accidentally deletes a digital document that is relevant to litigation after the company announces that such litigation is a possibility.

D.

An employee abstains from destroying a document relevant to an ongoing proceeding even though this act violates the company's document retention policy.

Question 5

Each day, Rachel purchases $14 500 in bearer instruments with cash from a bank where all currency transactions above 515,000 must be reported to the government Rachets actions are a red flag of which of the following schemes'?

Options:

A.

Channel stuffing

B.

Alternative remittance system

C.

Structuring

D.

Real estate laundering

Question 6

Slater has been appointed as a bankruptcy administrator. According to the recommendations of the World Bank Principles for Effective Insolvency and Creditor/Debtor Regimes (World Bank Principles), which of the following statements concerning Slater's role as bankruptcy administrator is MOST ACCURATE?

Options:

A.

Slater may investigate all contracts the debtor entered into, but he does not have the power to cancel them without the debtor's permission.

B.

Slater may request relevant information from the debtor's agents or others with knowledge of the debtor's affairs, but he cannot force them to provide it.

C.

Slater may collect, preserve, and dispose of the debtor's property.

D.

Slater may not interfere with contracts signed by the debtor.

Question 7

Which of the following statements concerning civil trials in civil law jurisdictions is MOST ACCURATE?

Options:

A.

The standard of proof in civil trials is often described as the inner conviction of the judge.

B.

The standard of proof in civil trials is lower than it is in criminal trials.

C.

Civil trials are typically a single event rather than a continual series of meetings and correspondences.

D.

Neither side may appeal an adverse judgment in a civil case.

Question 8

Which of the following is the MOST ACCURATE statement about the UK Bribery Act?

Options:

A.

Like the FCPA the UK Bribery Act contains an explicit exception for facilitating payments

B.

Even if an organization's anti-corruption program complies with the FCPA, it might not be sufficient for the purpose of complying with the UK Bribery Act

C.

Unlike the FCPA. the UK Bribery Act makes it a crime to bribe a foreign public official in connection with international business transactions

D.

The UK Bribery Act only exercises jurisdiction over individuals and corporate entities for acts of corruption when the offense occurs outside the United Kingdom

Question 9

Which of the following is generally one of the goals of deferred prosecution agreements?

Options:

A.

To help reduce the risk of future illegal practices by an organization accused of misconduct.

B.

To save trial resources by getting the defendant to plead guilty to a less serious offense.

C.

To postpone prosecution until a company conducts an adequate internal investigation.

D.

To increase the likelihood of conviction if a company is accused of subsequent misconduct.

Question 10

Which of the following is the MOST ACCURATE statement about the circumstances under which a conflict of interest claim would be actionable against an agent?

Options:

A.

The agent must have purported to act on behalf of or as an agent for an identified principal

B.

The agent must have had an undisclosed interest m a matter that could influence their professional role

C.

The agent must have informed the principal of their actions

D.

The agent must have been authorized by someone with actual authority to carry out the transaction at issue

Question 11

Countries A and B both follow the Financial Action Task Force (FATF) Recommendations concerning cross-border transfers of currency Trevor is traveling from Country A to Country B while carrying $16,000 in cash which exceeds Country B's reporting threshold Trevor is required to disclose the amount of currency he is carrying to authorities in Country B.

Options:

A.

True

B.

False

Question 12

According to the best practices regarding large cash transactions with customers as provided by the Financial Action Task Force (FATF) Recommendations, which of the following transactions would require a report to be filed with the government?

Options:

A.

A domestic cash deposit into a bank of a sum that is below the jurisdiction's designated threshold.

B.

A single cash purchase of restaurant supplies for a sum that is above the jurisdiction's designated threshold.

C.

A single cash purchase of casino credits for a sum that is above the jurisdiction's designated threshold.

D.

All of the above.

Question 13

Greta is convicted of white-collar crime. However, her sentence is suspended in return for her promise of good behavior. Which of the following BEST describes Greta's sentence?

Options:

A.

Determinate sentence

B.

Probation

C.

indeterminate sentence

D.

Deferred prosecution agreement

Question 14

In common law jurisdictions failing to suspend routine destruction of electronic data can result in sanctions for failure to preserve relevant evidence

Options:

A.

True

B.

