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Exam Review

Key Facts: ICA KYC & CDD Exam

25 Q

Exam Questions

ICA Exam Syllabus

60 min

Time Limit

ICA Exam Guidelines

70%

Pass Mark

ICA Qualification Rules

The ICA Certificate in KYC and CDD is a 25 MCQ / 60-minute online exam testing practical KYC legal rules, identity verification, UBO ownership thresholds, high-risk customer EDD, and transaction monitoring.

Sample ICA KYC & CDD Practice Questions

Try these sample questions to review concepts for the ICA KYC & CDD exam. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1What is the primary statutory objective of the UK Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017)?

A.To require relevant persons to implement risk-based policies and procedures to prevent financial services from being used for money laundering and terrorist financing

B.To criminalize all failure to pay personal income tax across financial institutions

C.To mandate that all commercial bank accounts require dual signature authorization for daily transfers

D.To replace the Proceeds of Crime Act 2002 with a single administrative fine framework

Explanation: The MLR 2017 transposed EU Fifth Money Laundering Directive standards into UK law, setting out mandatory requirements for relevant persons (such as banks, legal firms, and estate agents) to establish risk assessments, customer due diligence, and internal controls to prevent money laundering and terrorist financing.

2In money laundering terminology, which stage involves introducing illicitly derived cash proceeds into the legitimate financial system?

A.Layering

B.Placement

C.Integration

D.Smurfing

Explanation: Placement is the initial stage of money laundering where physical cash derived from illegal activity is first injected into the financial system, such as through small bank deposits or purchasing cash-intensive business assets.

3Under Section 330 of the Proceeds of Crime Act 2002 (POCA), an employee in the regulated sector commits an offence if they fail to disclose knowledge or suspicion of money laundering. What additional state of mind satisfies this offence?

A.Reasonable grounds to know or suspect

B.Gross negligence without any grounds of suspicion

C.Malicious intent to harm the firm

D.Strict liability regardless of any knowledge or suspicion

Explanation: Section 330 of POCA creates an objective test: an offence is committed if a person knows, suspects, or has 'reasonable grounds to know or suspect' that another person is engaged in money laundering, and fails to report it to the Nominated Officer/MLRO.

4Which scenario constitutes an illegal 'tipping off' offence under Section 333A of POCA 2002?

A.Disclosing to a customer that a Suspicious Activity Report (SAR) has been submitted about their account, which is likely to prejudice an investigation

B.A compliance officer sharing SAR information with an internal MLRO

C.Sharing information between two financial institutions within the same corporate group for AML compliance

D.Reporting suspected money laundering to the UK National Crime Agency (NCA)

Explanation: Section 333A of POCA makes it an offence to disclose that a SAR has been made (or that an AML investigation is being contemplated/conducted) if that disclosure is likely to prejudice an investigation.

5What is the primary statutory responsibility of a Money Laundering Reporting Officer (MLRO) under UK AML regulations?

A.To receive internal suspicious activity disclosures, evaluate them, and decide whether to submit external SARs to the National Crime Agency

B.To personally audit all retail banking customer tax returns annually

C.To manage front-line sales teams and approve credit card limit increases

D.To represent customers in court against regulatory enforcement actions

Explanation: The MLRO (or Nominated Officer) acts as the central focal point within a regulated firm for receiving internal money laundering reports, evaluating reasonable grounds for suspicion, and submitting external SARs to the UK NCA.

6In the 'Three Lines of Defence' governance model for AML risk, which business function represents the First Line of Defence?

A.Business operations and front-line customer onboarding staff

B.The Compliance and AML Specialist team

C.The Independent Internal Audit department

D.The Financial Conduct Authority (FCA) supervisory team

Explanation: Front-line operational units, sales teams, and customer onboarding staff who interact directly with customers constitute the First Line of Defence, responsible for directly executing CDD and identifying red flags.

7What is the core principle of the Risk-Based Approach (RBA) under FATF standards and MLR 2017?

A.Firms must allocate AML resources dynamically, applying enhanced measures to high-risk areas and simplified measures to low-risk areas

B.Firms must apply identical, rigid verification requirements to every customer regardless of profile

C.Firms must refuse service to all customers originating outside their domestic jurisdiction

D.Firms must eliminate 100% of financial crime risk with zero tolerance for operational errors

Explanation: The Risk-Based Approach requires firms to assess their specific risks and deploy controls proportionally, applying enhanced due diligence to higher risk scenarios while streamlining controls for lower risk situations.

8What is the legal status of the Joint Money Laundering Steering Group (JMLSG) Guidance notes in UK court proceedings under Regulation 86 of MLR 2017?

A.A court must consider whether a firm complied with relevant JMLSG guidance when deciding if the firm breached MLR 2017 or POCA requirements

B.JMLSG Guidance is strictly primary legislation passed by Parliament

C.JMLSG Guidance has no legal standing and cannot be cited in judicial reviews

D.Compliance with JMLSG Guidance grants total immunity from criminal prosecution under all statutes

Explanation: Under Regulation 86 of MLR 2017 and POCA Section 330(8), UK courts are required to take into account whether a person or firm followed approved industry guidance (such as JMLSG) when determining if an offence or breach occurred.

