ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 91:

  Which section of the USA PATRIOT Act relates to forfeiture of funds and allows for extraterritorial reach ?

  A. Section 319(a)
  B. Section 314(a)
  C. Section 319(b)
  D. Section 314(b)
  A. Section 319(a)

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  The USA PATRIOT Act includes provisions allowing the U.S. government to seize assets linked to financial crime , even when held in foreign financial institutions. Option A (Correct): Section 319(a) of the USA PATRIOT Act provides U.S. regulators with the authority to seize funds deposited in U.S. correspondent accounts of foreign banks if linked to illicit activity . Option B (Incorrect): Section 314(a) focuses on information sharing between law enforcement and financial institutions . Option C (Incorrect): Section 319(b) enables U.S. authorities to seize funds linked to foreign correspondent banking accounts , but 319(a) specifically deals with extraterritorial forfeiture . Option D (Incorrect): Section 314(b) allows financial institutions to voluntarily share AML- related information . Why This Matters: Foreign banks using U.S. correspondent accounts can be subject to U.S. jurisdiction. Helps U.S. law enforcement disrupt global money laundering networks. Encourages financial institutions to enhance correspondent banking due diligence.

• Question 92:

  Which red flag should a compliance officer prioritize first for investigation?

  A. A loan is paid off in full with cash after the sale of the vehicle that was used as collateral for the loan.
  B. Several cross-border transfers are received and immediately wired to another beneficiary.
  C. A customer has 20 monthly transactions that are repetitive but less than $500 USD per transaction.
  D. A convenience store cashes government checks for its customers in amounts less than $1,000 USD per day.
  B. Several cross-border transfers are received and immediately wired to another beneficiary.

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  This is a common red flag of money laundering that involves layering, which is the process of moving funds through multiple accounts or entities to conceal their origin and ownership. Layering often involves cross- border transfers, especially to high-risk jurisdictions, and rapid movement of funds to avoid detection or tracing. A compliance officer should prioritize this red flag for investigation, as it may indicate a complex money laundering scheme or the financing of terrorism or proliferation. References: AML Red Flags ?What are the Top 10 Indicators? - ComplyAdvantage, section "Red flags related to transaction patterns" AML 101: The 10 Most Common Red Flags - KYC-Chain, section "Red flag indicators related to geographical risks" Anti-money laundering red flags, page 2, bullet point 5

• Question 93:

  Which are the two most common controls a financial institution (FI) uses to identify suspicious money- laundering activity? (Choose two.)

  A. Sanctions screening
  B. Adverse media information
  C. Governmental subpoena Search warrant
  D. Transaction monitoring rules
  A. Sanctions screening

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  Sanctions screening and transaction monitoring rules are two of the most common controls that FIs use to identify suspicious money-laundering activity. Sanctions screening is the process of checking customers, transactions, and counterparties against various lists of sanctioned individuals, entities, and countries issued by national and international authorities. Sanctions screening helps FIs to avoid doing business with or facilitating the activities of those who are involved in terrorism, proliferation, human rights violations, or other criminal activities. Transaction monitoring rules are the criteria or scenarios that FIs use to detect unusual or potentially suspicious patterns of transactions or behaviors of customers or accounts. Transaction monitoring rules help FIs to identify transactions that deviate from the expected norms, such as large cash deposits, frequent wire transfers, or transactions with high-risk jurisdictions. Transaction monitoring rules also help FIs to comply with their reporting obligations, such as filing Suspicious Activity Reports (SARs) or Currency Transaction Reports (CTRs). References: ACAMS CAMS Certification Video Training Course, Chapter 4: Developing an Effective Anti- Money Laundering Program, Section 4.2: Customer Identification Program (CIP) and Customer Due Diligence (CDD); Money laundering and terrorist financing, Section: Anti Money Laundering (AML) regulations; The Three Stages Of Money Laundering And How Money Laundering Works, Section: How to Prevent Money Laundering.

• Question 94:

  An anti-money laundering expert is hired by a new Internet bank to assess the money laundering threat to the bank. What is the most important recommendation for the expert to make given it is an on-line bank?

