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KYCAML Previous Year Questions & Exam-Pattern Practice (2026)

IIBF doesn't release official question papers. Practice these exam-pattern recall questions instead — modeled on the current KYCAML syllabus and difficulty, with answers and explanations.

15 hard practice questions Answers + explanations included

Why "previous year questions" don't officially exist for KYCAML

IIBF does not publish past question papers, and no verified bank of actual previous-year questions exists anywhere. Every question on this page is an exam-pattern practice question written to match the current KYC, AML and CFT syllabus and difficulty — it is not an actual exam question. That's the honest way to prepare for the recall-based pattern.

KYCAML subject

KYC, AML and CFT

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1

A non-profit trust with valid MHA/FCRA approval receives a single overseas donation of ₹12 lakh equivalent into its designated FCRA account. Which FIU report(s) apply, assuming no independent grounds of suspicion?

  1. A. Only CBWTR
  2. B. Only NTR
  3. C. Both CBWTR and NTR
  4. D. STR only — foreign donations to NPOs are inherently suspicious
Show answer & explanation

Correct answer: C. Both CBWTR and NTR

Correct: (C) Why correct: The chapter shows multiple reports can apply to one transaction. This is a cross-border wire transfer above ₹5 lakh (CBWTR) AND a receipt above ₹10 lakh in an NPO account (NTR). Both must be filed. Why others wrong: (A) misses the NPO-specific NTR; (B) misses the cross-border CBWTR; (D) FCRA-approved donations are legitimate — STR arises only on independent suspicion such as a watchlisted donor.

Study this chapter: Transaction Monitoring and Reporting
2

An AML analyst escalates a dormant account that suddenly receives multiple high-value RTGS credits remitted out within hours, with field verification showing the customer is not at the declared address. What is the correct next step?

  1. A. Close the alerts as false positives since RTGS is a regulated mode
  2. B. Freeze the funds and report directly to local police
  3. C. Document Grounds of Suspicion, send a proposition to the Principal Officer who decides on STR; do not restrict the account merely because of the STR
  4. D. File a CTR because the RTGS volumes are large
Show answer & explanation

Correct answer: C. Document Grounds of Suspicion, send a proposition to the Principal Officer who decides on STR; do not restrict the account merely because of the STR

Correct: (C) Why correct: The chapter says the analyst 'writes a proposition, recommending either filing of STR or non-filing, with full Grounds of Suspicion. The final filing decision rests only with the Principal Officer' and 'No restrictions are to be placed on operations in an account merely because an STR has been filed.' Why others wrong: (A) the pattern (dormancy + spurt + immediate outflow + address mismatch) is a textbook STR; (B) freezing/informing police unilaterally is beyond the bank's authority; (D) CTR is for cash, not RTGS.

Study this chapter: Transaction Monitoring and Reporting
3

A walk-in prospect makes detailed enquiries about cash-deposit limits and how to avoid reporting, then leaves without opening any account. Drawing on the Cobrapost precedent, what should the bank do?

  1. A. Nothing — no account exists so no transaction occurred
  2. B. Make only an internal note; FIU has no jurisdiction over non-customers
  3. C. File an STR under the 'attempted transaction' category
  4. D. File a CTR for the value mentioned in the enquiry
Show answer & explanation

Correct answer: C. File an STR under the 'attempted transaction' category

Correct: (C) Why correct: The chapter states PMLR 'explicitly requires reporting of attempted transactions' and 'walk-in inquiries that arouse suspicion should be filed as STR', citing the Cobrapost case where banks were penalised for not reporting attempted transactions. Why others wrong: (A) absence of an account does not extinguish the attempted-transaction obligation; (B) internal-note-only is exactly what got Cobrapost-era banks penalised; (D) no cash transaction occurred, so no CTR.

Study this chapter: Transaction Monitoring and Reporting
4

A branch officer, trying to be helpful, informs a customer that an STR has been filed against him. The customer promptly closes the account and disappears. What is the consequence under PMLA?

