Money Laundering Prevention Quiz

Money laundering means:

• A) Washing banknotes
• B) Making money earned from crime look legal ✔
• C) Printing new currency
• D) Paying taxes on time

Why: Money laundering (सम्पत्ति शुद्धीकरण) means hiding the criminal source of money, for example from corruption or drug trade, so that it looks like legally earned income.

Putting dirty cash into the financial system is which stage?

• A) Placement ✔
• B) Layering
• C) Integration
• D) Auditing

Why: Placement is the first stage: illegal cash enters the financial system, for example through bank deposits, currency exchange or buying valuable items.

Moving money through many complex transactions to hide its trail is:

• A) Placement
• B) Layering ✔
• C) Integration
• D) Budgeting

Why: Layering is the second stage: the money is moved through many accounts, companies or countries so that its criminal origin becomes hard to trace.

Buying land or businesses with laundered money is:

• A) Integration ✔
• B) Placement
• C) Layering
• D) Deposit

Why: Integration is the final stage: laundered money comes back into the normal economy, for example as land, businesses or shares, and appears legitimate.

Nepal's main anti-money laundering law is the Asset (Money) Laundering Prevention Act of:

• A) 2052
• B) 2059
• C) 2064 ✔
• D) 2074

Why: Nepal's main law is the Asset (Money) Laundering Prevention Act, 2064 (सम्पत्ति शुद्धीकरण निवारण ऐन, २०६४). It makes laundering and terrorist financing crimes and sets reporting duties.

FIU-Nepal works within:

• A) Nepal Rastra Bank ✔
• B) Ministry of Education
• C) Election Commission
• D) Department of Customs

Why: The Financial Information Unit (FIU-Nepal) works within Nepal Rastra Bank as an independent unit. It receives and analyses reports on suspicious and large transactions.

STR stands for:

• A) Suspicious Transaction Report ✔
• B) Standard Tax Return
• C) State Treasury Record
• D) Short Term Repayment

Why: STR means Suspicious Transaction Report. Banks and other reporting entities must send an STR to FIU-Nepal when a transaction looks unusual or linked to crime.

Which body investigates money laundering offences in Nepal?

• A) Department of Money Laundering Investigation ✔
• B) Public Service Commission
• C) National Planning Commission
• D) Survey Department

Why: The Department of Money Laundering Investigation (सम्पत्ति शुद्धीकरण अनुसन्धान विभाग) investigates laundering offences and files cases. FIU gathers intelligence; the department investigates.

KYC means:

• A) Keep Your Cash
• B) Know Your Customer ✔
• C) Key Yearly Check
• D) Kind Yield Credit

Why: KYC means Know Your Customer: banks and other institutions must identify and verify customers, for example with citizenship and address documents, before opening accounts.

Telling a customer that a suspicious report was filed about them is called:

• A) Tipping off, which is prohibited ✔
• B) Good service
• C) Due diligence
• D) Integration

Why: Telling a customer that an STR was filed is 'tipping off', and it is prohibited, because it could let the suspect hide or move the money.

Which of these is a DNFBP?

• A) Real estate business ✔
• B) Supreme Court
• C) Public school
• D) Weather office

Why: DNFBPs are Designated Non-Financial Businesses and Professions, such as real estate businesses, dealers in precious metals, casinos, lawyers and accountants. They also have reporting duties.

FATF was set up in:

• A) 1945
• B) 1989 ✔
• C) 2001
• D) 2015

Why: The Financial Action Task Force (FATF) was set up in 1989 by the G7 meeting in Paris to set global standards against money laundering, later also against terrorist financing.

Which regional FATF-style body is Nepal a member of?

• A) APG (Asia/Pacific Group on Money Laundering) ✔
• B) SAARC Bank
• C) ASEAN
• D) OPEC

Why: Nepal is a member of the Asia/Pacific Group on Money Laundering (APG), a regional FATF-style body that assesses member countries against FATF standards.

In February 2025, FATF placed Nepal on its:

• A) White list
• B) List of jurisdictions under increased monitoring (grey list) ✔
• C) Black list with sanctions
• D) No list

Why: In February 2025, FATF placed Nepal on its list of jurisdictions under increased monitoring (the grey list), with an action plan to fix weaknesses in its AML/CFT system.

AML/CFT stands for anti-money laundering and:

• A) Countering the financing of terrorism ✔
• B) Central fund transfer
• C) Customs and fiscal tax
• D) Credit for farmers

Why: AML/CFT means anti-money laundering and countering the financing of terrorism. Both are covered by Nepal's 2064 Act and by FATF standards.