False

Question 15

Alicia has been charged with tax evasion. As a defense, Alicia claims that she made an honest mistake due to the complexity of the tax law and did not intentionally violate the jurisdiction's tax laws. If the court finds that her mistake was made in good faith, then she will most likely NOT be found to have willfully engaged in fraudulent actions to avoid reporting or paying her taxes.

Options:

A.

True

B.

False

Question 16

The Financial Action Task Force (FATF) Recommendations advise countries to do all of the following EXCEPT:

Options:

A.

Use a risk-based approach when setting anti-money laundering policies

B.

Require financial institutions to keep certain records and establish anti-money laundering policies.

C.

Require financial institutions to monitor their customers' political affiliations.

D.

Enable authorities to trace freeze, and confiscate assets suspected in money laundering and terrorist financing

Question 17

Which of the following statements concerning judgments involving parties that are in multiple jurisdictions is MOST ACCURATE?

Options:

A.

If a party obtains a judgment in one jurisdiction, then that party will automatically be able to enforce the judgment wherever the defendant resides.

B.

Whether a foreign judgment is enforceable always depends on where the defendant's assets are located.

C.

If a party obtains a judgment in one jurisdiction, then that party will automatically be able to enforce the judgment in any jurisdiction.

D.

Whether a foreign judgment is enforceable might depend on whether the two jurisdictions have an enforcement treaty.

Question 18

Which of the following is MOST LIKELY to affect the rights that an employee may have during an internal investigation?

Options:

A.

The likelihood that the case will eventually go to trial.

B.

The existence of a collective bargaining agreement.

C.

The amount of evidence that the employer possesses.

D.

The length of the employee's tenure at the organization.

Question 19

IBC Manufacturing is a private company in a jurisdiction in which the public has the legal right to be free from unreasonable search and seizure by government authorities. An investigator at IBC searches the desk of Denise an IBC employee and finds illegal narcotics. The investigator seizes the narcotics and turns them over to members of law enforcement. The investigator violated Denises rights by failing to obtain a search warrant before conducting the search

Options:

A.

True

B.

False

Question 20

Evidence that tends to make some tact at issue more or less likely than it would be without the evidence is called:

Options:

A.

Circumstantial evidence

B.

Testamentary evidence

C.

Demonstrative evidence

D.

Relevant evidence

Question 21

The Organisation for Economic Co-operation and Developments (OECD) Recommendation on Combating Bribery m International Business (Recommendation) urges member states to combat the bribery of foreign public officials by taking steps to improve which of the following primary areas within their respective infrastructures?

Options:

A.

Public health and safety regulations

B.

Laws and regulations related to public subsidies licenses, and contract procurement

C.

Laws and regulations covering e-commerce

D.

Consumer data protection laws

Question 22

Which of the following statements is MOST ACCURATE concerning how criminal bargaining agreements are typically handled in jurisdictions where such agreements are allowed?

Options:

A.

The defense generally has the discretion to decide whether to settle charges with a bargaining agreement.

B.

Both the prosecution and the defense have the discretion to decide whether to settle charges with a bargaining agreement.

C.

Only the judge assigned to the case has the discretion to decide whether to settle charges with a bargaining agreement.

D.

The prosecution generally has the discretion to decide whether to settle charges with a bargaining agreement.

Question 23

Robert, a Certified Fraud Examiner (CFE), wants to ensure that the authenticity of the evidence he collected during his investigation is not compromised. His main objective should be to:

Options:

A.

Limit access to the evidence to judicial officials prior to trial proceedings.

B.

Prevent all other parties from obtaining physical control of the evidence.

C.

Establish a clear chain of custody to show that the evidence has not been altered.

D.

Only alter or materially change the evidence himself if absolutely necessary.

Question 24

Freya, a government contractor, has been convicted of colluding with other contractors to manipulate the competitive bidding process. After her conviction, Freya's name is added to a list of individuals who are prohibited from bidding on government contracts for a period of five years. The administrative penalty that Freya received is BEST described as:

Options:

A.

License revocation

B.

Disenfranchisement

C.

Debarment

D.

License suspension

Question 25

Leslie, a business owner, submits tax information regarding her company's finances to her country's taxing authority. The taxing authority allows companies to subtract the cost of production from their gross sales to determine the taxable income. To reduce her tax liability, Leslie inflates the costs of production on her tax forms. Which of the following schemes has Leslie MOST LIKELY committed?

