ACAMS CAMS-FCI Online Practice Questions and Exam Preparation

ACAMS CAMS-FCI Online Questions & Answers

• Question 21:

  An analyst reviews an alert for high volume Automated Clearing House (ACH) activity in an account. The analyst's initial research finds the account is for a commercial daycare account that receives high volumes of large government-funded ACH transactions to support the programs. The account activity consists of checks (cheques) made payable to individual names in varying dollar amounts. One check indicates rent to another business.

  An Internet search finds that the daycare company owner has previous government-issued violations for safety and classroom size needs, such as not having enough chairs and tables per enrollee. These violations were issued to a different daycare name.

  Simultaneous to this investigation, another analyst sends an email about negative news articles referencing local child/adult daycare companies misusing governmental grants. This prompts the financial institution (Fl) to search all businesses for names containing daycare' or 'care1. Text searches return a number of facilities as customers at the Fl and detects that three of these businesses have a similar transaction flow of high volume government ACH funding with little to no daycare expenses.

  During the investigation, it was determined that some of the checks were issued to a mother-in-law of a PEP and deposited into her account with the Fl. This customer was not found on the Fl's PEP list How should the investigator proceed in

  this situation"? (Select Two.)

  A. Conduct the investigation as usual, since the activity in question is not directly connected to the PEP.
  B. Reter the newly identified customers account for closure due to the high risk associated with the potential PEP.
  C. Use this case as an example to train employees to recognize potential PEPs during their investigation process.
  D. Send a referral to Sanctions/List Screening, or similar department/responsible individual, to ensure that the customer due diligence information is up to date.
  E. File a SAR/STR due to the potential involvement of a PEP.
  A. Conduct the investigation as usual, since the activity in question is not directly connected to the PEP.
  D. Send a referral to Sanctions/List Screening, or similar department/responsible individual, to ensure that the customer due diligence information is up to date.

  ---

  Explanation/Reference:

  The investigator should proceed in this situation by conducting the investigation as usual, since the activity in question is not directly connected to the PEP (A) and sending a referral to Sanctions/List Screening, or similar department/

  responsible individual, to ensure that the customer due diligence information is up to date (D). These actions are appropriate and prudent, as they allow the investigator to continue their analysis of the suspicious activity without being biased

  by the potential PEP status of the customer's relative, and they ensure that the FI has accurate and current information about its customers and their associates. According to the ACAMS Advanced Financial Crimes Investigations Certification

  Study Guide1, "the FI should conduct enhanced due diligence on all parties involved in the investigation, including checking various sources of information, such as watch lists, sanctions lists, negative news, and official registries" (p.

  24). The FI should also "update the customer profile with any new information obtained during the investigation" (p. 25).

  The other options are not correct. The investigator should not refer the newly identified customer's account for closure due to the high risk associated with the potential PEP (B), as this could be premature or disproportionate, as well as

  potentially discriminatory or illegal. The investigator should not file a SAR/STR due to the potential involvement of a PEP (E), as this could also be premature or unnecessary, as well as potentially misleading or inaccurate. The investigator

  should not use this case as an example to train employees to recognize potential PEPs during their investigation process ? as this could violate confidentiality or data protection laws, as well as compromise the investigation or alert the

  customer or their relative of the suspicion.

  References: 1: ACAMS Advanced Financial Crimes Investigations Certification Study Guide, available at ACAMS

• Question 22:

  Which main vulnerability has led to an increase in the ransomware attacks perpetuated on small businesses?

  A. Ability to pay larger ransoms
  B. Weaker cybersecurity controls
  C. Tendency not to contact law enforcement
  D. Inability to recover the encrypted information
  B. Weaker cybersecurity controls

  ---

  Explanation/Reference:

  Weaker cybersecurity controls are a main vulnerability that has led to an increase in ransomware attacks on small businesses, as they make them easier targets for cybercriminals who can exploit their systems and demand payment for restoring access to their data. The other options are not relevant to the vulnerability, as they relate to the consequences or responses of the victims.

• Question 23:

  Why is a more robust supervisory approach needed by regulators when overseeing small- and medium-sized money service businesses (MSBs) compared to larger MSBs for combatting terrorist financing (TF)?

  A. Small- and medium-sized MSBs need to be targeted to ensure that competition in the industry remains constant and uniform.
  B. Small- and medium-sized MSBs need to be robustly supervised so the regulator can maintain visibility in combatting TF.
  C. Small- and medium-sized MSBs are more likely to falsify records to appear less risky in order to keep the banking relationship.
  D. Small- and medium-sized MSBs are more at risk of allowing transactions linked to TF due to the lack of skilled compliance resources.
  D. Small- and medium-sized MSBs are more at risk of allowing transactions linked to TF due to the lack of skilled compliance resources.

