ACFE Certified Fraud Examiner (CFE) - Fraud Investigations and Legal Issues CFE-Fraud-Investigations-and-Legal-Issues Exam Dumps: Updated Questions & Answers (August 2026)

This question tests your knowledge of Domain 1.

In the context of Overview of the Legal System, specifically relating to criminal, adversarial, the question asks about TRUE, criminal proceedings and discovery in adversarial jurisdictions.

The correct answer is D: The judge is the primary driver of the discovery process in criminal proceedings..

This question relates to the legal system framework. Understanding the distinction between different legal systems and processes is crucial for fraud examiners. The correct answer accurately describes the relationship between different legal entities and their jurisdictions. In adversarial systems, opposing parties present their cases before a neutral judge or jury, while in inquisitorial systems, judges take a more active role in investigating cases.

This question tests your knowledge of Domain 4.

In the context of Securities Fraud, specifically relating to securities, IOSCO, the question asks about the International Organization of Securities Commissions (IOSCO) is TRUE, TRUE, IOSCO.

The correct answer is B: IOSCO is comprised of commissioners and administrators responsible for regulating securities and administering securities laws in their countries..

This question tests knowledge of securities fraud and regulation. The correct answer accurately describes the role of regulatory bodies, securities laws, or fraud schemes in this context. Securities fraud is a specialized area requiring knowledge of specific regulations and oversight mechanisms.

The correct answer is C. Structuring scheme. The CFE Manual explains that structuring occurs when a person breaks up money into smaller transactions specifically designed to avoid regulatory reporting requirements or internal financial-institution controls. It notes that many countries require reporting of currency transactions above a certain threshold, such as more than $10,000, and that a common red flag is a customer making many deposits just under the reporting threshold.

That is exactly what Tammy is doing. Her repeated deposits of $9,000 to $9,900 over several weeks strongly suggest that she is intentionally keeping each transaction below the reporting threshold to avoid government scrutiny. Option D, integration, refers to a later laundering phase in which illicit money is reintroduced into the economy as apparently legitimate funds. Options A and B do not match this conduct. In money laundering cases, fraud examiners are trained to identify transaction patterns that appear deliberately calibrated to evade mandatory reporting rules. Repeated cash deposits just below a legal threshold are one of the clearest examples. Therefore, Tammy is most likely engaged in a structuring scheme, making C the correct answer.

The CFE Prep – Investigations states:

“If a fraud examiner gets a verbal confession from the fraudster, it does not matter whether the fraudster claims his conduct was an accident. The following items of information should be obtained … admission that the accused knew the conduct was wrong, facts known only to the confessor, the accused’s motive, approximate dates, involvement of others, physical evidence, and disposition of illicit income.”

Thus, the examiner does not need a statement about accident.

“Even when a victim refers a fraud case for criminal prosecution, the government will usually not disclose the contents of nonpublic records with the victim during the investigation”.

Thus, option D is most accurate.

Covert operations must be carefully planned and documented because they involve legal, safety, financial, and reputational risks. The Fraud Examiners Manual states that before conducting a covert operation, the basis for the operation should be committed to writing, preferably in a memorandum. The memorandum should identify the information upon which the operation is based, the information expected to be gained, known suspects, and operatives under the examiner’s control. Option D is therefore directly supported. Option A is too broad because all known associates are not necessarily required. Option B may be useful in planning but is not the best statement of the memorandum’s required basis. Option C is vague and less directly tied to the manual’s listed documentation points.

The calibration (or norming) process in interviews is meant to establish a baseline of the subject’s normal verbal and nonverbal behavior. This is done by asking noncritical background questions so that later deviations can be more reliably identified.

From the CFE Prep guide:

“The proper way an interviewer should start the calibration (norming) of a witness is through the use of: Noncritical questions on background information. … Examples of noncritical questions include ‘When did you start with the company?’ and ‘How long is your commute?’”.

Thus, the correct answer is D. “How many jobs have you had before this one?” since it is a nonthreatening background question.

The CFE Prep Guide clarifies:

“A fraud response plan outlines the actions… when suspicions of fraud have arisen. Because every fraud is different, the response plan should not outline how a fraud examination should be conducted. Instead, response plans should help organizations manage their responses and create environments to minimize risk and maximize the potential for success”.

Thus, statement D is false.

Fraud examiners should write reports with the assumption that the report might be reviewed outside the immediate investigation team, including by legal counsel, opposing parties, regulators, owners, investors, or members of the media. Therefore, reports must be accurate, objective, professional, and free from unnecessary speculation. Option A is incorrect because a fraud examination report does not legally confirm liability; courts or other authorized decision-makers determine liability. Option B is too broad because fraud examiners should avoid improper opinions, especially opinions on guilt or innocence, although limited expert opinions or recommendations may sometimes be appropriate. Option C is unsafe because reports can be disclosed through litigation, regulatory processes, or internal distribution. Thus, option D is the best answer.

The 2014 International Fraud Examiners Manual states:

“The information contained on a wire transfer generally will include the following items:

• The amount of the transfer

• The date of the transfer

• The name of the sender or originator

• The routing number of the originating bank or financial institution.”

Therefore, the correct answer is C.

Under the ACFE Fraud Examiners Manual, Law Section, particularly The Civil Justice System and Individual Rights During Examinations , individuals have legally protected privacy interests that can give rise to civil liability when violated. One recognized invasion of privacy tort is intrusion upon seclusion, which occurs when someone intentionally intrudes, physically or otherwise, into another person’s private affairs without authorization and in a manner that would be highly offensive to a reasonable person.

In this scenario, Wilson searched Garcia’s private tablet without legitimate authority or investigative basis. Garcia had a reasonable expectation of privacy in her personal device, and there was no suspicion of wrongdoing to justify the intrusion. Because the wrongful act is the unauthorized access itself, Garcia would most likely assert a claim for intrusion into private matters.

Public disclosure of private facts requires dissemination of private information to third parties, which is not indicated here. Defamation requires a false statement communicated to others that harms reputation, which is also absent. Property damage would require physical harm to the tablet.

Therefore, the most appropriate civil claim is intrusion into an individual’s private matters, as the injury arises from the unauthorized invasion of Garcia’s privacy.

Phone records are classified as nonpublic records. The Fraud Examiners Manual explains that personal telephone and mobile records usually require consent, subpoena, or warrant to access. Public records, by contrast, include real property ownership and corporate filings. Therefore, B is correct.

A best practice when collecting and organizing documents is to establish a document database early in the investigation. A document database helps the examiner track what was collected, where it came from, who provided it, when it was obtained, and how it relates to issues in the case. It also supports indexing, retrieval, review, and later report preparation. Option A is poor practice because originals and working copies should be controlled carefully and not mixed in a way that risks alteration or loss. Option B may be useful for some documents, but chronological order alone is not sufficient. Option D is inefficient and not the best general practice. Therefore, establishing a document database early is the strongest answer.

 “As a general rule, questioning should proceed from the general to the specific; it is best to seek general information before details. A variation… is to begin with known information and work towards unknown areas”【9:2014 International Fraud Examiners Manual.pdf†L39-L51】.

 Random order is not recommended and breaks the logical flow.

Limitations of online public record searches include:

Need to search multiple jurisdictions.

Records are often only abstracts.

Information must be verified for accuracy.There is no mention that online record vendors are “difficult to find.” In fact, many such vendors exist.