In Nepali, money laundering is:

• A) सम्पत्ति शुद्धीकरण ✔
• B) सम्पत्ति कर
• C) सम्पत्ति विवरण
• D) सम्पत्ति बाँडफाँड

Why: Money laundering is सम्पत्ति शुद्धीकरण. सम्पत्ति कर is property tax, सम्पत्ति विवरण is a property statement, and सम्पत्ति बाँडफाँड is division of property.

Which crime can be a source of 'dirty money'?

• A) Corruption, drug trafficking or tax evasion ✔
• B) Paying tax on time
• C) Saving salary
• D) Receiving a pension

Why: Money from crimes such as corruption, drug trafficking, human trafficking and tax evasion is 'dirty money'. Laundering tries to hide where it came from.

AML/CFT controls money laundering together with:

• A) Terrorist financing ✔
• B) Tourism
• C) Remittance only
• D) Agriculture

Why: AML/CFT systems fight money laundering together with terrorist financing, because both use the financial system to move money secretly.

Depositing cash in small amounts in many accounts is an example of:

• A) Placement ✔
• B) Integration
• C) Layering
• D) Audit

Why: Splitting cash into small deposits across many accounts (structuring) is a placement method, used to avoid threshold reports such as TTRs.

Using shell companies and foreign transfers to hide the trail is:

• A) Layering ✔
• B) Placement
• C) Integration
• D) KYC

Why: Shell companies and cross-border transfers are typical layering methods: they add steps between the crime and the money, making the trail hard to follow.

Buying shares with laundered money is:

• A) Integration ✔
• B) Placement
• C) Layering
• D) Reporting

Why: Buying shares with laundered money is integration: the money is now invested in the legal economy, and returns from it look legitimate.

Which is an effect of money laundering?

• A) It encourages crime and corruption ✔
• B) It increases honest tax revenue
• C) It strengthens banks
• D) It reduces crime

Why: Laundering lets criminals enjoy their profits, so it encourages more crime and corruption. It also weakens banks and reduces honest tax revenue.

Money laundering harms honest businesses through:

• A) Unfair competition ✔
• B) Lower prices for all
• C) More trust
• D) Better audits

Why: Businesses funded by criminal money can sell below cost and still survive, which creates unfair competition and pushes honest businesses out of the market.

The Act makes money laundering and terrorist financing:

• A) Crimes ✔
• B) Legal
• C) Tax-free
• D) Optional

Why: The Asset (Money) Laundering Prevention Act, 2064 makes both money laundering and terrorist financing criminal offences, with punishment and confiscation of property.

Illegal property can be:

• A) Frozen and confiscated ✔
• B) Kept freely
• C) Given to the criminal
• D) Ignored

Why: Under the Act, property linked to laundering can be frozen during investigation and confiscated after conviction, so criminals cannot keep the benefit.

TTR stands for:

• A) Threshold Transaction Report ✔
• B) Tax Transfer Record
• C) Total Trade Return
• D) Treasury Transaction Rule

Why: TTR means Threshold Transaction Report: transactions above a set amount must be reported to FIU-Nepal, even if they are not suspicious.

FIU-Nepal passes information to:

• A) Investigating agencies ✔
• B) Newspapers
• C) The customer
• D) Political parties

Why: After analysis, FIU-Nepal shares financial intelligence with investigating agencies such as the Department of Money Laundering Investigation, police and tax authorities.

SEBON supervises AML in:

• A) The securities sector ✔
• B) Banking only
• C) Agriculture
• D) Tourism

Why: The Securities Board of Nepal (SEBON) supervises AML compliance in the securities sector, such as brokers and fund managers, while NRB supervises banks.

The Insurance Authority supervises:

• A) Insurance companies ✔
• B) Banks
• C) Casinos
• D) Courts

Why: The Nepal Insurance Authority regulates insurance companies, including their AML duties, because insurance products can also be misused to launder money.

Which of these is a reporting entity?

• A) Money transfer companies ✔
• B) Public parks
• C) Weather stations
• D) Libraries

Why: Money transfer (remittance) companies are reporting entities: they must follow KYC and report suspicious or large transactions to FIU-Nepal.

CDD means:

• A) Customer Due Diligence ✔
• B) Central Data Department
• C) Cash Deposit Duty
• D) Court Decision Document

Why: CDD means Customer Due Diligence: identifying the customer, verifying documents, understanding the purpose of the account and monitoring transactions.

The real person who owns or controls a company is the:

• A) Beneficial owner ✔
• B) Cashier
• C) Auditor
• D) Witness

Why: The beneficial owner is the real person who finally owns or controls a company or account. KYC must identify them, because criminals hide behind companies.

Reporting entities must keep transaction records:

• A) For the period required by law ✔
• B) For one day
• C) Never
• D) Only in memory

Why: Reporting entities must keep customer and transaction records for the period set by law, so investigators can trace money later if a case arises.

