ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 171:

  A financial institution (FI) is being investigated for possible money laundering. When cooperating with law enforcement agencies, which additional steps should the FI ensure are taken? (Choose two.)

  A. Centralized control is maintained over all requests and responses to ensure completeness and timely responses.
  B. Make employees, including corporate officers, unavailable for interviews and refuse documents upon receipt of a subpoena.
  C. Subpoenas and other information requests should be reviewed by senior management and an investigations group or counsel.
  D. Address the document destruction policy to ensure the relevant documents are destroyed.
  E. Inquiries from the media are not answered directly, but rather are addressed by replying, "No comment."
  A. Centralized control is maintained over all requests and responses to ensure completeness and timely responses.
  C. Subpoenas and other information requests should be reviewed by senior management and an investigations group or counsel.

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  When an FI is being investigated for possible money laundering, it is important that it cooperates with the law enforcement agencies (LEAs) in a professional and transparent manner. This means that the FI should take the following steps: Maintain centralized control over all requests and responses to ensure completeness and timely responses. This will help the FI to avoid duplication, inconsistency, or omission of information, as well as to track the status and progress of the requests and responses. It will also facilitate the communication and coordination between the FI and the LEAs, and demonstrate the FI's willingness to cooperate12. Review subpoenas and other information requests by senior management and an investigations group or counsel. This will help the FI to assess the scope, relevance, and legality of the requests, as well as to identify any potential risks, conflicts, or sensitivities. It will also enable the FI to prepare and provide the requested information in an accurate and timely manner, and to seek clarification or negotiation if necessary13. The other options are not advisable, as they may indicate a lack of cooperation, obstruct the investigation, or damage the FI's reputation. For example: Making employees, including corporate officers, unavailable for interviews and refusing documents upon receipt of a subpoena may be considered as non-compliance, evasion, or contempt of court, and may result in legal sanctions or penalties4. Addressing the document destruction policy to ensure the relevant documents are destroyed may be seen as tampering with evidence, destroying records, or concealing information, and may constitute a criminal offence or a breach of regulatory obligations5. Not answering inquiries from the media directly, but rather replying, "No comment" may create a negative impression, fuel speculation, or invite criticism, and may harm the FI's image, credibility, or trustworthiness. References: Cooperation between FIUs, Law Enforcement Authorities, and Prosecutors AML and Financial crimes investigation Mechanisms for interaction of law enforcement agencies in the field of counteracting and combating money laundering Recommendation 30: Responsibilities of law enforcement and investigative authorities Money laundering and illicit finance

• Question 172:

  According to Basel Committee guidelines, which level of the organization should determine whether or not to enter business relationships with higher risk customers?

  A. First-level management
  B. Senior management
  C. Account opening staff
  D. Middle management
  B. Senior management

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  According to the Basel Committee guidelines, banks should formulate a customer acceptance policy and a tiered customer identification programme that involves more extensive due diligence for higher risk customers12. The customer acceptance policy should be approved by senior management and include clear guidelines on the types of customers that are likely to pose a higher than average risk to the bank1. Senior management should also ensure that the bank has adequate resources and systems to effectively manage the risks associated with higher risk customers1. Therefore, senior management should determine whether or not to enter business relationships with higher risk customers, based on the bank's risk appetite, policies, and procedures.

• Question 173:

  Who has the ultimate responsibility within a bank for ensuring that the bank has a comprehensive and effective Bank Secrecy Act / anti-money laundering (BSA/AML) program and oversight framework that is reasonably designed to ensure compliance with applicable regulations?

  A. Senior management
  B. Board of directors
  C. Business line managers
  D. BSA/AML compliance officer
  B. Board of directors

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  The board of directors has the ultimate responsibility within a bank for ensuring that the bank has a comprehensive and effective BSA/AML program and oversight framework that is reasonably designed to ensure compliance with applicable regulations. According to the Federal Financial Institutions Examination Council (FFIEC) BSA/AML Examination Manual, the board of directors must approve the BSA/AML compliance program, which includes the BSA/AML policy, internal controls, independent testing, designated BSA/AML compliance officer, and training1. The board of directors must also provide sufficient resources, ensure qualified staff, and hold senior management accountable for implementing and adhering to the BSA /AML compliance program1. References: 1: FFIEC BSA/AML Examination Manual, Board of Directors and Senior Management Oversight

• Question 174:

  The product department of an insurance company proposes launching a special life insurance product with investment elements that allow clients to instruct payments to unknown third parties via partner financial institutions. The product

  department seeks fast-track approval from compliance to ensure quick market launch.

  What is the best course of action from a compliance perspective?

  A. Do not sign off on the product because it contains the option to make payments to unknown third parties, which carries a high money laundering risk.
  B. Sign off on the product because client KYC is complete, and unknown individuals can be added or removed throughout the duration of the contract.
  C. Do not sign off on the product because the compliance department was not involved from the beginning of the product development process, which is a severe governance violation.
  D. Sign off on the product quickly to gain a competitive advantage while evaluation by compliance can be completed later.
  A. Do not sign off on the product because it contains the option to make payments to unknown third parties, which carries a high money laundering risk.

