ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 141:

  Which is an indicator that there is an attempt to conceal a company's true beneficial ownership?

  A. The company has a subsidiary in another jurisdiction, and the beneficial ownership of the subsidiary includes a local investor in that jurisdiction.
  B. Recent changes to the company's ownership structure have been documented internally and are reflected in documents filed with local authorities.
  C. Beneficial ownership information from the time that the company was formed several years ago does not match the current beneficial ownership information.
  D. The person filling out an application on the company's behalf indicates that a beneficial owner is a nominee for another person not named in the company's documentation.
  D. The person filling out an application on the company's behalf indicates that a beneficial owner is a nominee for another person not named in the company's documentation.

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  A beneficial owner is the natural person who ultimately owns or controls a legal entity or arrangement, such as a company, a trust, or a foundation. Identifying the beneficial owner is essential for preventing and detecting money laundering, terrorist financing, tax evasion, and other illicit activities that may involve the misuse of corporate vehicles. However, some individuals or entities may attempt to conceal the true beneficial ownership of a company by using various techniques, such as complex ownership structures, shell companies, bearer shares, or nominees. A nominee is a person or an entity that acts on behalf of another person or entity, usually for a fee or a commission, without disclosing the identity of the real owner or controller. Nominees can be used to protect or conceal the identity of the beneficial owner and controller of a company or asset. A nominee can help overcome jurisdictional controls on company ownership and circumvent directorship bans imposed by courts and government authorities. While the appointment of nominees is lawful in most countries, the use of nominees for money laundering purposes is illegal and a red flag for suspicious activity. Therefore, the person filling out an application on the company's behalf indicating that a beneficial owner is a nominee for another person not named in the company's documentation is an indicator that there is an attempt to conceal the company's true beneficial ownership. The other options are not necessarily indicators of concealment of beneficial ownership, as they may have legitimate explanations or reasons. The company having a subsidiary in another jurisdiction with a local investor as a beneficial owner may be a normal business practice or a strategic decision, as long as the ownership information is transparent and accurate. Recent changes to the company's ownership structure may reflect the company's growth, development, or adaptation to market conditions, as long as they are documented and reported to the relevant authorities. Beneficial ownership information from the time that the company was formed several years ago not matching the current information may be due to natural changes in the company's shareholders, directors, or managers, as long as they are updated and verified periodically.

• Question 142:

  A bank receives an anonymous tip from an employee about another employee through its confidential hotline. Which activity warrants further review?

  A. A mortgage officer works with home loan applicants to resolve adverse credit issues
  B. An employee in bookkeeping accepts funds transfer requests from customers via telephone
  C. An employee in accounting works with customers to help understand how to reduce service charges
  D. A teller distributes bank brochures to customers who regularly conduct cash transactions below reporting limits
  D. A teller distributes bank brochures to customers who regularly conduct cash transactions below reporting limits

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  The activity of a teller distributing bank brochures to customers who regularly conduct cash transactions below reporting limits warrants further review. This is because the teller may be facilitating or encouraging structuring, which is a form of money laundering that involves breaking down large amounts of cash into smaller transactions to avoid detection or reporting requirements. Structuring is illegal and can expose the institution and the employee to civil or criminal penalties. The teller may also be acting as an agent or a recruiter for money launderers who use the bank's services to launder their illicit funds12. References: 1: CAMS Certification Package - 6th Edition | ACAMS, Chapter 2: Money Laundering Risks and Methods, p. 28-29 2: FATF Report: Money Laundering through the Physical Transportation of Cash, October 2015, p. 23-24, http://www.fatf-gafi.org/media/fatf/documents/reports/money-laundering- throughtransportation-cash.pdf

• Question 143:

  The branch manager notices that a number of customers come in weekly and always use the same teller to process their deposits. The manager notices that the customers and the teller, who are from the same ethnic group, are speaking in a foreign language and every once in a while the customers from local ethnic restaurants will bring the teller lunch. The commercial customers that visit the teller generally deposit the same amount of cash each time they come in. How should the branch manager respond to this activity?