PEP stands for:

• A) Politically Exposed Person ✔
• B) Public Expenditure Plan
• C) Private Equity Partner
• D) Police Enforcement Programme

Why: PEP means Politically Exposed Person: someone with a prominent public role, or their close family or associates, who faces higher corruption risk and needs extra checks.

Which customers need enhanced checks?

• A) Politically exposed persons and high-risk customers ✔
• B) All children
• C) Pensioners only
• D) No one

Why: Politically exposed persons and other high-risk customers need enhanced due diligence, such as checking the source of funds and senior approval.

Lawyers and accountants can be:

• A) DNFBPs with reporting duties ✔
• B) Exempt always
• C) Investigators
• D) Judges

Why: Lawyers and accountants are designated professions (DNFBPs) when they handle client money or company deals, so they also have KYC and reporting duties.

FATF's standards are known as the:

• A) 40 Recommendations ✔
• B) 10 Commandments
• C) Sendai Priorities
• D) Millennium Goals

Why: FATF's standards are the 40 Recommendations, covering laws, preventive measures, supervision, investigation and international cooperation.

FATF was set up in:

• A) Paris ✔
• B) New York
• C) Geneva
• D) Kathmandu

Why: FATF was created in Paris in 1989, and its secretariat is still hosted at the OECD in Paris.

APG is a:

• A) Regional FATF-style body ✔
• B) Bank
• C) Court
• D) Political party

Why: The Asia/Pacific Group on Money Laundering (APG) is a regional FATF-style body. It carries out mutual evaluations of members such as Nepal.

Being on the FATF 'grey list' means:

• A) Increased monitoring with an action plan to fix weaknesses ✔
• B) Full sanctions
• C) A reward
• D) No issues

Why: The grey list means 'jurisdictions under increased monitoring': the country has agreed an action plan to fix weaknesses, and FATF checks its progress.

Informal money transfer outside banks, common in South Asia, is called:

• A) Hundi ✔
• B) Dharauti
• C) Goshwara
• D) Beruju

Why: Hundi is an informal way of sending money outside the banking system, common in South Asia. Because it leaves no formal record, it is a laundering risk.

Cash-heavy sectors at high risk include:

• A) Real estate and gold ✔
• B) Public libraries
• C) Schools
• D) Weather offices

Why: Real estate and gold deals often involve large cash payments and hard-to-check prices, so they are high-risk sectors for hiding illegal money.

Which strengthens AML?

• A) Faster investigation, prosecution and asset confiscation ✔
• B) Ignoring STRs
• C) Removing KYC
• D) Tipping off customers

Why: AML works when cases are investigated quickly, prosecuted and property confiscated. Ignoring STRs, removing KYC or tipping off customers weakens it.

Coordination between FIU, investigators, tax and customs helps to:

• A) Detect and act on laundering ✔
• B) Hide crimes
• C) Delay cases
• D) Remove records

Why: Sharing information between FIU, investigators, tax and customs helps join the dots, so laundering can be detected and acted on faster.

Which law is related to AML because corruption is a source crime?

• A) Prevention of Corruption Act, 2059 ✔
• B) Sports Act
• C) Tourism Act
• D) Copyright Act

Why: The Prevention of Corruption Act, 2059 is closely related, because corruption is a major source of money that people then try to launder.

Mutual Legal Assistance and Extradition laws help in:

• A) International cooperation against crime ✔
• B) Local elections
• C) Budget approval
• D) Leave management

Why: Laundering often crosses borders, so Mutual Legal Assistance and Extradition laws let Nepal share evidence and hand over suspects with other countries.

Money laundering can damage a country's:

• A) Reputation and cost of foreign transactions ✔
• B) Weather
• C) Population
• D) Geography

Why: Weak AML can damage a country's reputation, for example through FATF grey-listing, making foreign transactions slower and costlier for banks and businesses.

Staff and public awareness helps AML by:

• A) Spotting and reporting suspicious activity ✔
• B) Encouraging tipping off
• C) Ignoring risks
• D) Hiding transactions

Why: When bank staff and the public know the warning signs, they spot and report suspicious activity sooner, which improves detection.

Risk-based supervision means regulators:

• A) Focus more on higher-risk institutions and products ✔
• B) Treat everything the same
• C) Never inspect
• D) Only check small shops

Why: Risk-based supervision means regulators spend more time on institutions and products with higher laundering risk, instead of treating all equally.

FIU-Nepal's main job is to:

• A) Receive and analyse financial reports and share intelligence ✔
• B) Prosecute in court
• C) Collect taxes
• D) Issue passports

Why: FIU-Nepal is a financial intelligence unit: it receives and analyses financial reports (STRs, TTRs) and shares intelligence. It does not prosecute cases or collect taxes.