  A. The bank should limit the amount of money which can be processed per transaction
  B. The bank should ensure that prospective new customers can be properly identified
  C. The bank should set up automated programs to analyze transactions for money laundering activity
  D. The bank should ensure that a firewall is set up to protect the transactions
  A. The bank should limit the amount of money which can be processed per transaction

• Question 95:

  Which methods are typically used to launder money using insurance companies? (Choose two.)

  A. The policy holder overpays the policy and moves the funds out of the policy despite paying early withdrawal penalties.
  B. The policy holder enters a sibling as a beneficiary of the insurance policy rather than themselves.
  C. The policy holder purchases a bond and redeems it at a discount prior to its full term.
  D. The policy holder uses an offshore company to pay the insurance installments.
  E. The policy holder is strongly interested in how many costs are incurred when taking out an insurance policy.
  A. The policy holder overpays the policy and moves the funds out of the policy despite paying early withdrawal penalties.
  D. The policy holder uses an offshore company to pay the insurance installments.

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  The methods that are typically used to launder money using insurance companies are: The policy holder overpays the policy and moves the funds out of the policy despite paying early withdrawal penalties. This method involves placing large amounts of illicit funds into an insurance policy, usually a life insurance or an annuity, and then requesting a refund or a surrender of the policy. The policy holder may incur some fees or penalties for the early withdrawal, but they will receive a check or a wire transfer from the insurance company that appears to be a legitimate source of income. This method allows the launderer to layer and integrate the funds into the financial system. The policy holder uses an offshore company to pay the insurance installments. This method involves setting up a shell company or a trust in a jurisdiction with low or no tax and weak or no anti-money laundering regulations. The launderer then uses the offshore entity to purchase an insurance policy or a bond from a reputable insurance company. The offshore entity pays the premiums or the installments using the illicit funds, and the launderer can claim the benefits or the returns from the policy or the bond as clean money. This method allows the launderer to hide the true ownership and origin of the funds. The other options are not typical methods of money laundering using insurance companies, because: The policy holder enters a sibling as a beneficiary of the insurance policy rather than themselves. This method does not involve any movement or disguise of the illicit funds, and it does not generate any income or return for the launderer. The beneficiary of the policy will only receive the payout upon the death of the policy holder, and the insurance company will conduct due diligence on the beneficiary before releasing the funds. The policy holder purchases a bond and redeems it at a discount prior to its full term. This method does not make sense for a money launderer, because it involves losing money rather than gaining money. A bond is a fixed-income instrument that pays a regular interest and a principal amount at maturity. If the bond is redeemed before its full term, the bond holder will receive less than the face value of the bond, and will also forfeit the future interest payments. This method does not help the launderer to conceal or legitimize the source of the funds. The policy holder is strongly interested in how many costs are incurred when taking out an insurance policy. This method does not indicate any money laundering activity, but rather a prudent and rational behavior of a potential customer. The policy holder may want to compare different insurance products and providers, and to understand the fees, charges, commissions, and taxes associated with the policy. This method does not involve any placement, layering, or integration of the illicit funds.

• Question 96:

  What should senior management do in order to promote a culture of anti-money laundering compliance?

  A. They should include compliance with AML procedures as condition of employment
  B. They should attend all training sessions with front-line employment
  C. They should have close ties with the independent auditors of the AML program
  D. They should base employee compensation on the amount of suspicious activity they detect
  A. They should include compliance with AML procedures as condition of employment

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  The line of business is responsible for creating, implementing and maintaining policies and procedures, as well as communicating these to all personnel. It must also establish processes for screening employees to ensure high ethical and professional standards and deliver appropriate training on AML policies and procedures based on roles and functions performed so employees aware of their responsibilities. To facilitate this, employees should be trained as soon as possible after being hired, with refresher training as appropriate.