  A. Transfer the teller to another branch
  B. Conduct further investigation before taking any other action
  C. Encourage the teller to bring in more business from the ethnic community
  D. Suggest to the teller to send the customers to other tellers to avoid the opportunity for collusion
  B. Conduct further investigation before taking any other action

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  The branch manager should conduct further investigation before taking any other action, as this activity may indicate possible money laundering or fraud. The branch manager should review the transaction records of the customers and the teller, and look for any unusual or suspicious patterns, such as large or frequent cash deposits, round amounts, structured transactions, or inconsistent information. The branch manager should also interview the teller and the customers, and ask them about the nature and purpose of their relationship, the source and use of funds, and the reason for choosing the same teller. The branch manager should document the findings and report any suspicious activity to the appropriate authorities, if necessary. References: CAMS Study Guide, 6th Edition, Chapter 3, Section 3.21 CAMS Study Guide, 6th Edition, Chapter 4, Section 4.21

• Question 144:

  What poses the greatest money laundering risk for a financial institution offering on-line services to customers?

  A. There is a greater difficulty in matching the customer with the provided identification documentation
  B. There is a lack of human review of the customer's transactions
  C. Institutions offering on-line services have no possibility to properly verify the identity of their customers
  D. Customers have direct access to their accounts without being detected
  A. There is a greater difficulty in matching the customer with the provided identification documentation

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  One of the key components of an effective anti-money laundering (AML) program is customer due diligence (CDD), which involves verifying the identity of the customer, understanding the nature and purpose of the customer's relationship with the financial institution (FI), and assessing the risk of money laundering or terrorist financing that the customer poses. CDD is essential for preventing and detecting the misuse of the FI' s services by criminals, and for complying with the relevant laws and regulations. However, CDD can be challenging for FIs that offer online services to customers, as there is a greater difficulty in matching the customer with the provided identification documentation. Unlike face-to-face interactions, online services rely on electronic or remote methods of identification and verification, such as scanned copies of documents, biometric data, digital signatures, or third-party verification services. These methods may not be as reliable or secure as physical verification, and may expose the FI to the risk of identity fraud, document forgery, or impersonation. Moreover, online services may attract customers from different jurisdictions, which may have different standards and requirements for identification and verification, and may pose different levels of risk. Therefore, FIs that offer online services to customers should implement enhanced due diligence (EDD) measures to mitigate the risk of money laundering, such as obtaining additional information or documentation from the customer, applying more stringent verification procedures, conducting more frequent and intensive monitoring of the customer's transactions and behavior, and restricting or limiting the types or amounts of transactions that the customer can perform online. References: CAMS Study Guide - 6th Edition, Chapter 3, Section 3.4, page 82 Anti-Money Laundering in a Nutshell, Chapter 4, Section 4.2, page 63 Guidance on Digital Identity, Section 2, page 8 Anti-Money Laundering, The Basics: Installment 1, Section 3.2, page 5

• Question 145:

  A compliance officer at an insurance company has been reviewing the transaction activity of several clients. Which transaction is considered a red flag for potential money laundering?

  A. A client paid the quarterly life insurance premium using money orders from two different banks.
  B. A client from a high-risk jurisdiction recently purchased property insurance for a real-estate development.
  C. A corporation owns several affiliates and recently opened separate group life insurance policies for each of the affiliates.
  D. A client established a $100,000 charitable annuity with a non-profit organization that provides health and safety assistance internationally.
  A. A client paid the quarterly life insurance premium using money orders from two different banks.

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  https://www.naic.org/documents/committees_d_antifraud_meetingcc_faqsinsurance_103105.pdf Paying the quarterly life insurance premium using money orders from two different banks is considered a red flag for potential money laundering. This is because money orders are often used by money launderers to avoid the scrutiny of banks and regulators, and to disguise the source and origin of funds12. Using money orders from two different banks also suggests that the client is trying to evade the reporting thresholds or the record-keeping requirements that apply to cash transactions3. The other transactions are not necessarily indicative of money laundering, although they may warrant further due diligence depending on the risk profile of the client and the nature of the insurance product. References: 1: AML in Insurance: How to Detect and Combat Money Laundering, ComplyAdvantage, 5; 2: AML fraud flags: best practices for insurers, Thomson Reuters, 6; 3: Money Laundering `Red Flags': How To Spot Risky Scenarios, ThinkAdvisor, 7

• Question 146:

  A businessman requests a European private bank to open a numbered or alternate name account. According to the Basel Committee on Banking Supervision principles, which of the following is the most important question the banker should ask?