  ---

  Explanation/Reference:

  A more robust supervisory approach is needed by regulators when overseeing small- and medium-sized MSBs compared to larger MSBs for combatting TF because small- and medium-sized MSBs are more at risk of allowing transactions

  linked to TF due to the lack of skilled compliance resources. Small- and medium-sized MSBs may face challenges in implementing effective AML/CFT controls, such as conducting risk assessments, applying customer due diligence

  measures, monitoring transactions, detecting suspicious activities, and reporting to the authorities. They may also have limited access to training, guidance, and tools to enhance their compliance capabilities. Therefore, regulators need to

  provide more supervision and support to small- and medium-sized MSBs to ensure that they comply with the AML/CFT requirements and mitigate the TF risks.

  References:

  Sustainable Growth for Small and Medium-Sized Enterprises ... - MDPI Lessons on Resilience for Small and Midsize Businesses - HBR

• Question 24:

  A SAR/STR on cash activity is filed for a company registered in the Marshall Islands operating a Mediterranean beach bar and hotel. The company has three nominee directors, one nominee shareholder, and another individual declared as both the beneficial owner and authorized signatory. Which information is key for law enforcement's physical surveillance of cash activity? (Select Two.)

  A. The identification details o' the nominee shareholder
  B. The company's operating address
  C. The identification details of the beneficial owner and authorized signatory
  D. The company's registered address
  E. The identification details the nominee directors
  B. The company's operating address
  C. The identification details of the beneficial owner and authorized signatory

  ---

  Explanation/Reference:

  The identification details of the beneficial owner and authorized signatory are key for law enforcement's physical surveillance of cash activity, as they would help identify the person who controls and operates the company and who is responsible for its financial transactions. The company's operating address is also key, as it would help locate the premises where the cash activity takes place and observe any suspicious movements or behaviors. The identification details of the nominee shareholder and directors are not relevant, as they are not involved in the management or operation of the company. The company's registered address is also not relevant, as it is likely to be a shell or mailbox address that does not reflect the actual location of the business. References: Advanced CAMS-FCI Study Guide, page 44-45; [FATF Guidance on Transparency and Beneficial Ownership], page 12-13.

• Question 25:

  Which actions should financial institutions perform to ensure proper data governance? (Select Three.)

  A. Establish an appropriate data management method for collecting and storing information.
  B. Ensure the accuracy of customer identification records and transaction records and appropriately manage data as a prerequisite for the effective use of IT systems.
  C. For customers who are determined to be at high risk, review their risk rating and apply risk mitigation measures as appropriate.
  D. Periodically validate integrity and accuracy of information used for IT systems such as customer information, customer identification records, and transaction records.
  E. Evaluate the nature of foreign remittance under a risk-based structure of AML/CFT and take necessary measures in accordance with the risk-based approach.
  F. Review significant discrepancies between the values of the product reported on the invoice and the fair market value.
  A. Establish an appropriate data management method for collecting and storing information.
  B. Ensure the accuracy of customer identification records and transaction records and appropriately manage data as a prerequisite for the effective use of IT systems.
  D. Periodically validate integrity and accuracy of information used for IT systems such as customer information, customer identification records, and transaction records.

  ---

  Explanation/Reference:

  Financial institutions should perform the following actions to ensure proper data governance:

  Establish an appropriate data management method for collecting and storing information. This is important to ensure that the data is consistent, reliable, and accessible for various purposes, such as risk assessment, compliance reporting,

  and customer service. Data management methods may include defining data standards, policies, and procedures; implementing data quality controls and validation checks; and using appropriate data storage systems and formats.

  Ensure the accuracy of customer identification records and transaction records and appropriately manage data as a prerequisite for the effective use of IT systems. This is important to comply with the anti-money laundering and counter-

  terrorist financing (AML/CFT) requirements, such as customer due diligence, transaction monitoring, and suspicious activity reporting. Accurate and complete customer and transaction data also enables financial institutions to use IT systems

  more effectively for data analysis, risk management, and decision making.

  Periodically validate integrity and accuracy of information used for IT systems such as customer information, customer identification records, and transaction records. This is important to ensure that the data remains up-to-date, relevant, and

  reliable over time. Data validation may include verifying the source and quality of the data; identifying and correcting any errors or inconsistencies; and updating or deleting any obsolete or redundant data.

