Misconfigured smart contracts can allow which type of scam to occur?
Answer(s): C
Misconfigured or poorly designed smart contracts can enable rug pull scams, where developers create fraudulent decentralized finance (DeFi) projects or tokens and then withdraw liquidity or funds abruptly, leaving investors with worthless assets.Phishing (A) and SIM attacks (B) relate to social engineering and telecom fraud, respectively, and ransomware (D) is malware demanding payment. Rug pulls specifically exploit smart contract vulnerabilities.The DFSA and AML thematic reviews on crypto highlight rug pull scams as a key operational and financial crime risk linked to smart contract vulnerabilities.
Which advantage of the proof of work consensus algorithm is widely applicable in many cryptocurrencies and other blockchain systems?
Proof of Work (PoW) consensus achieves network consensus by requiring participants (miners) to solve complex cryptographic puzzles, which verifies transactions and secures the blockchain. This computational work makes it difficult and costly to alter the blockchain.Dependency on electricity (A) is a criticism rather than an advantage. PoW promotes decentralization rather than centralization (B). It provides strong security for large networks rather than small ones (D).This principle is fundamental in Bitcoin and many other cryptocurrencies and is frequently referenced in AML/CFT guidance to understand the transaction validation process and network security.
The lightning network is a payment protocol built on top of the Bitcoin blockchain that:
Answer(s): D
The Lightning Network is a second-layer payment protocol that enables off-chain transactions, allowing users to conduct fast, low-fee Bitcoin payments without recording every transaction directly on the Bitcoin blockchain. This improves scalability and reduces congestion.It does not inherently facilitate large payments to decentralized exchanges (A), bridging assets across blockchains (B), or guarantee zero transaction fees (C), though fees are significantly lower than on- chain transactions.The DFSA and FATF crypto guidance discuss such layer-2 solutions in the context of emerging technological risks and monitoring challenges.
What Is the purpose of applying learning (ML) or artificial Intelligence (Al) within a compliance framework? (Select two.)
Answer(s): B,D
Machine learning (ML) and artificial intelligence (AI) are applied within compliance frameworks to enhance the efficiency of monitoring and detection processes and to allow skilled compliance resources to focus on higher-value activities such as complex investigations and strategic decision- making. ML/AI tools can process vast amounts of transaction data to identify suspicious patterns faster than manual processes.They do not reduce the fundamental requirement for risk assessment (A) nor are they intended primarily to reduce headcount (C), but rather to optimize resource allocation.AML and DFSA guidance emphasize leveraging technology to improve the effectiveness and efficiency of AML controls while maintaining robust risk management.
What is the purpose of a security audit in reason to smart contracts?
The primary purpose of a security audit for smart contracts is to protect investors' funds by identifying vulnerabilities, coding errors, and weaknesses in the smart contract or underlying protocol that could be exploited. This proactive approach helps prevent hacks, exploits, and financial loss.While performance issues (B) may be noted, the critical concern is security. Identifying bad actors (C) is not within the scope of a code audit but is a broader operational issue. Copyright concerns (A) are unrelated.AML and crypto governance frameworks underline the importance of security audits to mitigate operational risks in DeFi and other smart contract-based applications.
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