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CFE-Law Certified Fraud Examiner (CFE) - Law Questions and Answers

Questions 4

Which of the following statements concerning digital currencies, such as bitcoin, is MOST ACCURATE?

Options:

A.

Digital currencies are subject to all of the same regulations as payments made through traditional financial institutions

B.

Digital currencies are attractive to money launderers because payments often cross jurisdictional boundaries, making it difficult for authorities to pursue enforcement

C.

Digital currencies are attractive to money launderers because they are a payment method that provides complete anonymity

D.

Digital currencies are not typically used to launder money due to strict customer identification or recordkeeping requirements enforced in all jurisdictions

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Questions 5

Which of the following statements concerning the selection of expert witnesses during trial is MOST ACCURATE?

Options:

A.

Generally, the court selects the primary expert witnesses in adversarial jurisdictions and the parties do not participate in the selection.

B.

Generally, the parties select the expert witnesses in both inquisitorial and adversarial jurisdictions.

C.

Generally, the court selects the primary expert witnesses in inquisitorial jurisdictions and the parties do not hire them directly.

D.

Generally, the parties select expert witnesses in inquisitorial jurisdictions but not in adversarial jurisdictions.

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Questions 6

Raj is an employee who works in a jurisdiction that prohibits unreasonable workplace searches and surveillance in areas or items where employees have a reasonable expectation of privacy. In which of the following is Raj MOST LIKELY to have a reasonable expectation of privacy?

Options:

A.

A backpack brought from home

B.

A filing cabinet in the office lobby

C.

A waste bin m the employee's office

D.

A company-issued tablet computer

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Questions 7

During a bankruptcy bustout scheme, or planned bankruptcy, the debtor committing the fraud typically performs which of the following actions?

Options:

A.

Colludes with creditors and the trustee to pay some creditors but not ethers

B.

Bribes a trustee to overlook assets in the debtor's possession

C.

Conspires with suppliers to produce fraudulent invoices

D.

Purchases large quantities of goods on credit

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Questions 8

In systems using adversarial processes, an attorney may impeach an opposing party's witness by showing that the witness:

Options:

A.

Has a keen ability to observe

B.

Made poor consistent statements

C.

Testified from personal knowledge

D.

Is influenced by bias or self-interest

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Questions 9

Which of the following is NOT one of the elements that the government must prove to establish a violation of a law criminalizing false statements to government agencies?

Options:

A.

The government relied on the false statement

B.

The defendant knew the statement was false

C.

The defendant made a false statement

D.

The false statement was material

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Questions 10

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

Options:

A.

Civil jury trials must have the same number of jurors as in criminal jury trials.

B.

Neither side may appeal an adverse judgment in a civil case

C.

Jury verdicts m civil trials must always be unanimous

D.

in most civil cases, the standard of proof is the preponderance of the evidence

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Questions 11

In most civil law systems, the burden of proof for the government to convict a defendant in a criminal case is beyond a reasonable doubt.

Options:

A.

True

B.

False

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Questions 12

Which of the following statements concerning alternative remittance systems is INCORRECT?

Options:

A.

The systems are not necessarily illegal.

B.

Funds are sent and received without the use of traditional financial institutions.

C.

The systems are characterized by a lack of physical or digital transfer of currency between payers and payees.

D.

The ledgers used typically contain information regarding payers and payees, such as names and account numbers.

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Questions 13

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.

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Questions 14

Management at ABC Org. suspects that Marcia, an employee in charge of negotiating vendor contracts, has a conflict of interest. For ABC Org.'s conflict-of-interest claim to be actionable, which of the following scenarios must be TRUE?

Options:

A.

The alleged conflict must have resulted in a direct personal benefit for Marcia.

B.

Marcia must have failed to disclose that she had a personal or economic interest in a matter that could influence her professional role.

C.

Marcia must have informed the organization that she had a connection to one or more of the vendors with whom she was negotiating.

D.

The alleged conflict must have resulted in a financial loss for the organization.

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Questions 15

The Financial Action Task Force (FATF) Recommendations suggest that countries should do which of the following?

Options:

A.

Use a risk-based approach when creating and establishing their anti-money laundering policies.

B.

Require financial institutions to monitor their customers' social media activity for signs of money laundering.

C.

Only conduct business with other countries that comply with the anti-money laundering recommendations.

D.

Impose a sentence of five years of imprisonment for all money laundering and terrorist financing convictions.

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Questions 16

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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Questions 17

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

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Questions 18

Which of the following is a method of disguising money acquired from illegal sources by recording more income on a business's books than the business actually generates?

