CFE – Law — Question 12

Which of the following is a red flag that an entity is operating a security business without the proper license or registration?

Answer options

• A. There is an unexplained absence of customer complaints against the entity.
• B. The entity's website contains detailed background information.
• C. The agents working at the entity have criminal records.
• D. There are justified gaps in the work history of promoters at the entity.

Correct answer: D

Explanation

Option D is correct because justified gaps in the work history of promoters can indicate a lack of legitimate experience or credibility, raising concerns about the entity's legitimacy. Options A and B suggest positive attributes that typically do not hint at unlicensed operations, while option C might indicate potential issues but does not directly relate to licensing or registration.