ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 151:

  After evaluating recent changes to international standards, an anti-money laundering specialist should consider enhanced due diligence on accounts held by

  1.

  lawyers.

  2.

  foreign exchange dealers.

  3.

  retail account holders.

  4.

  precious metal dealers.

  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

  ---

  Enhanced due diligence (EDD) is a higher level of customer due diligence that is required for customers or accounts that pose a higher risk of money laundering or terrorist financing. According to the FATF Recommendations, EDD measures may include obtaining additional information on the customer, the beneficial owner, the intended nature and purpose of the business relationship, the source and destination of funds, and the reasons for transactions. EDD is also required for customers or accounts that are from or in countries that do not have adequate AML/CFT systems or are subject to sanctions or embargoes. Among the four categories of customers or accounts listed in the question, lawyers, foreign exchange dealers, and precious metal dealers are considered as high-risk by the FATF and other international standards, and therefore require EDD. Lawyers may be involved in transactions that conceal the origin or ownership of illicit funds, such as creating shell companies, trusts, or foundations. Foreign exchange dealers may facilitate the movement of illicit funds across borders or jurisdictions, or provide anonymous or pseudonymous services. Precious metal dealers may deal with high-value goods that are easily convertible into cash, or may be used to launder proceeds of crime or evade sanctions. Retail account holders, on the other hand, are generally considered as low-risk customers or accounts, unless they exhibit unusual or suspicious behavior or transactions. Therefore, they do not require EDD by default, but only when there are specific indicators of higher risk. References: [ACAMS Study Guide for the CAMS Certification Examination, 6th Edition], Chapter 3: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), pp. 75-76, 79-80. FATF Guidance on Correspondent Banking Services, October 2016, pp. 7-8, 12-13. Customer Due Diligence - Overview, Federal Financial Institutions Examination Council, April 2018, pp. 1-2, 5-6. Customer due diligence, The Law Society, accessed on February 9, 2024. Anti-Money Laundering (AML) Source Tool for Broker-Dealers, U.S. Securities and Exchange Commission, May 16, 2022, pp. 1-2, 5-6.

• Question 152:

  A customer living in a high-risk jurisdiction makes frequent, large cash deposits at a bank. The same customer sends small wire transfers to unrelated parties in other high-risk jurisdictions. What are two red flags that may indicate money laundering? (Choose two.)

  A. The bank allows cash deposits
  B. The client resides in a high-risk jurisdiction
  C. Wire transfers are to high-risk jurisdiction
  D. Large cash deposits are from a high-risk jurisdiction
  C. Wire transfers are to high-risk jurisdiction
  D. Large cash deposits are from a high-risk jurisdiction

  ---

  Wire transfers to high-risk jurisdictions and large cash deposits from a high-risk jurisdiction are two red flags that may indicate money laundering. These activities suggest that the customer is trying to move funds from or to a country that has weak anti-money laundering (AML) controls, or that is known to be a source or destination of illicit funds12. Wire transfers can also be used to obscure the origin or destination of the funds, or to layer transactions through multiple accounts or intermediaries3. Large cash deposits can indicate that the customer is trying to avoid the reporting or record-keeping requirements that apply to cash transactions, or that the customer is dealing with proceeds from illegal activities45. The other two options are not necessarily red flags, as the bank may have legitimate reasons to allow cash deposits, and the client may reside in a high- risk jurisdiction for legitimate reasons. References: 1: FFIEC BSA/AML Examination Manual, Appendix F: Money Laundering and Terrorist Financing Red Flags, Geographic Concerns, 6; 2: AML Red Flags ?What are the Top 10 Indicators?, ComplyAdvantage, 5; 3: FFIEC BSA/AML Examination Manual, Appendix F: Money Laundering and Terrorist Financing Red Flags, Transaction Has Unusual Features, 6; 4: FFIEC BSA/AML Examination Manual, Appendix F: Money Laundering and Terrorist Financing Red Flags, Unusual Source of Funds, 6; 5: Money Laundering Red Flags | Key Behaviours and Indicators, High Speed Training, 8. Reference: https://aml-cft.net/library/banks-amlcft-red-flags/

• Question 153:

  Which step should be taken to understand the types of financial institutions to whom the services are being offered when a correspondent bank permits "nested" relationships according to the Wolfsberg Group?

  A. Review peer-group clients by risk category
  B. Understand the type and volume of accounts serviced
  C. Evaluate the distribution of downstream correspondents and identify any direct or indirect issues
  D. Obtain independent audits or examination reports for "nested" relationships to determine risk levels
  C. Evaluate the distribution of downstream correspondents and identify any direct or indirect issues