Options:

A.

Overstating revenues

B.

Reporting real estate purchases

C.

Recording but not depositing revenue

D.

None of the above

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Questions 19

In jurisdictions that allow criminal bargaining agreements the defendant's counsel generally has the discretion to determine whether a bargaining agreement is available to the defendant.

Options:

A.

True

B.

False

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Questions 20

Which of the following would be direct evidence that an employee committed a cash larceny scheme that resulted in the theft of $800 from their employer's safe?

Options:

A.

A coworker states that the employee appeared to be nervous on the day of the theft.

B.

A diagram is used to display the location of the employer's safe.

C.

A witness testifies that they saw the employee take the money.

D.

A witness testifies that the employee was usually the last person to leave the office.

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Questions 21

Greta obtained money from illegal activities, which she deposited into a domestic bank account. Next, she moved the funds to several foreign accounts in the form of fake loans and transactions to make the audit trail difficult to follow. Finally, she transferred the funds back to a domestic account that she controlled and then spent the money. In which of the following stages of money laundering did Greta engage when she first deposited the money into a domestic account?

Options:

A.

Integration

B.

Placement

C.

Implementation

D.

Layering

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Questions 22

Ramona is investigating Eugene for misconduct Ramona and Eugene both work for Elek-Tek, which operates in a jurisdiction with evil laws for defamation, invasion of privacy and conflict of interest During the investigation Ramona obtained ^formation that Eugene is cheating on his spouse Ramona to a large group of Elek-Tek employees that Eugene was committing adultery, which turned out to be true Which cause of action would give Eugene the BEST chance for success m a civil suit against Ramona?

Options:

A.

Conflict of interest

B.

Defamation

C.

Public disclosure of private facts

D.

Slander

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Questions 23

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

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Questions 24

Under the World Bank Principles for Effective Insolvency and Credit/Debtor Regimes (World Bank Principles), which of the following parties should administer the debtor's estate in liquidation bankruptcy proceedings?

Options:

A.

The jurisdiction's commerce department or equivalent agency

B.

The creditor with the largest claim against the debtor

C.

The debtor, supervised by an independent insolvency representative

D.

An independent insolvency representative

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Questions 25

During an internal investigation Todd a Certified Fraud Examiner (CFE) interviewed Janessa a fraud suspect Although Janessa wanted to leave in the middle of the interview, Todd blocked the exit and prevented her from leaving Janessa subsequently confessed to committing fraud If under these facts Janessa files a lawsuit (or false imprisonment against Todd, Todd will likely

Options:

A.

Win the case because he is protected under the qualified business privilege

B.

Lose the case if a trier of fact concludes that he restrained Janessa without consent or legal justification

C.

Lose the case because janessa did not leave the interview

D.

Win the case if he did not know the conduct was illegal

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Questions 26

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.

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Questions 27

Which of the following is a legal element that must be shown to prove a claim for commercial bribery?

Options:

A.

The defendant acted negligently.

B.

The defendant gave or received a thing of value.

C.

The principal suffered damages as a result of the bribe

D.

The defendant failed to exercise due care.

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Questions 28

If Mary uses legal means to lower her tax bill through legitimate deductions and credits she is engaging m tax evasion

Options:

A.

True

B.

False

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Questions 29

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

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Questions 30

Which of the following, if available, would help an organization recover losses from an instance of internal fraud?

Options:

A.

Privilege insurance

B.

Customer liability policy

C.

Fidelity insurance

D.

Deposition

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Questions 31

Which of the following schemes involves disguising money from illegal nonbusiness sources by recording more income on a business's books than the business actually generates?

Options:

A.

Overstate revenues

B.

Structured deposits

C.

Trade-based laundering

D.

None of re above

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Questions 32

To determine if a misrepresentation in the offer or sale of any securities is material a fraud examiner should answer which of the following questions?

Options:

A.

"Did the person who made the representation believe that it was suitable for potential investors?"

B.

"Was the misrepresentation made by an authorized individual?"

C.

"Would a reasonable investor wish to know the information to make an informed decision?"

D.

''Did the person who made the representation intend to mislead potential investors?

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Questions 33

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.

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Questions 34

Which of the following is the MOST ACCURATE statement about rules prohibiting securities broker-dealers from making unsuitable recommendations on investments or investment strategies?

Options:

A.

A suitability violation occurs when a broker does not carry out a trade requested by or promised to a customer

B.