Options:

A.

A value-added tax evasion scheme

B.

A falsified tax deduction scheme

C.

A sales tax scheme

D.

A tax credit evasion scheme

Question 26

Which of the following statements regarding the qualifications of expert witnesses in most inquisitorial jurisdictions is CORRECT?

Options:

A.

Certification in a specific field is always enough to qualify an expert

B.

An excerpt is not qualified to testify unless all parties to the litigation approve

C.

Experts are generally prohibited from serving as expert witnesses in multiple cases

D.

The qualification of an expert is generally based on standardized requirements

Question 27

Which of the following choices is a method of pretrial civil discovery that is often found in common law jurisdictions?

Options:

A.

Injunctions

B.

Production writs

C.

Indictments

D.

Affidavits of documents

Question 28

The same customer comes into a casino each day and deposits a large amount of cash into an account but after very little gambling the customer withdraws the funds The casino employees suspect that the customer may be engaged in money laundering activity Assuming that the anti-money laundering (AML) regulations that govern the casino’s activities correspond to the Financial Action Task Force (FATF) Recommendations the casino:

Options:

A.

May, but is not required to file a report of suspicious transactions related to possible money laundering with appropriate authorities

B.

May not file a report of suspicious transactions related to potential criminal activity with appropriate authorities

C.

Is required to file a report of suspicious transactions with appropriate authorities because the employees suspect money laundering violations

D.

Is required to file a cash transaction report for possible criminal activity with appropriate authorities because cash was involved

Question 29

Jackson believes he has a legal cause of action against Alice, who lives in a foreign country. The fact that Jackson is the plaintiff allows him to bring the lawsuit against Alice in any court in the country where he lives.

Options:

A.

True

B.

False

Question 30

Which of the following statements is TRUE regarding criminal proceedings and discovery in adversarial jurisdictions?

Options:

A.

Most criminal proceedings are divided into pretrial, investigative and trial phases

B.

Parties typically cannot request evidence from each other until after the trial begins.

C.

The majority of criminal discovery usually occurs before the trial begins.

D.

The judge is the primary driver of the discovery process in criminal proceedings.

Question 31

Which of the following typically does NOT need to be present for communications between an attorney and the attorney's client to be protected by a legal professional privilege?

Options:

A.

Communication between a legal advisor and a client

B.

Purpose of the communications was to seek or provide legal advice

C.

Intent to keep the communications confidential

D.

A lawsuit has been filed

Question 32

Jay files for bankruptcy in order to settle all of his debts. During the bankruptcy proceeding, the court sells off his property and uses the proceeds to pay Jay's creditors, thereby discharging all of Jay's dischargeable debts. This type of bankruptcy proceeding can BEST be described as:

Options:

A.

Debt adjustment bankruptcy

B.

Liquidation bankruptcy

C.

Reorganization bankruptcy

D.

Debt dismissal bankruptcy

Question 33

Which of the following statements concerning judgments involving parties in multiple jurisdictions is MOST ACCURATE?

Options:

A.

Whether a foreign judgment is enforceable always depends on where the defendant's assets are located

B.

If a party obtains a judgment in one jurisdiction, that party will automatically be able to enforce the judgment in any jurisdiction

C.

If a party obtains a judgment in one jurisdiction, that party will automatically be able to enforce the judgment wherever the defendant resides

D.

Whether a foreign judgment is enforceable might depend on whether the two jurisdiction have an enforcement treaty

Question 34

All of the following are common legal defenses for tax evasion EXCEPT:

Options:

A.

Mental illness of the taxpayer

B.

Death of the taxpayer

C.

The taxpayer s reliance on an attorney or accountant

D.

The actions were tax avoidance not tax evasion

Question 35

Which of the following is generally NOT one of the goals of deferred prosecution agreements?

Options:

A.

To postpone prosecution until a company conducts an extensive internal investigation

B.

To get an organization to reform its policies

C.

To allow prosecutors to resolve a case while still punishing malfeasance

D.

To reduce the risk of illegal practices at an organization

Question 36

Which of the following statements concerning fact finders in criminal trials in common law jurisdictions is MOST ACCURATE?