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  The life insurance industry is vulnerable to money laundering and terrorist financing , especially when policies allow payments to unknown third parties . Option A (Correct): Allowing policyholders to transfer funds to unknown third parties increases the risk of money laundering . FATF and EU AML Directives highlight life insurance policies as high- risk products. Option B (Incorrect): Completing KYC does not eliminate risk . Customers can use legitimate insurance products for illicit purposes. Option C (Incorrect): While governance violations should be addressed, the main concern here is money laundering risk , not the compliance team's involvement in product development. Option D (Incorrect): Fast-tracking approval without proper risk assessment creates regulatory and reputational risks.

• Question 175:

  A foreign politically exposed person (PEP) requests to add a beneficiary to a file insurance policy. How should the request be processed to mitigate risk?

  A. Perform due diligence on the beneficiary
  B. Determine the source of wealth and source of funds
  C. Decline the request if the beneficiary is a foreign PEP
  D. Decline the request to add a beneficiary due to increased risk
  A. Perform due diligence on the beneficiary

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  According to the FATF Recommendation 12, financial institutions should take reasonable measures to determine whether the beneficiaries of a life insurance policy and/or, where required, the beneficial owner of the beneficiary are politically exposed persons. This should occur at the latest at the time of the payout1. The purpose of this requirement is to prevent the abuse of life insurance products for money laundering or terrorist financing by PEPs or their associates. Therefore, the best way to mitigate the risk of adding a beneficiary to a life insurance policy for a foreign PEP is to perform due diligence on the beneficiary, such as verifying their identity, relationship with the PEP, and source of funds2. The other options are not correct because they either do not comply with the FATF standards, or do not adequately address the risk of adding a beneficiary to a life insurance policy for a foreign PEP. Determining the source of wealth and source of funds is a measure that should be applied to the PEP as the customer, not the beneficiary, as part of the enhanced due diligence process2. Declining the request if the beneficiary is a foreign PEP may not be feasible or proportional, as not all foreign PEPs are involved in money laundering or terrorist financing, and some may have legitimate reasons to add a beneficiary to their life insurance policy. Declining the request to add a beneficiary due to increased risk may also not be feasible or proportional, as it may violate the contractual rights of the PEP as the customer, and may not be necessary if the due diligence on the beneficiary does not reveal any red flags or suspicions. References: https://complyadvantage.com/insights/peps-life-insurance/ https://www.cfatf-gafic.org/index.php/documents/fatf-40r/378-fatf-recommendation-12-politically-exposed- persons

• Question 176:

  In establishing procedures for the review of suspicious transactions and filling of STRs, what thing should an institution focus on?

  A. The need to have on-going training as to potential red flags that the institution might encounter
  B. The appropriateness of having a centralized review of suspicious transactions and recommendations to file an STR to ensure consistency
  C. A system for tracking STRs and ensuring that appropriate supporting documentation is segregated and maintained
  D. The need not to ensure that the institution has a strong case of impropriety before filling an STR
  B. The appropriateness of having a centralized review of suspicious transactions and recommendations to file an STR to ensure consistency

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  An institution should focus on the appropriateness of having a centralized review of suspicious transactions and recommendations to file an STR to ensure consistency. This is because a centralized review process can help to avoid duplication, inconsistency, or omission of STRs, as well as to ensure compliance with regulatory requirements and internal policies. A centralized review process can also facilitate the analysis of trends, patterns, and typologies of suspicious transactions across the institution, and enable the communication and coordination with relevant stakeholders, such as law enforcement, regulators, or other financial institutions.

• Question 177:

  A customer comes into a financial institution and deposits a large amount of cash. He has never done that before. When asked about the deposit, he indicates he recently sold a used car and received cash. He does not trust forms of payment and is wary of counterfeit money orders. What should the bank do?

  A. The bank has received a plausible explanation, so it should do nothing
  B. While the explanation appears plausible, the institution should, for a period of time, monitor the account for cash transactions and suspicious activity
  C. While the explanation may be plausible, the institute should nonetheless file a Suspicious Transaction Report to protect itself
  D. The institution should close the account before another issues arise
  B. While the explanation appears plausible, the institution should, for a period of time, monitor the account for cash transactions and suspicious activity

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  A large cash deposit is a potential indicator of money laundering, especially if it is inconsistent with the customer's profile or behavior. Therefore, the bank should ask the customer about the source and purpose of the funds, and verify the information if possible. In this case, the customer claims to have sold a used car and received cash, which may be a reasonable explanation. However, the bank should not rely solely on the customer's statement, but should also monitor the account for any further cash transactions or suspicious activity that may indicate money laundering. For example, the bank should check if the customer withdraws the cash soon after the deposit, transfers the funds to other accounts or jurisdictions, or engages in structuring or smurfing to avoid reporting thresholds. The bank should not do nothing, as this may expose the bank to regulatory or reputational risks, or facilitate money laundering. The bank should also not file a Suspicious Transaction Report (STR) unless there are other grounds to suspect money laundering, as this may be premature or unnecessary. The bank should not close the account before another issues arise, as this may be disproportionate or discriminatory, and may also alert the customer to the bank's suspicion.