  A. Who will control the account?
  B. Who will inherit the proceeds in the event of the businessman's death?
  C. How much money will be deposited into the account?
  D. What account-opening date should I record'!'
  A. Who will control the account?

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  According to the Basel Committee on Banking Supervision principles, the most important question the banker should ask when opening a numbered or alternate name account is who will control the account. This is because such accounts pose a higher risk of money laundering and terrorist financing, as they can be used to conceal the identity and beneficial ownership of the funds. Therefore, the banker should perform enhanced due diligence and verify the identity and source of funds of the person who has the authority to operate the account, as well as the purpose and nature of the business relationship12 The other questions are less relevant or secondary to the issue of control. The inheritance of the proceeds in the event of the businessman's death is a matter of succession law and does not affect the identification of the beneficial owner. The amount of money deposited into the account may indicate the level of risk, but does not reveal the origin or destination of the funds. The account-opening date is a procedural detail that does not affect the compliance with the anti-money laundering and counter-terrorist financing standards12 References: 1: Basel Committee on Banking Supervision - Core principles for effective banking supervision, 2012, Principle 14 and Essential Criterion 14.1 2: Basel Committee on Banking Supervision - Sound management of risks related to money laundering and financing of terrorism, 2014, Paragraphs 30 and 31

• Question 147:

  An anti-money laundering specialist at a financial institution has received a legal request to provide all transaction records for a specific individual since 2004. Which of the following item s should be delivered?

  1.

  Monthly statements and transaction activities for that individual since 2004.

  2.

  All wire transfers for that individual since 2004.

  3.

  Signature cards from accounts opened by that individual since 2004.

  4.

  All security trading activities for that individual since 2004.

  A. 1, 2, and 3 only
  B. 1, 2, and 4 only
  C. 1, 3, and 4 only
  D. 2, 3, and 4 only
  B. 1, 2, and 4 only

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  According to the CAMS study guide, chapter 4, page 1191, transaction records include any records that reflect the movement of funds or assets, such as wire transfers, checks, deposits, withdrawals, securities trades, etc. Therefore, items 1, 2, and 4 are examples of transaction records that should be delivered in response to a legal request. Item 3, signature cards, are not transaction records, but rather account opening documents that contain the customer's name, address, identification, and signature. These documents may be relevant for customer due diligence or identification purposes, but they do not reflect the transaction activities of the customer. References: ACAMS CAMS Study Guide - 6th Edition, Chapter 4, page 119: https://www.acams.org/wp-content /uploads/2019/09/ACAMS-CAMS-Study-Guide-6th-Edition-Chapter-4.pdf

• Question 148:

  Which are common types of economic sanctions? (Choose three.)

  A. Targeted sanctions
  B. Technological sanctions
  C. SWIFT network sanctions
  D. Sectoral sanctions
  E. Supervisory sanctions
  F. Comprehensive sanction
  A. Targeted sanctions
  D. Sectoral sanctions
  F. Comprehensive sanction