  1. A. None — STR filings are purely internal records
  2. B. The bank may be penalised under Section 13 PMLA and the tipping-off officials may face penal action
  3. C. The bank must file a corrective STR with an apology
  4. D. Only a civil defamation suit by the customer can follow
Show answer & explanation

Correct answer: B. The bank may be penalised under Section 13 PMLA and the tipping-off officials may face penal action

Correct: (B) Why correct: The chapter says 'there must be NO tipping off to the customer about an STR at any stage. This is a criminal offence under Section 13.' Tipping off attracts Section 13 penalty and penal action against officials. Why others wrong: (A) it is a statutory violation, not a minor lapse; (C) there is no concept of a 'corrective STR' for tipping off; (D) civil defamation is not the primary consequence — statutory penalty is.

Study this chapter: Transaction Monitoring and Reporting
5

Which combination of red flags is MOST distinctive of Trade-Based Money Laundering (TBML) as opposed to generic AML alerts?

  1. A. High-value cash deposits and frequent locker operations
  2. B. Repeated import/export of the same high-value item, vague goods description, and non-standard LC clauses
  3. C. Multiple ATM withdrawals immediately after inward RTGS
  4. D. A sudden high-value transaction in a new account
Show answer & explanation

Correct answer: B. Repeated import/export of the same high-value item, vague goods description, and non-standard LC clauses

Correct: (B) Why correct: The chapter's TBML rule-set lists 'repeated import and export of the same high-value item (round-tripping)', 'description of goods is vague', and 'LC contains unusual or non-standard clauses.' Why others wrong: (A) cash deposits/lockers are generic AML flags; (C) ATM-after-RTGS is a generic mule/fraud indicator; (D) new-account spurt is a generic alert, not trade-specific.

Study this chapter: Transaction Monitoring and Reporting
6

An AML system generates such a high volume of alerts that over 90% are routinely closed as false positives, exhausting analyst capacity. Which fine-tuning approach is MOST appropriate?

  1. A. Disable the high-volume rules entirely
  2. B. Whitelist genuine repeat-trigger accounts and use statistical threshold analysis on historical data against past STRs
  3. C. Cut the analyst headcount to match capacity
  4. D. Raise every threshold by 25% across the board
Show answer & explanation

Correct answer: B. Whitelist genuine repeat-trigger accounts and use statistical threshold analysis on historical data against past STRs

Correct: (B) Why correct: The chapter lists fine-tuning as white-listing recurring genuine accounts, rules management, and threshold setting via 'statistical analysis of historical transactions... comparing them against past STRs filed/not filed.' Why others wrong: (A) disabling rules creates false negatives; (C) cutting headcount worsens detection; (D) blanket threshold hikes increase false negatives — tuning must be data-driven, rule by rule.

Study this chapter: Transaction Monitoring and Reporting
7

At a single branch, eight current accounts share the same registered address, the same email ID, similar declared trade lines, and a common contact mobile that belongs to a third party who is himself a director in one entity, with funds funnelled into one account and RTGSed onward. Which typology does this MOST closely match?

  1. A. Money-mule typology
  2. B. Multiple shell entities / benami structure with smurfing
  3. C. Counterfeit currency typology
  4. D. Cross-border trade-based laundering
Show answer & explanation

Correct answer: B. Multiple shell entities / benami structure with smurfing

Correct: (B) Why correct: The chapter's 'Multiple Shell Entities' and 'Benami Entity' cases describe exactly this — 'common address and common email across multiple companies', funds 'funnelled into a single account, then transferred out', and a controller other than the nominal proprietor. Why others wrong: (A) mules are individuals, not networks of shell companies; (C) counterfeit currency is a physical-note typology; (D) TBML would involve trade documentation and forex flows — this pattern is inland.

Study this chapter: Transaction Monitoring and Reporting
8

A salaried individual's account receives over 5,700 small round-amount cheques (₹1,250, ₹2,000, ₹2,250 etc.) over 18 months, ~20% of which bounce, with cash withdrawn soon after credit and the holder untraceable at the declared address. Which typology BEST fits?

  1. A. Cyberattack / SWIFT heist
  2. B. Cross-border trade-based laundering
  3. C. Benami entity / Multi-Level Marketing (MLM) related activity
  4. D. Counterfeit currency operation
Show answer & explanation

Correct answer: C. Benami entity / Multi-Level Marketing (MLM) related activity

Correct: (C) Why correct: The chapter's 'Benami Entity / MLM' case has exactly this signature — 'very large number of small round-amount cheques (MLM signature)', '~20% bounced', 'cash withdrawal soon after deposit', and a benami proprietor untraceable at the address. Why others wrong: (A) SWIFT heists involve fraudulent SWIFT messages and cross-border movement; (B) TBML involves trade documentation and forex; (D) counterfeit currency involves physical notes.