• Question 97:

  Bank A is a non-United States (U.S.) bank that has $5 million in a correspondent account at a bank in New York City. The Worldwide Terrorist Syndicate (WTS) has $1 million in its account at a non-US branch of Bank A. The U.S. government

  has initiated forfeiture action against the WTS.

  Which potential action can the U.S. take under the USA PATRIOT ACT pursuant to the issuance seizure warrant?

  A. Seize Bank A's $5 million correspondent account in the U.S.
  B. Seize WTS' $1 million account at the non-U.S. branch of Bank A.
  C. Seize $1 million from Bank A's correspondent account in the U.S.
  D. Seize $5 million from the non-U.S. branch of Bank A where the WTS' account is located.
  C. Seize $1 million from Bank A's correspondent account in the U.S.

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  This potential action is authorized by Section 319 of the USA PATRIOT ACT, which allows the U.S. government to seize funds from a foreign bank's correspondent account in the U.S. if the foreign bank refuses to cooperate with a request for records relating to an investigation of money laundering or terrorist financing. The U.S. government can seize an amount equal to the funds in the account of the target of the investigation, regardless of whether those funds are actually in the correspondent account. In this case, the U.S. government can seize $1 million from Bank A's correspondent account in the U.S. because Bank A holds $1 million in the account of the WTS, which is the target of the forfeiture action. The other potential actions are not authorized by the USA PATRIOT ACT or other U.S. laws. The U.S. government cannot seize Bank A's entire $5 million correspondent account in the U.S. because that would exceed the amount in the WTS's account and would violate the principle of proportionality. The U.S. government cannot seize the WTS's $1 million account at the non-U.S. branch of Bank A because that would require the cooperation of the foreign jurisdiction where the branch is located, which may not be forthcoming. The U.S. government cannot seize $5 million from the non-U.S. branch of Bank A where the WTS's account is located because that would also require the cooperation of the foreign jurisdiction and would exceed the amount in the WTS's account. References: CAMS Certification Package - 6th Edition | ACAMS, Chapter 3: International Standards and Global Initiatives, pp. 67-68 CAMS Certifications: How to Get CAMS Certified | ACAMS, CAMS Study Guide, pp. 54-55 How Does the Patriot Act Affect Criminal Investigations? | Nolo, Section 319: Forfeiture of Funds in United States Interbank Accounts The USA PATRIOT Act at 20: Sneak and Peek Searches - CRS Reports, Section 319: Forfeiture of Funds in United States Interbank Accounts

• Question 98:

  A bank has opened a new account for a well-known attorney to manage client funds. During the first six months, bank staff observe the account receives multiple deposits via wire transfer. They also observe that the attorney withdraws cash,

  makes payments to various people, and transfers funds to the law firm's account online.

  What is considered a red flag for potential money laundering in this situation?

  A. Withdrawing cash
  B. Making payment to various people
  C. Receiving multiple deposits via wire transfer
  D. Transferring funds to his law firm's account online
  B. Making payment to various people

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  According to the ACAMS CAMS Study Guide, one of the methods that attorneys may use to facilitate money laundering is to make payments to third parties on behalf of their clients, using funds from their client accounts. This may obscure the source and destination of the funds, and create a false appearance of legitimate transactions. Therefore, making payment to various people is a red flag for potential money laundering in this situation. References: ACAMS CAMS Study Guide, 6th Edition, page 117 FATF Report on Money Laundering and Terrorist Financing Vulnerabilities of Legal Professionals, June 2013, page 341 AML/CFT Red Flags for Lawyers, AML-CFT.net, October 20202

• Question 99:

  To ensure that an institution's anti-money laundering program is current, which step should be taken?

