ACAMS CAMS-FCI Online Practice Questions and Exam Preparation

ACAMS CAMS-FCI Online Questions & Answers

• Question 71:

  SAR/STR NARRATIVE

  A SAR/STR has been submitted on five transactions conducted on the correspondent banking relationship with ABC Bank.

  Client Information:

  Remitter information: DEF Oil Resource Ltd. is the oldest member of the DEF Group. It was founded in 1977 as a general trading business with a primary focus on exports from Africa and North America. The group has business activities that span the entire energy value chain. Their core field of endeavor is centered within the oil and gas industry and its associated sub-sectors.

  Beneficiary Information: As per the response received from ABC Bank, it was determined that the beneficiaries are related to DEF Oil Resource Ltd. These were created by DEF Oil Resource Ltd. to purchase property in a foreign country on behalf of their senior management as part of a bonus scheme. The purpose behind this payment was for the purchase of property in another country.

  Payment Reference:

  ABCXXXXX31PZFG2H

  ABCXXXXXX51PQGEH

  ABCXXXXXX214QWVG

  ABCXXXXXX41PSXA2

  ABCXXXXXX815QWS3

  Concerns:

  1.

  We are unsure about the country of incorporation of the beneficiaries.

  2.

  We are concerned about the transactional activity since the payment made towards entities (conducted on behalf of individuals) appears to be possible tax evasion.

  3.

  There appears to be an attempt to conceal the identity of individuals (senior management), which again raises concerns about the source of funds.

  4.

  Referring to the response received from ABC Bank, we are unclear about the ultimate beneficiary of funds.

  5.

  The remitter is involved in a high-risk business, (i.e., oil and crude products trading), and the beneficiary is involved in real estate business which again poses a higher risk.

  While reviewing the account activity, it is noted that several transfers are sent to a company located in an offshore jurisdiction. Which step should the investigator take next?

  A. Request information from the company.
  B. File a SAR/STR to the FIU where the company is located.
  C. Request information about the beneficiaries related to the company.
  D. Conduct an open-source search to determine the ownership and registration of the company.
  C. Request information about the beneficiaries related to the company.

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  Explanation/Reference:

  The best step for the investigator to take next is to request information about the beneficiaries related to the company. This will help to identify the ultimate beneficial owners of the funds and the purpose of the transactions. Requesting

  information from the company or filing a SAR/STR to the FIU where the company is located may not be feasible or effective, as the company may not cooperate or the FIU may not have jurisdiction over the offshore entity. Conducting an

  open-source search may provide some information about the ownership and registration of the company, but it may not be sufficient or reliable to determine the nature and legitimacy of the transactions.

  References:

  SAR Narrative Guidance Package

  Best Practices for Drafting an STR or SAR

• Question 72:

  The training department is conducting awareness training for unusual customer identification scenarios. Which two indicators should be included? (Select Two.)

  A. The customer opens the account in the name of a family member who begins making large deposits.
  B. The customer's name and home address cannot be verified
  C. The customer's internet protocol address does not match the identifying information provided during online registration.
  D. The customer requests payment of proceeds to an unrelated third party.
  E. The customer frequently exchanges small bills for large bills.
  A. The customer opens the account in the name of a family member who begins making large deposits.
  B. The customer's name and home address cannot be verified

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  Explanation/Reference:

  This information can be found in the Certified Anti-Money Laundering Specialist (CAMS) study guide, 6th edition, under the section on Unusual Customer Identification Scenarios. The guide explains that two indicators that should be included in awareness training for unusual customer identification scenarios are:

  A. The customer opens the account in the name of a family member who begins making large deposits.

  This is an indicator of potential structuring, where a customer may be attempting to avoid triggering reporting thresholds by depositing funds in smaller amounts over time. It is important for staff to be aware of this scenario and to monitor

  accounts for potential suspicious activity.

  B. The customer's name and home address cannot be verified. This is an indicator of potential identity theft or other fraudulent activity. If a customer's identifying information cannot be verified, it is important for staff to conduct additional due

  diligence to ensure that the customer is legitimate and that the account is not being used for illicit purposes.

