ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 121:

  Which two steps should a financial institution take when it receives a law enforcement request to keep an account open that may be associated with suspicious or criminal activity? (Choose two.)

  A. File a suspicious transaction report on the account owner(s)
  B. Maintain account records for at least five years after the request expires
  C. Ask for a written request from the law enforcement agency that defines the duration
  D. Stop filing suspicious transaction reports because law enforcement will be monitoring the account
  B. Maintain account records for at least five years after the request expires
  C. Ask for a written request from the law enforcement agency that defines the duration

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  According to the Anti-Money Laundering Specialist (the 6th edition) study guide, when a financial institution receives a law enforcement request to keep an account open that may be associated with suspicious or criminal activity, it should take the following two steps: Maintain account records for at least five years after the request expires. This is to ensure that the financial institution can provide evidence of its compliance with the law enforcement request and the applicable anti-money laundering regulations. The five-year retention period is based on the international standard set by the Financial Action Task Force (FATF) and adopted by many jurisdictions12. Ask for a written request from the law enforcement agency that defines the duration. This is to protect the financial institution from potential liability and to clarify the scope and purpose of the law enforcement request. The written request should specify the time period for which the account should remain open, the reason for the request, the contact information of the law enforcement officer, and the legal authority for the request34. References: Anti-Money Laundering Specialist (the 6th edition) study guide, page 57 FATF Recommendation 11, paragraph 2 Anti-Money Laundering Specialist (the 6th edition) study guide, page 58 Money Laundering website, article on "Law Enforcement Requests to Keep Accounts Open" https://www.fincen.gov/resources/statutes-regulations/guidance/requests-law-enforcement-financial- institutions-maintain

• Question 122:

  A newly appointed senior money laundering reporting officer (MLRO) at a digital bank has been instructed to implement an effective AML transaction monitoring system . What are important considerations for selecting and implementing the AML system? (Select Two.)

  A. Whether the monitoring system is adequate with respect to the bank's size, activities, complexity, and risks.
  B. Whether the vendor has documented appropriate internal controls for designing the system and data integration schema.
  C. Whether the permissions and user access settings for reviewing, investigating, and reporting details of alerts generated by the system are commensurate with those in use at other banks.
  D. Whether the monitoring system can be configured to enable the bank to execute trend analysis of transaction activity and to identify unusual business relationships and transactions.
  A. Whether the monitoring system is adequate with respect to the bank's size, activities, complexity, and risks.
  D. Whether the monitoring system can be configured to enable the bank to execute trend analysis of transaction activity and to identify unusual business relationships and transactions.

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  An effective AML transaction monitoring system must align with the bank's operational complexity, risk exposure, and analytical capabilities . Option A (Correct): The system must be tailored to the bank's specific risk profile to ensure effectiveness. Option D (Correct): A strong AML system should support trend analysis to identify long-term suspicious behaviors. Why Other Options Are Incorrect: Option B (Incorrect): While vendor controls are important, they do not determine system suitability. Option C (Incorrect): User access settings should be based on the bank's internal risk framework, not industry standards alone. Best Practices for Implementing an AML Monitoring System: Ensure scalability to adapt to evolving financial crime risks. Leverage AI and machine learning to enhance detection accuracy. Integrate real-time screening and transaction trend analysis.

• Question 123:

  A compliance officer at a small community bank has been asked to review existing customer onboarding policies and procedures to ensure they adequately address anti-money laundering risks. How should customer due diligence be implemented?

  A. With an annual compliance review and approval of customers
  B. With a one-time event conducted at initial customer onboarding
  C. As an ongoing activity that may vary commensurate with the risk profile of the customer
  D. As applicable to customers that pose higher money laundering or terrorist financing risk
  C. As an ongoing activity that may vary commensurate with the risk profile of the customer

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  Customer due diligence should be implemented as an ongoing activity that may vary commensurate with the risk profile of the customer. This is because the risk of money laundering or terrorist financing may change over time, depending on the customer's behavior, transactions, products, services, and geographic locations. The institution should monitor the customer's activity and update the customer's information and risk assessment periodically, or when there are red flags or significant changes in the customer's circumstances. The institution should also apply enhanced due diligence measures for customers that pose higher risks, and simplified due diligence measures for customers that pose lower risks12. References: 1: CAMS Certification Package - 6th Edition | ACAMS, Chapter 1: Risks and Methods of Money Laundering and Terrorist Financing, p. 18-19 2: FATF Guidance: Customer Due Diligence and Financial Inclusion, February 2018, p. 10-11, http://www.fatf- gafi.org/media/fatf/documents/reports/Guidance-CDD-and-Financial-Inclusion-2018.pdf

• Question 124:

  What are four key elements that a KYC program should contain according to the Basel Committee requirements?

