ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 291:

  The compliance officer for a bank is reviewing on-boarding documents for a new business account for a domestic corporation. The officer is unable to verify the identity of the beneficial owners of the company. Only information on the nominee

  owners was provided, and none of the listed addresses are local. The purpose of the business and future expected activity were disclosed to include cash letters, money orders and international remittance transfers.

  Which red flag identifies a heightened money laundering risk?

  A. Expected activity was advised to include cash letter and money orders
  B. The nature and purpose of the business include international remittance transfers
  C. The names provided at account opening are identified as the corporation's representative nominees
  D. Account signer's government issued identification lists addresses outside of where the branch account was opened
  C. The names provided at account opening are identified as the corporation's representative nominees

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  According to the ACAMS Study Guide 6th Edition, Chapter 2, page 37, one of the red flags of money laundering or terrorist financing is the use of nominees, trusts, or third parties to hide the identity, ownership, or control of the funds or assets involved in the transaction. Nominees are individuals or entities that act on behalf of the actual or beneficial owners of a company, trust, or account, and may be used to conceal the source, destination, or purpose of the funds or assets. Nominees may also be used to evade taxes, sanctions, or regulatory requirements. In this case, the compliance officer is unable to verify the identity of the beneficial owners of the company, and only information on the nominee owners was provided. This raises the suspicion that the company may be involved in money laundering or terrorist financing activities, and that the nominee owners may be acting as fronts or intermediaries for the actual or beneficial owners. The compliance officer should conduct further due diligence on the company, the nominee owners, and the beneficial owners, and report any suspicious or unusual activity to the relevant authorities. References: ACAMS Study Guide 6th Edition, Chapter 2, page 37 Beneficial Ownership Meaning and Regulation - Investopedia What is a nominee shareholder? | LawBite

• Question 292:

  Which two aspects of precious metals pose the highest risk of money laundering? (Choose two.)

  A. Some precious metals can be formed into other objects, making easier to transport
  B. Precious metals have high intrinsic value in a relatively compact form and are easy to convert into currency
  C. The value of precious metals can be inflated easily, making it easy to increase the amount of money laundered
  D. Precious metals can be readily used in many high-tech commercial applications, making them all the more valuable
  A. Some precious metals can be formed into other objects, making easier to transport
  B. Precious metals have high intrinsic value in a relatively compact form and are easy to convert into currency

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  Precious metals, such as gold and silver, pose a high risk of money laundering because they have some features that make them attractive to criminals. According to the FATF Guidance on the Risk-Based Approach for Dealers in Precious Metals and Stones1, these features include: Some precious metals can be formed into other objects, making easier to transport. For example, gold can be melted and shaped into jewellery, coins, bars, or other items that can be easily concealed and moved across borders. This makes it difficult for law enforcement and customs authorities to detect and seize the illicit proceeds of crime. Precious metals have high intrinsic value in a relatively compact form and are easy to convert into currency. For example, gold has a stable and universal value that can be exchanged for cash or other assets in any market. This makes it easy for criminals to store, transfer, and launder their illicit funds without leaving a trace in the formal financial system. The other two options, C and D, are not as relevant to the risk of money laundering. The value of precious metals is determined by the market forces of supply and demand, and it is not easy to inflate or manipulate it. Precious metals can be used in many high-tech commercial applications, but this does not necessarily make them more valuable or more prone to money laundering. References: 1: FATF Guidance on the Risk-Based Approach for Dealers in Precious Metals and Stones, 2008, https://www.fatf-gafi.org/en/publications/Fatfrecommendations/Fatfguidanceontheriskbasedapproachfordealersinpreciousmetalsandstones.html 2: Money laundering and terrorist financing risks and vulnerabilities associated with gold, 2015, https://www.fatf-gafi.org/en/publications/Methodsandtrends/Ml-tf-risks-and-vulnerabilities-gold.html 3: The anti-money laundering framework for precious stones and metals dealers in Singapore, 2021, https://www.emerald.com/insight/content/doi/10.1108/JMLC-07-2021-0074/full/html 4: Gold and Money Laundering, 2019, https://www.moneylaunderingnews.com/2019/04/gold-and-money-laundering/

• Question 293:

  Which three actions should employees be instructed to do during an internal investigation?