• Question 73:

  A compliance analyst is reviewing the account activity of a customer that they suspect may be indicative of money laundering activity. Which is difficult to determine solely from the customer's account activity and KYC file?

  A. If the activity is materially different from related businesses
  B. If the account has multiple transfers to the same, related businesses
  C. If there is negative media associated with counterparties
  D. If the account is mostly dormant or has little activity
  C. If there is negative media associated with counterparties

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  Explanation/Reference:

  According to the Certified Anti-Money Laundering Specialist (CAMS) study guide, 6th edition, page 105, the correct answer is C. It can be difficult to determine if there is negative media associated with counterparties solely from the

  customer's account activity and KYC file.

  The study guide explains that negative media can include news articles, government sanctions lists, and other sources of public information that may indicate that a counterparty is involved in illicit activities. However, this information may not

  be readily available in a customer's account activity or KYC file, and may require additional research or investigation.

• Question 74:

  A client with many personal and business deposits with the financial institution (Fl) seeks a business loan. The client wants to guarantee the loan with a trust for which they are the beneficiary.

  An investigator examines the trust. The trust has many layers, including shell companies in known tax havens. The client's ultimate beneficial ownership claim cannot be validated, and the loan is denied.

  Two months later, the Fl receives a law enforcement (LE) request on one of the client's business accounts. While reviewing the business account, the Fl receives another LE request on the same account from another agency. The requested

  information is shared.

  Three months later, a branch manager receives a request to open a business deposit account related to a complex trust. The manager forwarded the request because of the complexity. The trust was the same as the previously examined

  trust, but the request came from a different client. The second client also has many accounts with the Fl. Further inspection finds links between the second client and the Paradise Papers. The Papers state the client led illegal activities and

  committed tax evasion.

  What steps should the investigator perform in reference to the first client's existing accounts? (Select Three.)

  A. Review all client-signed documents relating to all accounts.
  B. File SARs/STRs for all accounts at the beginning of the discovery phase and amend later as necessary.
  C. Inform Fl management of all processes used to investigate the client due to LE inquiry.
  D. Perform secondary scans of the client's other owners/authorized signers
  E. Review Fl approved policies regarding the existing accounts to ensure regulatory requirements were followed.
  F. Prepare a relationship flow chart of all existing accounts to better understand the client's activities.
  A. Review all client-signed documents relating to all accounts.
  D. Perform secondary scans of the client's other owners/authorized signers
  F. Prepare a relationship flow chart of all existing accounts to better understand the client's activities.

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  Explanation/Reference:

  The investigator should review all client-signed documents relating to all accounts (A) to check for any discrepancies or red flags. The investigator should also perform secondary scans of the client's other owners/authorized signers (D) to identify any possible connections or associations with the second client or the Paradise Papers. Additionally, the investigator should prepare a relationship flow chart of all existing accounts (F) to better understand the client's activities and patterns. These steps are consistent with the ACAMS Advanced Financial Crimes Investigations Certification Study Guide1, which states that investigators should "review all relevant documentation, including account opening documents, transaction records, and customer correspondence" (p. 23), "conduct enhanced due diligence on all parties involved in the investigation" (p. 24), and "use data visualization tools to map out complex relationships and transactions" (p. 25). References: 1: ACAMS Advanced Financial Crimes Investigations Certification Study Guide, available at ACAMS

• Question 75:

  Law enforcement agents arrive at a broker-dealer's premises with a search warrant. In addition to cooperation with the warrant, which instructions should the person in charge of the broker-dealer provide to their employees?

  A. Take notes on the questions and comments made by the agents.
  B. Sign consent forms permitting the agents to search employees' offices.
  C. Provide agents with unlimited access to customers' personal data.
  D. Volunteer information not requested by the agents that the employees think may be useful.
  A. Take notes on the questions and comments made by the agents.