Study this chapter: Transaction Monitoring and Reporting
9

Mr. X deposits Rs. 7 lakh cash in his personal savings account and the same month deposits Rs. 5 lakh cash in his proprietary firm M/s. XX, plus Rs. 4 lakh cash in M/s. XYZ, a partnership firm in which he is a partner. For integrally connected CTR aggregation, which combination is counted together?

  1. A. Only the savings account and proprietary firm M/s. XX deposits are clubbed (Rs. 12 lakh); the partnership deposit is separate
  2. B. Only the two firms' deposits are clubbed
  3. C. None are clubbed since they are in different accounts
  4. D. All three are clubbed because Mr. X is involved in each
Show answer & explanation

Correct answer: A. Only the savings account and proprietary firm M/s. XX deposits are clubbed (Rs. 12 lakh); the partnership deposit is separate

Correct: (A) Why correct: The chapter states transactions are clubbed where the customer acts in the same capacity — 'cash deposits in his proprietary firm M/s. XX should be clubbed with deposits in his savings account', but deposits in a firm where he is only a partner 'will not be counted together.' So savings + proprietary = Rs. 12 lakh (reportable); the partnership Rs. 4 lakh stands apart. Why others wrong: (D) wrongly clubs the partnership; (B) omits the savings account; (C) ignores that cross-account clubbing in the same capacity is required.

Study this chapter: Transaction Monitoring and Reporting
10

After an STR is filed on a customer's account, a junior officer suggests freezing the account and informing the customer to deter further laundering. As per the KYC Master Directions described in the chapter, what is the correct conduct?

  1. A. Do not restrict operations and do not tip off the customer; keep the STR confidential
  2. B. Restrict operations but the customer need not be told
  3. C. Inform the customer but allow operations to continue
  4. D. Freeze the account and inform the customer of the STR
Show answer & explanation

Correct answer: A. Do not restrict operations and do not tip off the customer; keep the STR confidential

Correct: (A) Why correct: The chapter states 'No restriction should be put on operations in the accounts for which STR has been filed' and 'There should be no tipping off to the customer regarding STR at any stage... The information about filing STR is to be kept confidential.' Why others wrong: (D), (B) and (C) all breach either the no-restriction rule or the no-tipping-off/confidentiality rule.

Study this chapter: Transaction Monitoring and Reporting
11

A walk-in customer enquires about a remittance arrangement, the staff become suspicious about the purpose, and the customer leaves without completing any transaction. No money moved at all. Based on the chapter, what is the correct AML treatment?

  1. A. It can be reported only if the intended amount exceeded Rs. 10 lakh
  2. B. It is reportable only as a CTR if cash was involved
  3. C. Nothing is reportable because no transaction occurred and no value was involved
  4. D. It should be reported as an STR, since attempted/abandoned transactions are reportable irrespective of value
Show answer & explanation

Correct answer: D. It should be reported as an STR, since attempted/abandoned transactions are reportable irrespective of value

Correct: (D) Why correct: The chapter states 'Abandoned/aborted transactions should be reported as STR, irrespective of their value' and that PML Rules require reporting 'even attempted transactions'; the Cobrapost episode is cited where banks were penalised for not reporting attempted transactions. For STR no monetary threshold applies. Why others wrong: (C) ignores attempted-transaction reporting; (A) imposes a non-existent threshold for STR; (B) CTR is a rule-based cash report, irrelevant where no transaction occurred.

Study this chapter: Transaction Monitoring and Reporting
12

A society registered under the Societies Registration Act, 1860 receives a single donation of Rs. 12 lakh in its account. The relationship manager is unsure which report applies. What is the correct reporting?