  References:

  Data Governance for Financial Institutions - Capgemini Small and Medium-Sized Deposit-Taking Institutions (SMSBs) Capital and Liquidity Requirements - OSFI

• Question 26:

  The law enforcement agency (LEA) of a foreign jurisdiction contacts a financial institution (Fl) regarding one of the Fl's clients. The LEA advises that the client is currently wanted for prosecution as a result of a series of human trafficking charges. What should the Fl do? (Select Two.)

  A. Review the client's activity, determine if suspicious activity exists, and report accordingly.
  B. Advise the LEA that the government needs to be contacted for extradition.
  C. Comply immediately with the foreign jurisdiction and turn over all client information.
  D. Inform local LEA and regulator of the request for awareness.
  E. Close the clients accounts immediately to avoid any undue risk.
  A. Review the client's activity, determine if suspicious activity exists, and report accordingly.
  D. Inform local LEA and regulator of the request for awareness.

  ---

  Explanation/Reference:

  According to the Certified Anti-Money Laundering Specialist (the 6th edition), the financial institution (Fl) should take the following actions:

  A. Review the client's activity, determine if suspicious activity exists, and report accordingly. The Fl should assess the risk of the situation and determine if there is any suspicious activity that needs to be reported to the appropriate authorities. This would involve conducting a review of the client's account activity and transactions to determine if there are any indicators of money laundering or terrorist financing. D. Inform local LEA and regulator of the request for awareness. The Fl should inform the local law enforcement agency and regulator of the request from the foreign jurisdiction to raise awareness of the situation and determine if any further actions need to be taken.

• Question 27:

  A bank investigator notices an account receiving multiple deposits from the same employer under different employees' names. A cash withdrawal occurs one day after each deposit. The outcome of this investigation will likely uncover which crime typology?

  A. Human trafficking
  B. Environmental
  C. Trade-based money laundering
  D. Bribery and corruption
  D. Bribery and corruption

  ---

  Explanation/Reference:

  The correct answer is A because this scenario describes a possible case of human trafficking, which is a crime where people are exploited for labor or sexual services against their will. Human traffickers may use bank accounts to launder their proceeds and pay their victims, and they may use fake or stolen identities to avoid detection. The other options are not likely because they do not explain why multiple deposits from the same employer under different employees' names would occur, nor why cash withdrawals would follow each deposit. References: : Human Trafficking, : Human Trafficking Red Flags

• Question 28:

  Each month the automated transaction monitoring system generates alerts based on predetermined scenarios. An alert was generated in relation to the account activity of ABC Foundation. Below is the transaction history for ABC Foundation (dates are in DD/MM/YYYY format).

  

  The relationship manager for ABC Foundation contacts the client to request more information on the beneficiary of the transfer in Turkey. ABC Foundation advises that this is a not-for-profit charity group called 'Forever Free." Which is the best next step in the investigation?

  A. Contact the financial institution in Turkey that has a relationship with Forever Free and advise them of the investigation.
  B. Update the customer profile to include Forever Free as the recipient of the funds.
  C. Check the junsdiction's list of known chanties with connections to terrorist activity.
  D. File a SAR/STR with the new information learned about the beneficiary.
  C. Check the junsdiction's list of known chanties with connections to terrorist activity.

  ---

  Explanation/Reference:

  The best next step in the investigation is to check the jurisdiction's list of known charities with connections to terrorist activity ? This is because the FI has a responsibility to verify the legitimacy and reputation of the beneficiary of the funds, especially if it is a charity or non-profit organization that operates in a high-risk jurisdiction or sector. According to the ACAMS Advanced Financial Crimes Investigations Certification Study Guide1, "the FI should conduct enhanced due diligence on all parties involved in the investigation, including checking various sources of information, such as watch lists, sanctions lists, negative news, and official registries" (p. 24). The FI should also check if the beneficiary is consistent with the customer's profile and expected activity.

  The other options are not as appropriate or effective as option C. Contacting the financial institution in Turkey that has a relationship with Forever Free and advising them of the investigation (A) could violate confidentiality or data protection laws, as well as compromise the investigation or alert the customer or beneficiary of the suspicion. Updating the customer profile to include Forever Free as the recipient of the funds (B) could be premature or inaccurate, as it does not verify the nature and purpose of the transfer or the identity and legitimacy of the beneficiary. Filing a SAR/STR with the new information learned about the beneficiary (D) could also be premature or incomplete, as it does not confirm if there is any suspicious or criminal activity involved in the transfer or if there are any other red flags or indicators.