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  Explanation/Reference:

  The instruction that the person in charge of the broker-dealer should provide to their employees is to take notes on the questions and comments made by the agents (A). This is because taking notes can help the employees to recall and document what happened during the search warrant execution, which can be useful for legal or regulatory purposes. According to ACAMS3, "the FI should instruct its staff to cooperate with LE agents during a search warrant execution, but also to take notes of what is being searched, seized, or asked by the agents" (p. 35). The FI should also "keep copies of any documents or records that are taken by LE agents" (p. 35).

  The other instructions are not correct. The person in charge of the broker-dealer should not instruct their employees to sign consent forms permitting the agents to search employees' offices (B), as this is unnecessary and potentially risky, as the agents already have a valid search warrant that authorizes them to search the premises. The person in charge of the broker-dealer should not instruct their employees to provide agents with unlimited access to customers' personal data ? as this could violate privacy or data protection laws, as well as compromise customer trust and confidentiality. The person in charge of the broker- dealer should not instruct their employees to volunteer information not requested by the agents that they think may be useful (D), as this could interfere with the LE investigation or expose them to legal or regulatory risks.

  References: Introduction to Transnational Organized Crime ACAMS Law Enforcement and Financial Crimes Investigations eLearning Course Module Law Enforcement Requests and Actions

• Question 76:

  An investigator at a corporate bank is conducting transaction monitoring alerts clearance.

  KYC profile background: An entity customer, doing business offshore in Hong Kong, established a banking business relationship with the bank since 2017 for deposit and loan purposes. It acts as an offshore investment holding company. The customer declared that the ongoing source of funds to this account comes from group-related companies.

  1.

  X is the UBO. and owns 97% shares of this entity customer;

  2.

  Y is is the authorized signatory of this entity customer. This entity customer was previously the subject of a SAR/STR. KYC PROFILE Customer Name: AAA International Company. Ltd Customer ID: 123456

  Account Opened: June 2017 Last KYC review date: 15 Nov 2020 Country and Year of Incorporation: The British Virgin Islands, May 2017 AML risk level: High Account opening and purpose: Deposits, Loans, and Trade Finance Anticipated account activities: 1 to 5 transactions per year and around 1 million per transaction amount During the investigation, the investigator reviewed remittance transactions activities for the period from Jul 2019 to Sep 2021 and noted the following transactions pattern: TRANSACTION JOURNAL Review dates: from July 2019 to Sept 2021 For Hong Kong Dollars (HKD) currency: Incoming transactions: 2 inward remittances of around 1.88 million HKD in total from different third parties Outgoing transactions: 24 outward remittances of around 9 4 million HKD in total to different third parties For United States Dollars (USD) currency: Incoming transactions: 13 inward remittances of around 3.3 million USD in total from different third parties Outgoing transactions: 10 outward remittances of around 9.4 million USD in total to different third parties. RFI Information and Supporting documents: According to the RFI reply received on 26 May 2021, the customer provided the bank with the information below: 1J All incoming funds received in HKD and USD currencies were monies lent from non- customers of the bank. Copies of loan agreements had been provided as supporting documents. All of the loan agreements were in the same format and all

  the lenders are engaged in trading business. 2) Some loan agreements were signed among four parties, including among lenders. borrower (the bank's customer), guarantor, and guardian with supplemental agreements, which stated that the customer, as a borrower, who failed to repay a loan

  Which suspicious activity should the investigator identify during the review of the loan agreements?

  A. AAA International Company Ltd.'s account has transactions in HKD and USD.
  B. Y is the authorized signatory on the beneficial ownership form.
  C. Online information found that X is the chairman of a business group of companies.
  D. Y signed on behalf of the lenders.
  D. Y signed on behalf of the lenders.

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  Explanation/Reference:

  The correct answer is D because it is a suspicious activity that Y, who is the authorized signatory of the customer, also signed on behalf of the lenders. This indicates a possible conflict of interest, collusion, or fraud. The other options are not suspicious activities based on the information given. References: [Advanced CAMS-FCI Study Guide], page 17-18

• Question 77:

  The investigative department of a financial institution (Fl) receives an internal escalation notice from the remittance department for a SWIFT message requesting a refund due to potential fraud. The notice indicates that a total of three international incoming remittances were transferred to a corporate customer from Country A, in the amount of approximately 5 million EUR for each. The first two incoming remittances had been exchanged into currency B and transferred out to Country B a few days ago. The third incoming remittance has been held by the remittance department.