  A. Customer onboarding, sanction monitoring, customer acceptance, customer due diligence
  B. Customer identification, risk assessment, customer screening, monitoring
  C. Customer onboarding, risk monitoring, customer acceptance, enhanced due diligence
  D. Customer identification, risk management, customer acceptance, monitoring
  B. Customer identification, risk assessment, customer screening, monitoring

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  According to the Basel Committee on Banking Supervision (BCBS), a sound KYC program should contain four essential elements: (i) customer acceptance policy; (ii) customer identification; (iii) on-going monitoring of higher risk accounts; and (iv) risk management1. These elements correspond to the options B in the question, as customer identification involves verifying the identity and beneficial ownership of the customers, risk assessment involves determining the level of risk posed by the customers and their activities, customer screening involves checking the customers against relevant sanctions and watch lists, and monitoring involves reviewing the customers' transactions and behavior for any anomalies or red flags. References: Consolidated KYC Risk Management - Bank for International Settlements Reference: https://www.bis.org/publ/bcbs77.pdf

• Question 125:

  Which situation involving a vendor presents increased AML and/or sanctions risk to an organization?

  A. The vendor's sales representative was a refugee from a sanctioned jurisdiction as a child.
  B. The vendor has no individuals that own or control more than 10% of the company .
  C. The vendor is organized as a privately held company .
  D. The vendor provides services to end users located in an area subject to economic sanctions .
  D. The vendor provides services to end users located in an area subject to economic sanctions .

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  Vendors and third-party relationships pose financial crime risks, particularly when they operate in sanctioned jurisdictions . Organizations must ensure that they are not directly or indirectly violating economic sanctions when engaging with vendors. Option D (Correct): If a vendor provides services to sanctioned entities or individuals , an organization risks violating OFAC, EU, or UN sanctions laws , potentially leading to fines, legal action, or reputational damage . Engaging in business in a sanctioned region requires strict due diligence and licensing . Option A (Incorrect): The personal background of an employee is not relevant unless they currently have direct ties to a sanctioned jurisdiction or person . Option B (Incorrect): A lack of majority ownership does not automatically indicate AML risk ; however, organizations should still assess ownership structures for opacity . Option C (Incorrect): Privately held companies can be transparent if they disclose ownership and operate within compliance standards . Why This Matters:Failing to screen vendors for sanctions risks can result in severe penalties, reputational harm, and regulatory scrutiny OFAC (U.S.), EU, and UN sanctions prohibit business . transactions with specific countries, entities, and individuals . Organizations must conduct thorough due diligence to identify and mitigate sanctions risks .

• Question 126:

  A high-volume dealer of precious metals and stones in a high-risk jurisdiction is approached by a new customer interested in selling gold worth $200,000. The customer was referred by a longtime family friend of the dealer and provides no

  indication of background or business purpose for the sale. The dealer agrees to make the purchase based solely on the reference.

  What is the money laundering red flag?

  A. The customer was referred by a longtime friend of the dealer
  B. The precious metals dealer is operating in a high-risk jurisdiction
  C. A new customer is selling gold worth $200,000 to a high volume dealer
  D. The customer provides no background information or business purpose for the transaction
  D. The customer provides no background information or business purpose for the transaction

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  This is when a customer or a transaction does not provide sufficient or credible information about their identity, source of funds, business activity, or purpose of the transaction. Lack of transparency can indicate that the customer or the transaction is trying to conceal the origin, ownership, or destination of illicit funds, or to evade regulatory scrutiny or reporting obligations. Lack of transparency is a common risk factor for money laundering and terrorist financing, especially in high-risk jurisdictions or sectors. The other options are not necessarily red flags, although they may increase the risk or require further due diligence depending on the circumstances and the risk profile of the customers and countries involved. Option A describes a referral by a longtime friend of the dealer, which may be a legitimate source of trust or business relationship, but it does not substitute the need for proper customer identification and verification. Option B describes the location of the precious metals dealer, which may be a high-risk jurisdiction due to factors such as weak governance, corruption, crime, or sanctions, but it does not imply that the dealer or the customer is involved in money laundering. Option C describes the amount and nature of the transaction, which may be unusual or large, but it does not necessarily indicate money laundering, as long as the customer can provide a reasonable explanation and evidence for the source and use of funds. References: ACAMS CAMS Certification Video Training Course - 6th Edition1 Exam CAMS: Certified Anti-Money Laundering Specialist (the 6th edition)2 ACAMS CAMS Study Guide - 6th Edition, Chapter 3, pages 64-65 https://www.acams.org/wp-content/uploads/2019/09/ACAMS-CAMS-Study-Guide-6th-Edition-Chapter-3.pdf