  ---

  According to the Wolfsberg Group, a correspondent bank should evaluate the distribution of downstream correspondents and identify any direct or indirect issues when it permits "nested" relationships, which are arrangements where a respondent bank provides correspondent banking services to other banks that are not customers of the correspondent bank. This step is important to understand the types of financial institutions to whom the services are being offered and the potential risks they pose. The correspondent bank should also obtain information on the nature and extent of the nested activity, the due diligence performed by the respondent bank on the nested banks, and the controls and monitoring in place to prevent financial crime. References: Wolfsberg Correspondent Banking Principles 20221, Section 4.5: Nested Relationships Guidance on Correspondent Banking Services2, Section 3.2.2: Nested Correspondent Banking Relationships Reference: http://www.qfcra.com/en-us/whatwedo/AntiMoneyLaundering/Documents/Guidance%20on% 20Correspondent%20Banking%20May%202018.pdf (7) P/6, Wolfsberg Anti-Money Laundering Principles for Correspondent Banking 2014 https://www.wolfsberg- principles.com/sites/default/files/wb/pdfs/wolfsberg-standards/8.%20Wolfsberg-Correspondent-Banking- Principles-2014.pdf

• Question 154:

  Which of the following is the main reason Internet gambling is an ideal web-based money laundering method?

  A. Ease of connection and low subscription rate with major Internet service providers.
  B. High credibility of gambling websites.
  C. Ability to transfer value across jurisdictions.
  D. Large number of offshore websites located in known high-crime areas.
  C. Ability to transfer value across jurisdictions.

  ---

  Internet gambling is an ideal web-based money laundering method because it allows criminals to move funds across borders quickly, anonymously, and with minimal oversight12. Internet gambling sites can facilitate the placement, layering, and integration stages of money laundering by accepting cash deposits, issuing virtual credits, allowing bets on various games, and paying out winnings through different payment methods12. Internet gambling also poses challenges for law enforcement and regulators, as it operates in a complex and dynamic environment that involves multiple jurisdictions, service providers, and technologies12. References: ACAMS CAMS Study Guide (the 6th edition), Chapter 2: Money Laundering Risks and Methods, page ACAMS Today, The Growing Threat of Online Gambling Money Laundering2

• Question 155:

  Which two actions should Financial Intelligence Units (FIUs) take when submitting a request to another FIU? (Choose two.)

  A. Send the same request to all FIUs
  B. Disclose the reason and purpose for the request
  C. Provide feedback on how the information was used
  D. Make best efforts to provide complete and factual information
  B. Disclose the reason and purpose for the request
  C. Provide feedback on how the information was used

  ---

  According to the Egmont Group of Financial Intelligence Units, which is a global network of FIUs that promotes information exchange and cooperation, FIUs making requests to another FIU should disclose the reason and purpose for the request, and provide feedback on how the information was used12. These actions are intended to enhance mutual trust, transparency, and accountability between FIUs, and to facilitate the effective use of financial intelligence and information for combating money laundering, terrorist financing, and other financial crimes12. FIUs making requests should also respect the confidentiality and data protection requirements of the FIU receiving the request, and avoid imposing unreasonable or unduly restrictive conditions12. FIUs making requests should not send the same request to all FIUs, as this would be inefficient, unnecessary, and potentially harmful. FIUs should only send requests to FIUs that are relevant and competent to provide the information they need, based on the nature and scope of the case12. Sending the same request to all FIUs could overload the system, create duplication, and compromise the security and confidentiality of the information12. FIUs making requests should also make best efforts to provide complete and factual information, but this is not an action they should take when submitting a request, but rather when responding to a request from another FIU12. References: Egmont Group of Financial Intelligence Units Operational Guidance for FIU Activities and the Exchange of Information Principles for Information Exchange Between Financial Intelligence Units

• Question 156:

  Three individuals enter a casino and use cash to purchase chips worth 20,000 USD. The trio uses 200 USD in chips to play games and then combine their funds to request a casino cheque. What is the potential red flag that alludes to money laundering?

  A. The trio purchased the chips with cash and proceeded to gamble.
  B. The trio engage in minimal gambling and combine the funds to request a casino cheque for the chips presented.
  C. The trio uses chips worth 200 USD to gamble before requesting the refund.
  D. The trio purchased chips worth 20,000 USD and requested a casino cheque for the remaining chips.
  B. The trio engage in minimal gambling and combine the funds to request a casino cheque for the chips presented.

  ---

  The potential red flag that alludes to money laundering is option B, where the trio engage in minimal gambling and combine the funds to request a casino cheque for the chips presented. This behavior is indicative of structuring, which involves breaking down large transactions into smaller ones to avoid detection by the casino and regulatory authorities. The fact that the trio only used a small amount of chips to play games, and then combined their funds to request a casino cheque, raises suspicions that they may be attempting to disguise the origin of their funds.

• Question 157:

  An international bank is investigating a payment requested by a correspondent banking partner . The payment originated from a corporation located in Hong Kong , and the final beneficiary is an individual in New York . The transaction

  triggered an alert in the bank's automated transaction monitoring system .

  Which steps should the bank take first to address the alert? (Select Three.)

  A. Call the receiving individual to review identity verification documents.
  B. Confirm that neither the beneficiary nor the originator are sanctioned parties.
  C. Request supporting documents, including invoices and contracts, to confirm the purpose of the payment.
  D. Check for negative news in public sources on the sender and receiver.
  E. Send a 314(b) request to the corporation's bank in Hong Kong.
  B. Confirm that neither the beneficiary nor the originator are sanctioned parties.
  C. Request supporting documents, including invoices and contracts, to confirm the purpose of the payment.
  D. Check for negative news in public sources on the sender and receiver.