  As noted from the KYC profile, the corporate customer is working in the wood industry. with the last account review completed 3 months ago. Since the account's opening. there has been no history of a large amount of funds flowing through the account. The investigator conducts an Internet search and finds that the remitter is a food beverage company.

  The same morning, the investigator receives a call from a financial intelligence unit (FIU) inquiring about the same incident. The FIU states that it will issue a warrant to freeze the account on the same day.

  After further review, the decision is made that transactions appear suspicious. Which are the next steps the investigator should take? (Select Two.)

  A. Close the customer's accounts since the FIU is issuing a warrant to freeze the funds.
  B. Contact local LE and advise them of the investigation details to help speed up the investigation and prosecution.
  C. Provide additional information to the LE upon receiving a formal request.
  D. Close the investigation as the FIU is already on this matter, and they will inform LE if needed.
  E. Gather all the information that would be useful for law enforcement (LE) and recommend filing a SAR/STR
  C. Provide additional information to the LE upon receiving a formal request.
  E. Gather all the information that would be useful for law enforcement (LE) and recommend filing a SAR/STR

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  Explanation/Reference:

  The correct answer is C and E. The investigator should provide additional information to the LE upon receiving a formal request, and gather all the information that would be useful for LE and recommend filing a SAR/STR. These steps are consistent with the best practices of conducting financial crime investigations and reporting suspicious activity. The investigator should not close the customer's accounts or the investigation, as this may interfere with the ongoing LE inquiry and violate the FI's policies and procedures. The investigator should also not contact local LE directly, as this may compromise the confidentiality of the investigation and the FIU's authority. References: Advanced CAMS-FCI Study Guide, Chapter 4: Reporting Suspicious Activity, pages 40-411 Advanced CAMS-FCI Study Guide, Chapter 5: Governance of an AFC Investigations Unit, pages 48-491 Advanced CAMS-FCI Certification | ACAMS

• Question 78:

  The compliance learn is reviewing multiple data points to include in its data analytics program to detect shell or front company red flags. Which data points should the compliance team include? (Select Two.)

  A. Entities exhibiting transactions with declared counterparties
  B. Entities whose principal place of business is a non-residential address
  C. Entities with high paid-up capital relative to monthly value of transactions
  D. Entities with a large number and variety of beneficiaries not declared at the time of onboarding
  E. Entities transacting with or having relation to tax haven or high-risk countries
  B. Entities whose principal place of business is a non-residential address
  E. Entities transacting with or having relation to tax haven or high-risk countries

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  Explanation/Reference:

  The data points that the compliance team should include in its data analytics program to detect shell or front company red flags are entities whose principal place of business is a non-residential address and entities transacting with or having relation to tax haven or high-risk countries. These data points may indicate that the entities are not conducting legitimate business activities, but rather are used to conceal the identity or location of the true beneficiaries or owners, or to facilitate money laundering, tax evasion, or other illicit activities. Some of the sources that support these data points as red flags are4567:

  Entities whose principal place of business is a non-residential address may indicate that they have no physical presence, operations, assets, or employees. They may use addresses such as post office boxes, mail forwarding services,

  registered agents, or virtual offices to avoid detection or scrutiny. Entities transacting with or having relation to tax haven or high-risk countries may indicate that they are involved in offshore financial activities that are designed to evade taxes,

  regulations, or sanctions. They may also be exposed to higher risks of money laundering, terrorist financing, corruption, or fraud.

  References:

  How to Identify a Shell Company and the Associated Red Flags Difference between Shell, Shelf and Front Company | Sigma Ratings Shell Companies and Money Laundering | ComplyAdvantage General Comments Incorporation of shell

  companies - Singapore Police Force

• Question 79:

  Which test should be included in a bank's Office of Foreign Assets Control sanctions screening audit program?

