Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

6. Internal Controls and Reporting Cash

Fraud and the Fraud Triangle

Financial Accounting

6. Internal Controls and Reporting Cash

Fraud and the Fraud Triangle

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Multiple Choice

Which aspect of a money services business (MSB) can increase its financial crime risk?

Frequent external audits

Strict regulatory compliance

Limited customer identification procedures

Lack of effective internal controls

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Verified step by step guidance

Understand the context of the question: A money services business (MSB) is a financial institution that provides services such as currency exchange, money transfers, and check cashing. These businesses are often at risk for financial crimes like money laundering if proper controls are not in place.

Analyze the options provided: Frequent external audits and strict regulatory compliance are measures that reduce financial crime risk. On the other hand, limited customer identification procedures and lack of effective internal controls can increase the risk.

Focus on the key concept: 'Lack of effective internal controls' refers to the absence of policies, procedures, and systems designed to detect and prevent financial crimes. This can lead to vulnerabilities in the MSB's operations.

Relate the concept to financial crime risk: Without effective internal controls, an MSB may fail to monitor transactions, identify suspicious activities, or comply with anti-money laundering (AML) regulations, thereby increasing its exposure to financial crime.

Conclude the reasoning: The correct answer is 'Lack of effective internal controls' because it directly contributes to an increased financial crime risk by creating gaps in oversight and compliance mechanisms.