  A. The program should be evaluated and updated at least every six months be the Board of Directors
  B. The program should be reviews by a federal law enforcement officer for gaps in controls
  C. The program should be sent to the institution's government regulator on a periodic basis
  D. The program should be reassessed at least annually
  D. The program should be reassessed at least annually

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  According to the Anti-Money Laundering Specialist (the 6th edition) by ACAMS, an institution's anti-money laundering program should be reassessed at least annually to ensure that it is current, effective, and compliant with the applicable laws and regulations. The reassessment should include a review of the institution's risk assessment, policies and procedures, internal controls, training, and independent testing. The reassessment should also consider any changes in the institution's products, services, customers, geographic locations, or business environment that may affect its exposure to money laundering and terrorist financing risks1. The other options are not consistent with the best practices of maintaining an up-to-date anti-money laundering program. For example: The program should be evaluated and updated at least every six months by the Board of Directors. While the Board of Directors has the ultimate responsibility for overseeing the institution's anti-money laundering program, it is not required to evaluate and update the program every six months. This may be too frequent and impractical, especially for large and complex institutions. The Board of Directors should, however, approve the program and any significant changes, and ensure that senior management implements and enforces the program effectively1. The program should be reviewed by a federal law enforcement officer for gaps in controls. While federal law enforcement agencies may conduct investigations or examinations of the institution's anti- money laundering program, they are not responsible for reviewing the program for gaps in controls. This is the role of the institution's internal audit function or an external independent party, who should conduct periodic testing of the program's adequacy and effectiveness1. The program should be sent to the institution's government regulator on a periodic basis. While the institution's government regulator may request or review the institution's anti-money laundering program as part of its supervisory or enforcement activities, the institution is not obligated to send the program to the regulator on a periodic basis. The institution should, however, report any suspicious or unusual transactions or activities to the relevant authorities, such as the Financial Crimes Enforcement Network (FinCEN) or the Office of Foreign Assets Control (OFAC)1. References: Anti-Money Laundering Specialist (the 6th edition) by ACAMS

• Question 100:

  The findings of an internal audit discover that a large group of employees do not know how to handle Politically Exposed Persons (PEPs). Which is the next course of action that should be taken?

  A. Create a company-wide training program.
  B. Revamp the compliance program to better identify PEPs.
  C. Ensure all new-hire individuals have in-depth knowledge of PEPs.
  D. De-risk all PEPs from the financial institution (FI) to ensure compliance.
  A. Create a company-wide training program.

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  According to the ACAMS CAMS Study Guide, one of the key elements of an effective anti-money laundering (AML) program is ongoing training for all relevant staff. Training should cover the legal and regulatory obligations, the risks and red flags of money laundering and terrorist financing, the procedures and controls for customer due diligence and transaction monitoring, the reporting and record-keeping requirements, and the roles and responsibilities of the staff and the management. Training should also be tailored to the specific functions and needs of the staff, and should be updated regularly to reflect the changes in the AML environment and the FI's policies and procedures. PEPs are considered high-risk customers for AML purposes, as they may abuse their positions of power and influence to commit or facilitate corruption, bribery, embezzlement, or other financial crimes. Therefore, it is essential that the FI's staff are aware of the definition and categories of PEPs, the sources and methods to identify and verify PEPs, the enhanced due diligence measures and ongoing monitoring that apply to PEPs, and the escalation and reporting procedures for suspicious activities involving PEPs . If an internal audit reveals that a large group of employees do not know how to handle PEPs, this indicates a serious gap in the FI's AML training program, which could expose the FI to regulatory sanctions, reputational damage, and legal liabilities. Therefore, the next course of action that should be taken is to create a company- wide training program that covers the relevant aspects of PEPs, and to ensure that the training is delivered to all staff who deal with PEPs or have access to PEP-related information. The training should also be evaluated for its effectiveness and impact, and the results should be reported to the senior management and the board of directors. References: ACAMS CAMS Study Guide, 6th Edition, Chapter 2: Developing an Effective Anti-Money Laundering Program, page 51-52 ACAMS CAMS Study Guide, 6th Edition, Chapter 3: Conducting Customer Due Diligence, page 75-78 FATF Guidance: Politically Exposed Persons (Recommendations 12 and 22), June 2013, 1 ACAMS CAMS Study Guide, 6th Edition, Chapter 4: Conducting Ongoing Monitoring, page 97-98 Reference: https://www.acamstoday.org/all- politically-exposed-persons-are-local/