  A. Reviewing wire transfer screening processes to ensure that potential name hits are investigated promptly
  B. Looking at copies of suspicious activity reports filed with regulators to ensure completeness
  C. Ensuring that all clients with foreign identification are subject to enhanced due diligence
  D. Examining Human Resources processes for conducting criminal background checks on executives
  C. Ensuring that all clients with foreign identification are subject to enhanced due diligence

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  Explanation/Reference:

  The OFAC sanctions screening audit program should include the requirement that all clients with foreign identification are subject to enhanced due diligence, as this provides an extra layer of protection against potential violations of OFAC sanctions. Reference: CAMS VI manual, page 132, section 7.2.2.1.1 - "Testing for OFAC Sanctions Screening Audit." This section specifically states that the OFAC sanctions screening audit program should include ensuring that all clients with foreign identification are subject to enhanced due diligence.

• Question 80:

  A KYC specialist from the first line of defense at a bank initiates an internal escalation based on a letter of credit received by the bank.

  MEMO

  To: Jane Doe. Compliance Manager, Bank B From: Jack Brown, KYC Specialist, Bank B

  RE: Concerning letter of credit

  A letter of credit (LC) was received from a correspondent bank. Bank A. in Country A. in Asia with strict capital controls, providing guarantee of payment to Bank B's client for the export of 10 luxury cars located in Country B. located in Europe.

  Bank A's customer is a general in the army where Bank A is headquartered.

  The information contained in the LC is as follows:

  1.

  Advising amount per unit 30.000.00 EU ?0 units of BMW

  2.

  Model IX3

  3.

  Year of registration: 2020

  Upon checks on Bank B's client, the exporter mentioned that the transactions were particularly important, and a fast process would be much appreciated in order to avoid reputational damage to the firm and the banks involved in the trade finance process. The exporter has a longstanding relationship with Bank B and was clearly a good income generator. The exporter indicated that, as a general, the importer was trustworthy.

  The relationship manager

  Feedback from the RM:

  The RM contacted the exporter for a client courtesy visit, but it was rearranged four times as the exporter kept cancelling the appointments. When the exporter was finally pinned down for an interview, employees were reluctant to provide clear answers about the basis of the transaction. The employees were evasive when asked about the wider business and trade activity in the country.

  Findings from the investigation from various internal and external sources of information:

  1.

  There were no negative news or sanctions hits on the exporter company, directors, and shareholders.

  2.

  The registered address of the exporting business was a residential address.

  3.

  The price of the cats was checked and confirmed to be significantly below the market price of approximately 70,000 EU, based on manufacturer's new price guide.

  4.

  The key controllers behind the exporting company, that is the directors and

  During the investigation, the investigator determines that a nephew of the general.....

  A. should be treated well to avoid reputational damage to the bank
  B. is a high-net-worth individual
  C. should be flagged as a senior PEP.
  D. is a trustworthy source.
  C. should be flagged as a senior PEP.

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  Explanation/Reference:

  The investigator should determine that a nephew of the general (Bank A's customer) should be flagged as a senior PEP ? This is because the nephew is related to a senior military official who is a customer of Bank A, which is a high-risk jurisdiction with strict capital controls. According to the ACAMS Advanced Financial Crimes Investigations Certification Study Guide1, "the FI should identify and flag any customers who are PEPs or have close associations with PEPs, such as family members or business partners" (p. 24). The FI should also conduct enhanced due diligence on these customers and monitor their transactions for any suspicious or unusual activity.

  The other options are not correct. The investigator should not determine that a nephew of the general should be treated well to avoid reputational damage to the bank (A), as this could compromise the integrity and objectivity of the investigation, as well as expose the bank to legal or regulatory risks. The investigator should not determine that a nephew of the general is a high-net-worth individual (B), as this is not relevant or material to the investigation, as the nephew's wealth does not affect his potential PEP status or risk level. The investigator should not determine that a nephew of the general is a trustworthy source (D), as this could be biased or inaccurate, as the nephew's trustworthiness does not depend on his relation to the general or his involvement in the transaction.

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