Options:

A.

The presence of a jury is always required to make factual findings in a common law criminal trial

B.

A panel of a professional judge and lay judges usually serves as the fact finder in serious cases

C.

A judge is typically responsible for factual findings

D.

Juries usually serve as the fact finder in serious cases

Question 37

Tatiana is the chief executive officer (CEO) of Mattress World Warehouse, a retail mattress store that has been struggling financially A week before Mattress World Warehouse files for bankruptcy Tatiana sets ten mattresses to her husband at 80% below market value Which type of fraud scheme has Tatiana MOST LIKELY committed?

Options:

A.

A fraudulent bankruptcy

B.

A fraudulent conveyance

C.

A planned bustout

D.

A concealed transfer

Question 38

Which of the following describes the purpose of an expert witness testimony at trial?

Options:

A.

To offer an opinion as to a party's guilt or innocence

B.

To give a firsthand account of the fads of the case on the record

C.

To give an opinion when the fact finder needs specialized knowledge

D.

None of the above

Question 39

Regarding the litigation privilege in common law jurisdictions, which of the following is the MOST ACCURATE statement?

Options:

A.

The litigation privilege prevents disclosure of documents prepared in anticipation of litigation.

B.

The litigation privilege does not protect communications made by third-party agents, such as consultants.

C.

The litigation privilege prevents disclosure of documents entered as evidence during the course of litigation.

D.

The litigation privilege protects all communications related to a case, regardless of when they occurred.

Question 40

Frederick has multiple high-volume foreign bank accounts. The country he lives in requires him to report such accounts annually for tax purposes but he regularly and intentionally fails to report his accounts in order to reduce the amount of taxes he must pay. Which of the following schemes has Frederick MOST LIKELY committed?

Options:

A.

A tax credit evasion scheme

B.

A value-added tax evasion scheme

C.

An excise tax evasion scheme

D.

An income and wealth tax evasion scheme

Question 41

John deliberately understated his income so that he could pay a lesser amount on his tax bill. This is an example of tax avoidance.

Options:

A.

True

B.

False

Question 42

Which of the following statements about the appeals process in cranial cases is MOST ACCURATE?

Options:

A.

In common law jurisdictions, appellate courts are generally not permitted to make their own factual determinations when reviewing a case

B.

In civil law jurisdictions appellate courts are generally not permitted to make their own legal conclusions when reviewing a case

C.

Appellate courts will usually hear an appeal even if the petition was not filed in a timely manner

D.

Appellate courts will usually reverse a conviction even if the trial court's error did not affect the outcome of the case

Question 43

Which of the following is the MOST ACCURATE statement about the litigation privilege in common law jurisdictions?

Options:

A.

The primary purpose of the litigation privilege is to protect confidential communications between a client and the client's legal representative

B.

The litigation privilege only protects documents and materials prepared by an attorney

C.

The litigation privilege applies only while a trial is underway

D.

The litigation privilege applies only to documents and materials prepared in anticipation of litigation

Question 44

A company files a civil lawsuit against one of its directors for insider trading. At the end of the trial, a court orders the director to refrain from purchasing or obtaining the stock of a particular corporation. Which of the following BEST describes this type of remedy?

Options:

A.

Punitive damages

B.

Declaratory relief

C.

Injunction

D.

Monetary relief

Question 45

Even if a government agent obtains consent to search by force duress or bribery, the consent will still constitute a valid waiver of the consenting party's right to be free from searches.

Options:

A.

true

B.

False

Question 46

Which of the following scenarios is an example of the criminal sanction known as criminal forfeiture?

Options:

A.

As part of his sentence for embezzlement, a defendant is ordered to pay back his employer for the money he stole.

B.

As part of her sentence for bribery a defendant is ordered to transfer a car she received as a bribe to the government

C.

As part of her sentence for money laundering a defendant is sentenced to a three- to five-year term of incarceration

D.

As part of his sentence for tax evasion, a Defendant is ordered to pay a fine of $10,000 to the government

Question 47

In an inquisitorial judicial proceeding, which of the following parties is primarily responsible for questioning witnesses and generally has a larger role in the evidence-gathering process?

Options:

A.

The defendant's counsel

B.

The grand jury

C.

The prosecution

D.

The judge

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