• Question 29:

  CLIENT INFORMATION FORM Client Name: ABC Tech Corp Client ID. Number: 08125 Name: ABC Tech Corp Registered Address: Mumbai, India Work Address: Mumbai, India Cell Phone: "*?quot;"; Alt Phone:";"";* Email: .......";

  Client Profile Information:

  Sector: Financial

  Engaged in business from (date): 02 Jan 2020 Sub-sector: Software-Cryptocurrency Exchange Expected Annual Transaction Amount: 125,000 USD Payment Nature: Transfer received from clients' fund

  Received from: Clients

  Received for: Sale of digital assets

  The client identified itself as Xryptocurrency Exchange." The client has submitted the limited liability partnership deed. However, the bank's auditing team is unable to identify the client's exact business profile as the cryptocurrency exchange specified by the client as their major business awaits clearance from the country's regulator. The client has submitted documents/communications exchanged with the regulator and has cited the lack of governing laws in the country of their operation as the reason for the delay.

  During the financial crime investigation, the investigator discovers that some of the customer due diligence (CDD) documents submitted by the client were fraudulent. The investigator also finds that some of the information in the financial institution's information depository is false. What should the financial crime investigator do next?

  A. Report collusion between the cryptocurrency exchange and internal staff in the internal hotline or whistle-blowing channel.
  B. Request that the relationship manager conduct a CDD refresh as it is a material trigger.
  C. Escalate to the compliance officer/money laundering reporting officer to file a SAR/STR.
  D. Contact the client directly and obtain the relevant notarized documents and information.
  C. Escalate to the compliance officer/money laundering reporting officer to file a SAR/STR.

  ---

  Explanation/Reference:

  The correct answer is C. Escalate to the compliance officer/money laundering reporting officer to file a SAR/STR. This is because the financial crime investigator has found evidence of fraudulent documents and false information, which indicate a high risk of money laundering or other financial crimes. The investigator should not contact the client directly, as this may tip them off or compromise the investigation. The investigator should also not report collusion between the cryptocurrency exchange and internal staff, as this is an assumption that has not been verified. The investigator should not request a CDD refresh, as this is not sufficient to address the serious issues identified. References: Advanced CAMS-FCI Study Guide, page 291 Advanced CAMS-FCI Study Guide, page 311 Advanced CAMS-FCI Study Guide, page 331

  1: https://www.acams.org/en/certifications/advanced-cams/advanced-financial-crimes- investigations

• Question 30:

  An analyst reviews an alert for high volume Automated Clearing House (ACH) activity in an account. The analyst's initial research finds the account is for a commercial daycare account that receives high volumes of large government-funded ACH transactions to support the programs. The account activity consists of checks (cheques) made payable to individual names in varying dollar amounts. One check indicates rent to another business.

  An Internet search finds that the daycare company owner has previous government-issued violations for safety and classroom size needs, such as not having enough chairs and tables per enrollee. These violations were issued to a different daycare name.

  Simultaneous to this investigation, another analyst sends an email about negative news articles referencing local child/adult daycare companies misusing governmental grants. This prompts the financial institution (Fl) to search all businesses for names containing daycare' or "care*. Text searches return a number of facilities as customers at the Fl and detects that three of these businesses have a similar transaction flow of high volume government ACH funding with little to no daycare expenses.

  During the investigation, new suspicious patterns and trends related to check cashing are observed. The Fl decides to conduct a training to ensure that 1) the AML program is robust and 2) the training program is relevant and appropriate. Which parties should be trained on emerging trends and red flags? (Select Two.)

  A. Financial crimes investigation unit
  B. Loan department
  C. Branch personnel
  D. Senior management
  E. The board of directors
  A. Financial crimes investigation unit
  C. Branch personnel

  ---

  Explanation/Reference:

  The parties that should be trained on emerging trends and red flags are the financial crimes investigation unit (A) and the branch personnel ? These parties are directly involved in detecting, investigating, and reporting suspicious activity related to check cashing or other types of fraud or money laundering. According to the ACAMS Advanced Financial Crimes Investigations Certification Study Guide1, "the FI should provide regular and relevant training to its staff on the AML program, policies, procedures, and systems, as well as on the latest typologies, indicators, and best practices for financial crimes investigations" (p. 36). The FI should also "ensure that the training is tailored to the specific roles and responsibilities of the staff, and that it is updated and evaluated periodically" (p. 36).

  The other parties are not as relevant or appropriate as options A and C. The loan department (B) is not directly related to check cashing or other types of fraud or money laundering, although it may have some exposure to credit or identity fraud. The senior management (D) is responsible for overseeing and supporting the AML program, but not for conducting or supervising financial crimes investigations. The board of directors (E) is responsible for approving and reviewing the AML program, but not for implementing or monitoring it.

  References: 1: ACAMS Advanced Financial Crimes Investigations Certification Study Guide, available at ACAMS