  1. A. No report, since donations to societies are exempt
  2. B. CTR only, since the receipt exceeds Rs. 10 lakh
  3. C. NTR, since the entity is an NPO and the receipt exceeds Rs. 10 lakh
  4. D. CBTR, since donations are treated as wire transfers
Show answer & explanation

Correct answer: C. NTR, since the entity is an NPO and the receipt exceeds Rs. 10 lakh

Correct: (C) Why correct: The chapter defines an NPO for NTR as an entity registered as a trust or society under the Societies Registration Act, 1860 (or similar) or a Section 8 company, and 'all individual receipts of more than Rs. 10 lakh in the accounts of Non-Profit Organisations are to be reported' as NTR. Why others wrong: (B) CTR is for cash transactions >Rs. 10 lakh, not all NPO receipts; (D) CBTR is only for cross-border wire transfers; (A) NPO receipts are specifically covered, not exempt.

Study this chapter: Transaction Monitoring and Reporting
13

While compiling a CTR, an analyst is reviewing a customer who in one month made several cash deposits of Rs. 40,000 and Rs. 45,000 each plus one deposit of Rs. 9 lakh. The analyst wants to know how the sub-Rs. 50,000 transactions should be handled. Which treatment is correct?

  1. A. They are ignored entirely for CTR purposes
  2. B. They are not reported individually, but must be counted to determine inclusion of integrally connected transactions and the aggregate cash receipt
  3. C. They convert the case into an STR automatically
  4. D. They must be reported individually in the CTR
Show answer & explanation

Correct answer: B. They are not reported individually, but must be counted to determine inclusion of integrally connected transactions and the aggregate cash receipt

Correct: (B) Why correct: The chapter explicitly states 'Individual transactions of less than Rs.50,000/- are not to be reported, but they must be counted for determining the inclusion of integrally connected transactions and in the aggregate cash receipt/payment.' Why others wrong: (D) contradicts the non-reporting of sub-50k items individually; (A) wrongly excludes them from aggregation; (C) suspicion is unrelated to this value mechanic.

Study this chapter: Transaction Monitoring and Reporting
14

A branch officer notices that a customer made three separate cash deposits of Rs. 4 lakh, Rs. 3.5 lakh and Rs. 3 lakh (all credits) into his accounts during the same calendar month. None of the single deposits crosses Rs. 10 lakh. How should this be treated for CTR reporting?

  1. A. Reportable as integrally connected transactions, as the same-nature cash transactions in the month aggregate to more than Rs. 10 lakh
  2. B. Reportable only if one of the deposits individually exceeds Rs. 10 lakh
  3. C. Reportable as an STR, not a CTR
  4. D. Not reportable, since no single transaction exceeds Rs. 10 lakh
Show answer & explanation

Correct answer: A. Reportable as integrally connected transactions, as the same-nature cash transactions in the month aggregate to more than Rs. 10 lakh

Correct: (A) Why correct: The chapter states CTRs must include 'integrally connected transactions with aggregate value exceeding Rs.10 lakh within a month' where the transactions are in cash, of the same nature (all credits here), in the same calendar month and done by the customer in the same capacity — here the total is Rs. 10.5 lakh, so it is reportable. Why others wrong: (D) ignores the integrally connected rule; (B) describes only the individual-transaction trigger, not aggregation; (C) STR is norm-based on suspicion, not on a value aggregation rule.

Study this chapter: Transaction Monitoring and Reporting
15

A bank receives a cross-border inward wire transfer equivalent to exactly ₹5.0 lakh into a customer's NRE account. The transaction is not otherwise suspicious. What is the CBWTR position?

  1. A. CBWTR is not required because the threshold is 'above ₹5 lakh' and ₹5.0 lakh is not above it
  2. B. CBWTR is required because cross-border transfers are reportable irrespective of value
  3. C. CBWTR is required only because it is an inward transfer
  4. D. An STR must be filed in place of CBWTR
Show answer & explanation

Correct answer: A. CBWTR is not required because the threshold is 'above ₹5 lakh' and ₹5.0 lakh is not above it

Correct: (A) Why correct: The chapter and summary table state CBWTR triggers on transfers 'of more than ₹5 lakh'. A transfer of exactly ₹5.0 lakh is at the threshold, not above it, so it is not reportable. Why others wrong: (B) CBWTR is a rule-based threshold report, not value-agnostic; (C) inward and outward are both covered, but only above ₹5 lakh; (D) STR is suspicion-based, and the question states no suspicion.

Study this chapter: Transaction Monitoring and Reporting

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