ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 201:

  An anti-money laundering specialist has been hired by an independently-owned community bank to implement an anti-money laundering compliance program. This bank has recently seen a dramatic increase in the number of international electronic fund transfers from its commercial clients. The first thing the anti- money laundering specialist should do is

  A. file a suspicious transaction report on international customers receiving large electronic fund transfers.
  B. conduct a risk assessment of the bank's international electronic fund transfer activity.
  C. develop a new account questionnaire to quantify the level of risk for new international accounts.
  D. close all accounts which have had a dramatic increase in international electronic fund transfer activity.
  B. conduct a risk assessment of the bank's international electronic fund transfer activity.

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  The first thing the anti-money laundering specialist should do is to conduct a risk assessment of the bank's international electronic fund transfer activity. This is to identify and measure the potential money laundering and terrorist financing risks associated with the bank's products, services, customers, and geographic locations. A risk assessment can help the anti-money laundering specialist to: Understand the nature and extent of the bank's exposure to money laundering and terrorist financing threats and vulnerabilities. Establish a risk-based approach to the design and implementation of the anti-money laundering compliance program, including policies, procedures, controls, monitoring, reporting, and training. Allocate appropriate resources and prioritize actions to mitigate the identified risks and enhance the effectiveness of the anti-money laundering compliance program. Demonstrate to the regulators and auditors that the bank has a sound and comprehensive anti-money laundering compliance program that is commensurate with its risk profile and business activities. References: CAMS Study Guide - 6th Edition, Chapter 6, pages 167-168 CAMS Certification Exam Outline, Domain 3, Task 3.1, Skill 3.1.1 Anti-Money Laundering Bulletin November 2021 - Central Bank of Ireland, pages 4-5 Money Laundering through Money Remittance and Currency Exchange Providers, FATF, June 2010, pages 7-8 REGULATIONS - FIU, Part III, Regulation 9, pages 9-10

• Question 202:

  A compliance officer of a financial institution is reviewing a payment for sanctions compliance between two parties in Europe and Asia. The payment is in Euros and involves the provision of services to a company located in a jurisdiction subject to Office of Foreign Assets Control secondary sanctions. Which factor is most important in determining the compliance officer's response?

  A. Asset freezes only prohibit US companies from engaging in certain activities with counterparts from a sanctioned jurisdiction.
  B. A one-off commercial transaction conducted between parties in Europe and Asia is not subject to secondary sanctions.
  C. The threat of US sanctions against foreign individuals and entities continues to exist despite the absence of a US nexus.
  D. Secondary sanctions only target specific sectors of the economy such as the banking and finance sectors.
  C. The threat of US sanctions against foreign individuals and entities continues to exist despite the absence of a US nexus.

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  The threat of US sanctions against foreign individuals and entities continues to exist despite the absence of a US nexus. This is stated in the Certified Anti-Money Laundering Specialist (the 6th edition) manual on page 591, which states: "It is important to note that the threat of US sanctions against foreign individuals and entities continues to exist even when there is no direct US nexus (i.e., no US persons or assets involved)."

• Question 203:

  Which three statements are true regarding the extraterritorial reach of laws and legislation of the U.S.?

  A. The criminal anti-money laundering law can apply totransactions that occur partially overseas
  B. Economic and trade sanctions by OFAC may pose extraterritorial risks for financial institutions and businesses outside the U.S.
  C. The extraterritorial reach covers all transactions throughout the global economy D. The defendant does not need to know the funds came from an illegal activity under state, federal or foreign law
  A. The criminal anti-money laundering law can apply totransactions that occur partially overseas
  B. Economic and trade sanctions by OFAC may pose extraterritorial risks for financial institutions and businesses outside the U.S.

• Question 204:

  The Wolfsberg Anti-Money Laundering Principles for Private Banking require new clients to be approved by whom?

  A. The board of directors
  B. Only the private banker
  C. The private banker's supervisor
  D. At least one person other than the private banker
  D. At least one person other than the private banker

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  The Wolfsberg Anti-Money Laundering Principles for Private Banking require new clients to be approved by at least one person other than the private banker. This is because the private banker may have a conflict of interest or be influenced by the client's wealth or reputation. The approval process should involve a senior manager or a compliance officer who can independently assess the client's risk profile and suitability for the institution's services12. References: 1: CAMS Certification Package - 6th Edition | ACAMS, Chapter 2: Money Laundering Risks and Methods, p. 37 2: The Wolfsberg Group, The Wolfsberg Anti-Money Laundering Principles for Private Banking, June 2000, p. 3, https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/Wolfsberg-AML-Principles-for- Private-Banking-June-2000.pdf https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/wolfsberg-standards/10.%20Wolfsberg-Private-Banking-Prinicples-May-2012.pdf (04)

• Question 205:

  What are the rules imposed by Office of Foreign Assets Control (OFAC) for legal entities and persons related to the U.S.? (Choose two.)

  A. Any foreign corporation is also penalized if it conducts transactions with sanctioned countries under OFAC rules.
  B. A subsidiary of a legal entity of the U.S., which is formally registered in a foreign country, is exempt from OFAC rules.
  C. A foreign individual visiting the U.S. for a short vacation is obligated to follow OFAC rules.
  D. The head office of a foreign legal entity which has a branch in the U.S. does not need to comply with OFAC rules.
  E. Nationals of the U.S. must comply with OFAC rules, regardless of where they are located in the world.
  C. A foreign individual visiting the U.S. for a short vacation is obligated to follow OFAC rules.
  E. Nationals of the U.S. must comply with OFAC rules, regardless of where they are located in the world.