  ---

  When investigating a potentially suspicious cross-border payment , a financial institution should follow risk-based due diligence procedures . Option B (Correct): Sanctions screening is critical to ensure the originator or beneficiary is not listed on OFAC, EU, UN, or other sanctions lists . Option C (Correct): Requesting supporting documents (e.g., invoices, contracts) helps determine whether the transaction is consistent with the customer's profile . Option D (Correct): Conducting negative news (adverse media) checks helps identify financial crime risks, such as fraud or money laundering . Option A (Incorrect): Banks do not directly call transaction recipients unless there is a clear suspicion requiring customer verification. Option E (Incorrect): 314(b) requests under the USA PATRIOT Act allow information sharing among U.S. financial institutions but cannot be used for foreign banks .

• Question 158:

  An anti-money laundering specialist is employed by a large multi-national bank. The bank is planning to open an international department that will be responsible for expanding services to various countries. The head of the new international department has asked the specialist to assess risks associated with the bank's expansion plans. Which of the following materials should be included as a reference?

  1.

  USA PATRIOT Act

  2.

  Financial Action Task Force 40 Recommendations

  3.

  Customer Due Diligence for Banks issued by the Basel Committee on Banking Supervision

  4.

  The Egmont Group Statement of Purpose

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

  ---

  The Financial Action Task Force (FATF) 40 Recommendations are the international standards for combating money laundering and terrorist financing, and they apply to all countries and financial institutions. The Customer Due Diligence for Banks issued by the Basel Committee on Banking Supervision provides guidance on how banks should conduct CDD and KYC procedures, and how they should manage the risks of correspondent banking and wire transfers. The Egmont Group Statement of Purpose outlines the objectives and functions of the Egmont Group, which is an international network of financial intelligence units (FIUs) that exchange information and cooperate in the fight against money laundering and terrorist financing. These three materials are relevant and useful for the bank's expansion plans, as they cover the main aspects of AML /CFT compliance in different jurisdictions and sectors. The USA PATRIOT Act is a US-specific legislation that enhances the powers and obligations of US authorities and financial institutions in relation to AML/CFT, but it may not be applicable or appropriate for other countries where the bank intends to operate. Therefore, it is not a necessary reference material for the bank's international department. References: FATF 40 Recommendations Customer Due Diligence for Banks Egmont Group Statement of Purpose

• Question 159:

  What are the most effective measures that can be taken to boost risk appetite awareness across an organization after a Risk Appetite Statement (RAS) has been set and a risk appetite framework has been drafted? (Select Three.)

  A. Integrate the unalignment with risk appetite into internal reporting procedures.
  B. Train all managers to understand the importance and benefits of "good" risk-taking.
  C. Describe risk controls for business colleagues.
  D. Embed the risk appetite into everyday processes and governance.
  E. Provide training to staff to understand the role risk appetite and its limits play for the safe conduct of business.
  A. Integrate the unalignment with risk appetite into internal reporting procedures.
  D. Embed the risk appetite into everyday processes and governance.
  E. Provide training to staff to understand the role risk appetite and its limits play for the safe conduct of business.

  ---

  A Risk Appetite Statement (RAS) helps financial institutions define acceptable risk levels and align them with regulatory compliance and business strategy . Option A (Correct): Incorporating risk appetite adherence into internal reporting ensures consistent enforcement and accountability across business functions. Option D (Correct): Embedding risk appetite into daily processes ensures that compliance is built into the organization's culture and operations. Option E (Correct): Training employees on risk appetite awareness helps them understand compliance limits and risk management principles. Why Other Options Are Incorrect: Option B (Incorrect): While training managers on "good" risk-taking is valuable, it does not directly enhance risk appetite awareness for compliance . Option C (Incorrect): Describing risk controls is useful but insufficient for embedding risk appetite into an organization's structure. Best Practices for Implementing Risk Appetite Awareness: Ensure risk appetite is a key part of regulatory and operational reporting. Train employees at all levels on risk tolerance boundaries. Integrate risk appetite considerations into product development and customer onboarding processes.

• Question 160:

  Which operational situation might indicate that money laundering is occurring at or through a deposit- taking financial institution ?

  A. The institution has observed an increase in customer demand for large-denomination banknotes.
  B. The institution has observed an increase in the adoption of its digital products and services.
  C. The institution has observed a reduced settlement time in the transaction services that support the rapid movement or remittance of funds.
  D. The institution maintains a sequentially numbered log of the monetary instruments it sells.
  A. The institution has observed an increase in customer demand for large-denomination banknotes.

  ---

  Money launderers prefer large-denomination bills because they facilitate bulk cash smuggling and placement . Option A (Correct): Increased demand for large-denomination banknotes is a known money laundering red flag . Option B (Incorrect): Increased digital service adoption is normal banking behavior . Option C (Incorrect): Faster settlement times may reflect technology upgrades, not financial crime . Option D (Incorrect): Maintaining a log of monetary instruments is a compliance best practice , not a red flag.