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  Economic sanctions are penalties imposed by a country or a group of countries on another country, entity, or individual for foreign policy or security purposes. There are different types of economic sanctions, depending on the scope, objective, and mechanism of the sanctions. Some of the common types are: Targeted sanctions: These are sanctions that aim to minimize the adverse effects on the general population and the environment, and focus on specific individuals, entities, sectors, or activities that are responsible for or involved in the undesirable behavior or conduct. Targeted sanctions can include travel bans, asset freezes, arms embargoes, and trade restrictions on certain goods or services. For example, the United States and the European Union have imposed targeted sanctions on various officials, entities, and sectors in Russia, Iran, Syria, Venezuela, and other countries for human rights violations, nuclear proliferation, terrorism, corruption, and other reasons. Sectoral sanctions: These are sanctions that target a specific sector or industry of the economy of the sanctioned country, such as energy, finance, defense, or transportation. Sectoral sanctions aim to disrupt the economic activity and revenue of the targeted sector, and to create pressure on the government or regime to change its policies or behavior. For example, the United States has imposed sectoral sanctions on Iran's oil, gas, petrochemical, and automotive industries, as well as its central bank and other financial institutions, to curb its nuclear program and support for regional proxies. Comprehensive sanction: These are sanctions that impose a total or near-total ban on trade, investment, and other economic relations with the sanctioned country. Comprehensive sanctions are the most severe and broadest form of economic sanctions, and they aim to isolate the country from the global market and cause severe economic hardship and social unrest. Comprehensive sanctions are often accompanied by diplomatic isolation and military intervention. For example, the United States has maintained a comprehensive embargo on Cuba since 1962, prohibiting most trade, travel, and financial transactions with the island nation, as well as supporting its political opposition and dissidents. References: What Are Economic Sanctions?, Council on Foreign Relations Types of Economic Sanctions, Profolus Economic sanctions, Wikipedia How Economic Sanctions Work, Investopedia CAMS Certification Package - 6th Edition, ACAMS CAMS Certifications: How to Get CAMS Certified, ACAMS Reference: https://www.cfr.org/backgrounder/what-are-economic-sanctions

• Question 149:

  Federal law requires all U.S. financial institutions to secure and maintain all records and supporting documentation used m suspicious activity reporting for how many years?

  A. 2 years
  B. 5 years
  C. 10 years
  D. No requirement
  B. 5 years

• Question 150:

  In order to protect investigative materials from disclosure when conducting an internal Investigation of any employee of a financial institution, legal counsel of that financial should________?

  A. Request formal company authorization to conduct the investigation. Such authorization should be granted, if possible, by the board of directors or audit committee
  B. Refuse to provide any records or documents to law enforcement because the bank has client privilege with its bank customers
  C. Let the bank hire any and all contract investigators to conduct the internal investigation. That way Legal is not a party to the action and may remain independent
  D. Not mark files or documents with privileged and Confidential: Attorney-Client Privilege and/or Work- Product. Those marks will only encourage law enforcement
  A. Request formal company authorization to conduct the investigation. Such authorization should be granted, if possible, by the board of directors or audit committee

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  According to the Anti-Money Laundering Specialist (the 6th edition) study guide, one of the best practices for conducting an internal investigation is to request formal company authorization to conduct the investigation. Such authorization should be granted, if possible, by the board of directors or audit committee, as this will help to establish the independence and legitimacy of the investigation, as well as the protection of the attorney-client privilege and the work product doctrine1. The other options are incorrect because: B. Refusing to provide any records or documents to law enforcement may be seen as obstructing justice or violating regulatory obligations, and may also result in the loss of the privilege or the imposition of sanctions or penalties23. C. Letting the bank hire any and all contract investigators may compromise the quality and integrity of the investigation, as well as the protection of the privilege or the work product doctrine, as the investigators may not be properly supervised or instructed by legal counsel, or may not be covered by the Kovel doctrine45. D. Not marking files or documents with privileged and confidential: attorney-client privilege and/or work-product may undermine the claim of the privilege or the work product doctrine, as it may indicate that the materials were not prepared for the purpose of seeking or providing legal advice or in anticipation of litigation, or that they were not intended to be kept confidential67. References: 1: ACAMS, CAMS Certification Package - 6th Edition, Chapter 5, page 150 2: ACAMS, CAMS Certification Package - 6th Edition, Chapter 5, page 151 3: Perkins Coie, Protecting Internal Investigation Materials From Disclosure, Updates, August 10, 2020 4: ACAMS, CAMS Certification Package - 6th Edition, Chapter 5, page 150 5: Eversheds Sutherland, Legal privilege of corporate internal investigations under US law - 2019 caselaw update, JDSupra, December 20, 2019 6: ACAMS, CAMS Certification Package - 6th Edition, Chapter 5, page 150 7: Norton Rose Fulbright, Internal investigations: when does privilege apply?, Global law firm, September 11, 2018