  A. Provide corporate documents directly to law enforcement
  B. Inform counsel of all request for documentation
  C. Make copies of all documents provided to law enforcement
  D. Keep a log of the documents requested
  B. Inform counsel of all request for documentation
  C. Make copies of all documents provided to law enforcement
  D. Keep a log of the documents requested

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  During an internal investigation, employees should be instructed to do the following actions: Inform counsel of all request for documentation: This is to ensure that the legal rights and obligations of the organization and the employees are protected and respected. Counsel can also advise on the scope, relevance, and confidentiality of the requested documents. Make copies of all documents provided to law enforcement: This is to maintain a record of the information that has been disclosed and to prevent any loss or alteration of the original documents. Copies should be made before the documents are handed over to law enforcement. Keep a log of the documents requested: This is to track the progress and status of the investigation and to avoid any duplication or omission of the requested documents. The log should include the date, time, description, and location of the documents, as well as the name and contact details of the person who requested and received them. Providing corporate documents directly to law enforcement, on the other hand, is not an action that employees should be instructed to do during an internal investigation. This is because law enforcement may not have the legal authority or the proper warrant to access the documents, and doing so may violate the privacy or confidentiality of the organization or the employees. Employees should consult with counsel before providing any documents to law enforcement. References: 1: Internal money laundering reporting | The Law Society 2: How to Conduct Effective AML Investigations- Blog | Unit212 3: What Is The Importance Of An Internal Investigation? 4: Anti-Money Laundering: 5 Steps to Conduct an Audit

• Question 294:

  The bank's Compliance Officer is tasked with designing standards based on Basel's KYC principles. Which essential elements should be included in the program? (Choose two.)

  A. Appointing an independent audit function
  B. Conducting a money laundering risk assessment
  C. Documenting a customer acceptance policy
  D. Establishing on-going monitoring of high-risk accounts
  E. Reporting suspicious activity
  C. Documenting a customer acceptance policy
  D. Establishing on-going monitoring of high-risk accounts

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  According to the Basel Committee on Banking Supervision, banks should adopt a risk-based approach to customer due diligence, which includes four essential elements1: A customer acceptance policy that defines the types of customers that are likely to pose a higher than average risk to the bank. A customer identification program that collects and verifies information about the customer's identity, beneficial ownership, and purpose of the account or relationship. An on-going monitoring of high-risk accounts to detect and report any unusual or suspicious activity, and to keep customer information up-to-date. A risk management program that ensures that the bank's policies and procedures are implemented effectively, and that the bank's staff are trained and aware of their AML/CFT obligations. Therefore, documenting a customer acceptance policy and establishing on-going monitoring of high-risk accounts are the correct choices for the essential elements that should be included in the program based on Basel's KYC principles. References: 1: Basel Committee on Banking Supervision, Customer due diligence for banks, October 2001, page 8.

• Question 295:

  According to the Financial Action Task Force 40 Recommendations, to fulfill identification requirements concerning legal entities, financial institutions should take measures to verify

  A. the financial status of the legal entity through documented proof of the entity's other banking relations.
  B. a person purporting to act on behalf of the legal entity who is a resident in a country with strict secrecy laws.
  C. the legal existence and ownership structure of the legal entity.
  D. funds or trusts maintained by terrorists.
  C. the legal existence and ownership structure of the legal entity.

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  According to the Financial Action Task Force (FATF) 40 Recommendations, Recommendation 10 requires financial institutions to identify and verify the identity of their customers, including legal persons and arrangements, using reliable and independent sources. This includes verifying the legal existence and structure of the legal entity, such as by obtaining a certificate of incorporation, a partnership agreement, or a trust deed. Additionally, financial institutions should identify and verify the identity of the beneficial owners of the legal entity, such as by obtaining information on the natural persons who ultimately own or control the entity, or who exercise effective control over the entity. The other options are not consistent with the FATF 40 Recommendations. Verifying the financial status of the legal entity, or the entity's other banking relations, is not a requirement for identification purposes, although it may be relevant for risk assessment or due diligence purposes. Verifying a person purporting to act on behalf of the legal entity is also not sufficient, as the person may not be authorized or may not disclose the true identity or beneficial ownership of the entity. Verifying funds or trusts maintained by terrorists is not a specific identification requirement, but rather a general obligation to comply with targeted financial sanctions and freeze the assets of designated persons or entities. References: FATF 40 Recommendations, Recommendation 10, Interpretive Note to Recommendation 10, pages 14- 18. ACAMS CAMS Certification Study Guide, 6th Edition, Chapter 3, Section 3.2.1, page 77.