9Under Section 327 of POCA 2002, which of the following acts regarding criminal property constitutes a principal money laundering offence?

A.Concealing, disguising, converting, transferring, or removing criminal property from the UK

B.Failing to submit an annual compliance audit report to the FCA

C.Accidentally opening an account with an incomplete address proof

D.Paying interest to a customer whose account has been frozen by a civil court

Explanation: Section 327 POCA defines the offence of concealing, disguising, converting, transferring, or removing criminal property from England and Wales, Scotland, or Northern Ireland.

10Section 328 of POCA 2002 deals with 'entering into or becoming concerned in an arrangement'. What is necessary to establish this offence?

A.Knowing or suspecting that the arrangement facilitates the acquisition, retention, use, or control of criminal property by or on behalf of another person

B.Proving that the defendant personally profited by over £100,000

C.Demonstrating that the predicate crime occurred within UK territorial waters

D.Showing that the arrangement was conducted entirely in physical cash

Explanation: Section 328 criminalizes entering into or becoming concerned in an arrangement which the person knows or suspects facilitates the acquisition, retention, use, or control of criminal property by or on behalf of another person.

About the ICA KYC & CDD Exam

The ICA Certificate in KYC and CDD is an internationally recognized qualification covering essential anti-money laundering (AML) and Customer Due Diligence (CDD) principles, verification standards, complex corporate structure unravelling, Politically Exposed Persons (PEP) management, and risk-based ongoing monitoring.

Exam sponsor: International Compliance Association (ICA). The requirements and fees below concern the certification or admission exam, separate from our free practice resources.

Assessment

25 multiple-choice questions testing KYC legal framework, CDD verification, beneficial ownership discovery, EDD, PEP screening, and ongoing monitoring.

Time Limit

1 hour (60 minutes)

Passing Score

70% (18 out of 25 marks)

Exam / Certification Fees

£765

Exam sponsor website

Reported exam pass rate: Approx. 75-80%. Based on historical ICA candidate pass statistics. This describes exam candidates, not OpenExamPrep users or results from using our resources. Exam sponsor website

Fees, eligibility, and exam policies can change. Confirm them with the exam sponsor before applying or paying.

Official sources

ICA Certificate in KYC and CDD Course Overview

Our practice resources: topics covered

We aim to reflect publicly available exam outlines and topic information in our study resources. Coverage, format, and difficulty may differ from the actual exam, and we cannot guarantee that every detail is accurate or current. Confirm exam requirements, fees, and policies with the official exam sponsor.

20%

KYC Principles & Legal Requirements

UK Money Laundering Regulations 2017, Proceeds of Crime Act 2002, FATF standards, MLRO duties, and tipping-off offences.

25%

Customer Due Diligence (CDD) Identification & Verification

Standard vs simplified CDD, natural person IDV, legal entity verification, corporate registries, and digital identity.

20%

Ultimate Beneficial Ownership (UBO) Discovery

25% ownership/control threshold calculations, multi-layered holding companies, trusts, foundation controls, and PSC registers.

20%

Enhanced Due Diligence (EDD) & PEP Screening

High-risk customer indicators, foreign & domestic PEPs, Relatives & Close Associates (RCAs), Source of Wealth vs Source of Funds, and sanctions compliance.

15%

Ongoing Monitoring & Record Keeping

Rule-based and behavioral transaction monitoring, periodic review cycles, trigger events, 5-year retention rules, and SAR reporting.

Preparing for the ICA KYC & CDD Exam

What You Need to Know

Passing score: 70% (18 out of 25 marks)
Assessment: 25 multiple-choice questions testing KYC legal framework, CDD verification, beneficial ownership discovery, EDD, PEP screening, and ongoing monitoring.
Time limit: 1 hour (60 minutes)
Exam / certification fees: £765 Official sources

Using Our Practice Resources

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ICA KYC & CDD: Suggested Study Strategy

1Understand the key distinctions between Simplified Due Diligence (SDD), Standard CDD, and Enhanced Due Diligence (EDD).

2Master calculating effective beneficial ownership across multi-tiered corporate structures (e.g., Parent Company owning 60% of Subsidiary, which owns 50% of Target Company = 30% effective ownership).

3Memorize the legal obligations under the UK Money Laundering Regulations 2017 and Proceeds of Crime Act 2002 regarding MLRO reporting and tipping off.

Frequently Asked Questions

What is the pass mark for the ICA Certificate in KYC and CDD?

The pass mark is 70% (18 out of 25 questions correct).

How long is the ICA KYC and CDD exam?

The exam is 1 hour (60 minutes) long and consists of 25 multiple-choice questions.

What are the core topics covered in the exam?

The exam covers KYC legal framework, Customer Due Diligence (CDD), Ultimate Beneficial Ownership (UBO) calculation, Enhanced Due Diligence (EDD) & PEP screening, and Ongoing Monitoring & Record Keeping.

What is the UBO threshold under UK MLR 2017?

Under the UK Money Laundering Regulations 2017, an Ultimate Beneficial Owner (UBO) is generally any individual who ultimately owns or controls more than 25% of the shares or voting rights in a corporate entity.