A suitability violation occurs when a broker recommends an investment or investment strategy that is inconsistent with the client's objectives

C.

A suitability violation occurs when a broker trades in a client's account without obtaining prior approval for making the transaction(s).

D.

A suitability violation occurs when a broker enters into transactions and manages a client's account for the purpose of generating excessive commissions

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Questions 35

In a particular country's judicial process, the judge oversees the investigation of a case is primarily responsible for questioning witnesses and generally plays a larger role in the evidence-gathering process than the parties' legal counsel Which of the following BEST describes this type of judicial process'?

Options:

A.

Adversarial process

B.

Substantive law process

C.

Inquisitorial process

D.

Common law process

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Questions 36

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

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Questions 37

Which of the following is NOT a legal element that must be shown to prove a claim for fraudulent misrepresentation of material facts?

Options:

A.

The victim relied on the misrepresentation

B.

The defendant acted negligently

C.

The defendant made a false statement (i, e., a misrepresentation of fact)

D.

The victim suffered damages as a result of the misrepresentation

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Questions 38

Which of the following is NOT an element generally required to establish a claim alleging the common law avil wrong for intentional infliction of emotional distress?

Options:

A.

The defendant acted intentionally or recklessly

B.

The victim was an employee of the defendant

C.

The victim suffered distress as a result of the defendants conduct

D.

The defendant engaged in extreme and outrageous conduct

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Questions 39

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

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Questions 40

Which of the following statements regarding using front businesses as a method of laundering money is MOST ACCURATE?

Options:

A.

Front businesses are a favored method because it is easy to match the costs associated with providing customers food, liquor, and entertainment with the revenues produced.

B.

Bars, restaurants, and nightclubs are commonly used as front businesses because these venues tend to charge relatively low prices and customers rarely vary in their purchases.

C.

Front businesses can often be detected because these businesses have a large number of customers during peak operating hours and high income.

D.

A front business that conducts legitimate business can provide cover for delivery and transportation related to illegal activity.

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Questions 41

Which of the following statements concerning the appointment of expert witnesses at that is accurate?

Options:

A.

Generally, the court appoints the primary expert witnesses in inquisitorial jurisdictions.

B.

Generally, only the parties may select expert witnesses in inquisitional jurisdictions.

C.

Generally the court selects the primary expert witnesses in adversarial jurisdictions.

D.

Generally, only the parties may select experts to introduce testimony in adversarial jurisdictions

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Questions 42

Which of the following statements regarding civil lawsuits in most jurisdictions is CORRECT?

Options:

A.

The plaintiffs initial filing does not typically need to contain a summary of the evidence

B.

Civil lawsuits begin with the filing of a pleading, usually in the jurisdiction in which the defendant resides or where the claim arose

C.

The plaintiff’s initial filing with the court does not typically need to include the specific facts on which the claim relies.

D.

All of the above are correct

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Questions 43

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

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Questions 44

Which of the following situations would constitute a violation of the US Foreign Corrupt Practices Act (FCPA)

Options:

A.

A private U.S company pays a S2.000 foreign corporation fee that is required in order to do business within the country

B.

A private UK company transfers $25,000 to a Chilean public official to influence the award of lucrative overseas contracts.

C.

A private U S company transfers $45,000 to a foreign official to influence the award of a public construction contract.

D.

A private U.S company transfers $100,000 to the sole proprietor of a Brazilian company to influence the award of a commercial imports contract.

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Questions 45

Which of the following statements about civil actions in most jurisdictions is CORRECT?

Options:

A.

The plaintiff's complaint must typically contain a copy of all documents that might be relevant to the case.

B.

Civil actions begin with the filing of a pleading, usually in the jurisdiction where the defendant resides or where the claim originated.

C.

The plaintiff's complaint does not need to state the grounds for legal relief.

D.

All of the above are correct.

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Questions 46

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

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Questions 47

Allison works for a government contractor She informs the government that her employer has been submitting false claims to the government for payment Later it is discovered that Allison has misappropriated more than $50,000 of her employer's money Alison qualifies as a whistleblower entitled to anti-retaliation protection under the law because of her report to the government Which of the following statements about Allison is CORRECT?

Options:

A.

Allison cannot be fired for misappropriating funds from her employer

B.

Allison cannot be fired for any reason

C.

Alison cannot be fired for informing the government of her employee’s fraud

D.

None of the above

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Exam Code: CFE-Law
Exam Name: Certified Fraud Examiner (CFE) - Law
Last Update: Apr 17, 2025
Questions: 158

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