• Question 178:

  An international bank is investigating a payment requested by one of its correspondent relationships that generated an alert in the automated transaction monitoring system . The payment originated from a corporation located in Hong Kong , and the final beneficiary is an individual in New York . 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.

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  Correspondent banking relationships present high money laundering risks , requiring enhanced due diligence (EDD) when monitoring cross-border transactions . Option B (Correct): Verifying that neither the sender nor the receiver is on a sanctions list is a mandatory AML check. Option C (Correct): Requesting invoices and contracts helps establish the legitimacy of the transaction and ensures funds are being used for their stated purpose . Option D (Correct): Conducting adverse media checks can reveal past financial crime links or regulatory issues related to the sender or beneficiary. Why Other Options Are Incorrect: Option A (Incorrect): Calling the individual is not a standard AML procedure and may violate privacy laws . Option E (Incorrect): 314(b) information sharing applies only to U.S. financial institutions --the bank should first conduct its internal review before escalating internationally . Best Practices for Investigating Suspicious Correspondent Banking Transactions: Check for links to known money laundering typologies. Verify business relationships using supporting documentation. Ensure transaction transparency through KYC/CDD measures.

• Question 179:

  A financial institution is reorganizing and the anti-money laundering officer is now required to report to the Sales Director. Which of the following statements about this situation is most correct?

  A. The reorganization will ensure communication of anti-money laundering issues to the board.
  B. The reorganization will enhance the compliance framework.
  C. The anti-money laundering officer should be elevated to a position on the Board.
  D. The anti-money laundering officer should be independent of business functions.
  D. The anti-money laundering officer should be independent of business functions.

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  The anti-money laundering officer (AML officer) is responsible for overseeing the implementation and effectiveness of the anti-money laundering (AML) program of a financial institution. The AML officer should have sufficient authority, independence, and access to resources to perform this role. Reporting to the Sales Director may compromise the independence and objectivity of the AML officer, as the Sales Director may have conflicting interests or incentives that could influence the AML officer's decisions or actions. The AML officer should report to a senior management level that is independent of business functions and has direct access to the board of directors or a relevant committee. This would ensure that the AML officer can communicate any AML issues or concerns to the board without any interference or undue influence from the business functions. References: Some of the references that support this answer are: ACAMS Study Guide for the CAMS Certification Examination, Chapter 2, Section 2.2.1, page 41: "The AML officer should report to a senior management level that is independent of the business line and has direct access to the board of directors or a relevant committee." Money Laundering Reporting Officer: The Role Of MLRO, Section "Role Of Money Laundering Reporting Officer": "The MLRO should have independent monitoring and should be able to connect directly with people who make business decisions, such as senior management or the board of directors." Money Laundering Reporting Officer (MLRO)? | Dow Jones, Section "What is a Money Laundering Reporting Officer (MLRO)?": "A Money Laundering Reporting Officer (MLRO) is tasked with overseeing a firm's compliance with the Financial Conduct Authority's (FCA) rules on money laundering. ... The MLRO should have sufficient authority and independence within the firm to carry out their responsibilities effectively."

• Question 180:

  Which method is used to launder money via wire remittances sent through a bureau de change or money services business?

  A. A customer in country A makes a weekly small wire transfer to the bank account of an individual in country
  B. A customer in country A makes frequent wire transfers to a single customer in country B that are slightly under the legal reporting threshold.
  C. A large number of wire transfers are sent from a large number of senders in country A to a large number of recipients in country B during the period of December 1 to December 15.
  D. A customer in country A receives four small wire transfers from four different individuals located in country B on December 21. The aggregate of the wire transfers falls below the legal reporting threshold.
  B. A customer in country A makes frequent wire transfers to a single customer in country B that are slightly under the legal reporting threshold.

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  The correct answer is B, because it describes a method of money laundering known as structuring or smurfing. This is when a customer or a group of customers break down large amounts of illicit funds into smaller transactions that are below the reporting threshold, and then send them to another customer or entity, often in another country. This way, they avoid triggering any suspicion or regulatory reporting by the bureau de change or money services business (MSB) that processes the wire transfers. Structuring or smurfing is a common technique used by money launderers to move funds across borders and disguise their origin and destination. The other options are not necessarily indicative of money laundering, although they may require further investigation depending on the circumstances and the risk profile of the customers and countries involved. Option A describes a regular and small wire transfer that may be legitimate, such as a remittance to a family member or a friend. Option C describes a large volume of wire transfers that may be related to a seasonal or business activity, such as a holiday or a trade event. Option D describes a series of small wire transfers that may be coincidental or random, and do not necessarily add up to a significant amount. 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 2, pages 36-37 https://www.acams.org/wp-content/uploads/2019/09/ACAMS-CAMS-Study-Guide-6th-Edition-Chapter-2.pdf