• Question 206:

  According to the Basel Committee on Banking Supervision, banks should deal with high-risk customers by:

  A. maintaining segregated records to enable easy inspection by law enforcement in case of a subpoena.
  B. assigning those customers to specified private bankers for better monitoring of their offshore transactions.
  C. performing enhanced due diligence including enhanced ongoing monitoring of the account activity.
  D. seeking approval from the board of directors before establishing the relationship.
  C. performing enhanced due diligence including enhanced ongoing monitoring of the account activity.

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  According to the Basel Committee on Banking Supervision, banks should apply a risk-based approach to customer due diligence, which means that they should adopt enhanced measures for higher-risk customers and simplified measures for lower-risk customers. Enhanced due diligence (EDD) may include obtaining additional information on the customer's identity, source of funds, business activities, beneficial owners, and expected transactions, as well as conducting more frequent and intensive monitoring of the account activity. EDD is especially important for customers who are politically exposed persons (PEPs), who are from or have connections with high-risk countries or jurisdictions, or who are involved in high-risk industries or sectors. Therefore, performing EDD including enhanced ongoing monitoring of the account activity is the correct way for banks to deal with high-risk customers. References: Basel Committee on Banking Supervision, CAMS Study Guide, 6th Edition, Chapter 4, page 121. Reference: https://www.bis.org/bcbs/basel3.htm

• Question 207:

  Which practices are crucial for ensuring that an organization effectively limits the collection and use of personal data when performing AML-related controls ?

  A. Allowing unrestricted access to customer data across departments to facilitate quick decision- making.
  B. Implementing data minimization strategies to collect only the personal data necessary for transaction monitoring.
  C. Regularly reviewing and updating data processing policies to ensure they align with industry standards.
  D. Allowing repurposing of collected data to avoid redundant processes.
  B. Implementing data minimization strategies to collect only the personal data necessary for transaction monitoring.
  C. Regularly reviewing and updating data processing policies to ensure they align with industry standards.

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  AML compliance must be balanced with data protection laws such as GDPR (EU), CCPA (U.S.), and local banking secrecy laws . Option B (Correct): Data minimization ensures financial institutions only collect and retain essential customer data needed for AML compliance. Option C (Correct): Regularly updating data processing policies ensures compliance with evolving data protection regulations. Why Other Options Are Incorrect: Option A (Incorrect): Unrestricted access to customer data increases privacy risks and can violate GDPR and other data protection laws . Option D (Incorrect): AML data must not be repurposed without regulatory justification , as GDPR requires data usage to align with its original collection purpose . Best Practices for Managing Data Privacy in AML Compliance: Restrict access to AML data on a need-to-know basis. Implement strong encryption and security controls for customer data. Ensure all AML-related data collection aligns with privacy regulations.

• Question 208:

  Which of the following is the most common risk with a Personal or Private Investment Company (PIC)?

  A. They are almost always owned by politically exposed persons
  B. They are usually established in financial secrecy havens
  C. They often lack transparent ownership
  D. They are not publicly traded
  C. They often lack transparent ownership

• Question 209:

  A long-term client of an insurance company makes changes to a policy that require payment of an additional lump sum. The amount payable is high, though within the client's means based on the KYC information collected. The payment is made via a company in another jurisdiction that is known to have lax AML controls. Which indicator of suspicious activity is present?

  A. The payment was made via a company that appears to be owned and controlled by the client being insured.
  B. The payment was made via a company in a jurisdiction known to have lax AML controls.
  C. A long-term client wants a change to a policy that is already in force.
  D. The additional premium payable appears to be within the client's means based on the KYC information collected.
  B. The payment was made via a company in a jurisdiction known to have lax AML controls.

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  Making payments via a company located in a jurisdiction that is known to have lax anti-money laundering controls is a sign of suspicious activity and should be reported. When making a payment of this nature, the insurance company should be aware of the client's source of funds and the possible risks associated with the transaction.

• Question 210:

  What describes the Black Market Peso Exchange money laundering method?

  A. The best known money laundering method used by known terrorists
  B. An undercover technique to identify politically exposed persons who may assist money launderers
  C. A method primarily used by narcotics traffickers to transfer value back to the source country
  D. A method used to smuggle dollars or pesos across that border from the U.S. to Mexico, and vice versa
  C. A method primarily used by narcotics traffickers to transfer value back to the source country

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  The Black Market Peso Exchange (BMPE) is a trade-based money laundering technique commonly used by narcotics traffickers based in Colombia and Mexico. The central feature is the use of a money trader to ensure that the revenue from drug sales in the U.S. doesn't actually cross any borders. Instead, those dollars are used to purchase any number of legitimate commodities from unsuspecting businesses on behalf of legitimate South American businesspersons, whose legitimate imports are used to obtain pesos for the drug cartels12. The BMPE involves six distinct steps: Obtaining criminal proceeds: The drug cartels sell drugs for dollars in the U.S. Involvement of intermediary services: The drug cartels sell the dollars to black market peso exchangers in Colombia at a discounted rate. Identification of complicit companies: The black market peso exchangers identify exporting companies in the U.S. and importing companies in South America that are willing to participate in the scheme. Placement of funds: The black market peso exchangers deposit the dollars into U.S. bank accounts or use money service businesses or other methods to transfer the funds. Layering of funds: The black market peso exchangers use the funds to purchase monetary instruments such as checks, money orders, or wire transfers, or to pay for the goods ordered by the South American importers. Integration of funds: The South American importers receive the goods or the monetary instruments and use them to pay for their imports or to sell them for pesos in the local market. References: 1: Black Market Peso Exchange in Money Laundering - Financial Crime Academy 2: Overview - FinCEN.gov