• Question 127:

  What is the primary action a financial institution should take before formulating its anti-money laundering program?

  A. It should perform a comprehensive risk analysis
  B. It should determine how extensive and well-trained the compliance staff is
  C. It should consult with its correspondent banks to determine the nature and extent of their AML programs
  D. It should ensure that its training modules for all employees cover all relevant AML issues
  A. It should perform a comprehensive risk analysis

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  A comprehensive risk analysis is the first and most important step in developing an effective anti-money laundering program. A risk analysis helps a financial institution identify and assess its exposure to money laundering and terrorist financing risks, based on its products, services, customers, geographic locations, and other factors. A risk analysis also enables a financial institution to tailor its policies, procedures, controls, and training to mitigate the specific risks it faces. A risk analysis should be conducted periodically and updated as necessary to reflect changes in the institution's risk profile. References: ACAMS Study Guide for the CAMS Certification Examination, 6th Edition, Chapter 2: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), Section 2.1: Risk-Based Approach, p. 29-30 ACAMS Risk Assessment, What is Anti-Money Laundering (AML) Risk Assessment? How to Conduct an AML Risk Assessment - Assess Key Risk Drivers

• Question 128:

  Which are primary purposes of Financial Action Task Force {FATF)-Style Regional Bodies? (Select Two.)

  A. Acting as a prudential regulatory body for financial institutions
  B. Providing due diligence for foreign correspondent banks
  C. Providing expertise and input in FATF policy-making
  D. Imposing special measures for non-cooperative jurisdictions Promoting effective implementation of FATF recommendations
  C. Providing expertise and input in FATF policy-making

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  The primary purposes of Financial Action Task Force (FATF)-Style Regional Bodies are to promote effective implementation of FATF recommendations and to provide expertise and input in FATF policy-making. (CAMS Manual, 6th Edition, Page 180)

• Question 129:

  The most effective tool used to detect structured transactions is

  A. Verification of the source of funds.
  B. A comprehensive account-opening procedure.
  C. An employee training program to detect suspicious transactions.
  D. A software program that can link apparently unrelated transactions.
  D. A software program that can link apparently unrelated transactions.

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  Structured transactions are a common method of money laundering, where large amounts of cash are broken down into smaller deposits or withdrawals to avoid reporting thresholds or detection. The most effective tool to detect such transactions is a software program that can link apparently unrelated transactions by using various criteria, such as customer name, address, account number, identification number, transaction amount, date, time, location, etc. Such a program can help identify patterns, trends, and anomalies that may indicate money laundering activity.

• Question 130:

  The Head of Compliance was informed by external auditors of a finding that indicates an element of AML policy failed to comply with the regulatory requirement. Which action should the Head of Compliance take next?

  A. Make necessary updates to AML policy documents.
  B. Inform the compliance team about the finding.
  C. Agree immediately and provide corrective actions.
  D. Submit a corrective action plan with a target timeline.
  D. Submit a corrective action plan with a target timeline.

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  The Head of Compliance is responsible for overseeing and managing the AML compliance program of the organization. When an external auditor identifies a finding that indicates a failure to comply with a regulatory requirement, the Head of Compliance should take prompt and appropriate action to address the issue and prevent recurrence. The best course of action is to submit a corrective action plan with a target timeline to the auditor and the relevant regulator, demonstrating the organization's commitment to remediate the finding and improve its AML compliance program. The corrective action plan should include the root cause analysis of the finding, the specific actions to be taken, the responsible parties, the expected outcomes, and the deadlines for completion. The Head of Compliance should also monitor the progress of the corrective action plan and report any updates or challenges to the auditor and the regulator.