• Question 296:

  Which of the following represents the first Financial Action Task Force initiative?

  A. The 40 Recommendations on Money Laundering
  B. The Report on Non-Cooperative Countries and Territories
  C. The Report on Money Laundering Typologies
  D. The Special Recommendations on Terrorist Financing
  A. The 40 Recommendations on Money Laundering

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  The first Financial Action Task Force (FATF) initiative was the 40 Recommendations on Money Laundering, which were issued in April 1990, less than a year after the FATF was established by the G7 summit in Paris in 1989. The 40 Recommendations aimed to provide a comprehensive plan of action to fight money laundering by setting out the principles and measures for effective legal, regulatory, and operational frameworks at the national and international levels. The 40 Recommendations have been revised and updated several times since then, most recently in 2022, to reflect the evolving trends and techniques of money laundering and to include the issues of terrorist financing and the financing of proliferation of weapons of mass destruction. The other options are not the first FATF initiative, but they are related to the FATF's work and mandate. The Report on Non-Cooperative Countries and Territories (NCCTs) was launched in 2000 to identify and monitor the jurisdictions that did not comply with the FATF standards and posed a risk to the international financial system. The Report on Money Laundering Typologies was first published in 1996 and has been updated annually to provide an analysis of the methods, techniques, and trends of money laundering and to assist the FATF members and observers in developing effective countermeasures. The Special Recommendations on Terrorist Financing were issued in October 2001, following the September 11 attacks, to complement the 40 Recommendations and to address the specific challenges of combating the financing of terrorism and terrorist acts. References: History of the FATF, 1 Financial Action Task Force - Wikipedia, 2 Financial Action Task Force (FATF): What it is, How it Works - Investopedia, 3 The FINANCIAL ACTION TASK FORCE (FATF) - INSIGHTSIAS, 4

• Question 297:

  Which statement regarding data privacy is the most accurate in the context of AML investigations ?

  A. FIUs should document purposes for which personal data included on Suspicious Activity Reports (SARs) may be shared with other agencies.
  B. Any customer that is the subject of a suspicious report filing has the right to request redaction of their personal data.
  C. Data privacy laws prohibit information sharing between financial institutions for the purposes of AML investigations in all jurisdictions.
  D. Organizations are required to demonstrate that customers have opted into information sharing before submitting SARs to relevant Financial Intelligence Units (FIUs).
  A. FIUs should document purposes for which personal data included on Suspicious Activity Reports (SARs) may be shared with other agencies.

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  AML compliance must balance data privacy laws with financial crime prevention . Option A (Correct): FIUs must document the purpose of SAR-related data sharing under FATF Recommendation 29 and GDPR compliance standards . Option B (Incorrect): Customers do not have the right to request redaction of personal data in SARs, as this would compromise AML enforcement . Option C (Incorrect): Many jurisdictions permit information sharing for AML purposes under formal agreements (e.g., 314(b) USA PATRIOT Act, GDPR exemptions) . Option D (Incorrect): AML reporting requirements override opt-in privacy preferences due to the legal obligation to report suspicious activity .

• Question 298:

  Based on the AML principles outlined by the Wolfsberg Group, what do private and correspondent banks have in common when monitoring for terrorist financing?

  A. Numbered or alternate name accounts will only be accepted if the bank has established the identity of the client and beneficial owner.
  B. Account and transactional activity are monitored after the proper identification and verification of customers.
  C. Cash access from a pre-paid card increases the potential that the card will be used for money laundering purposes.
  D. Transaction monitoring examines the relationship between due diligence information and account closings.
  B. Account and transactional activity are monitored after the proper identification and verification of customers.

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  According to the Wolfsberg Group, a global association of leading banks that develops guidance and standards for the management of financial crime risks, both private and correspondent banks should monitor account and transactional activity after the proper identification and verification of customers, as part of their anti-money laundering and counter-terrorist financing (AML/CTF) measures. This is consistent with the FATF Recommendation 10, which requires financial institutions to conduct ongoing due diligence on their business relationships, including scrutinising transactions to ensure that they are consistent with the customer' s risk profile and source of funds. Monitoring account and transactional activity is a key component of the risk-based approach, as it enables banks to detect and report suspicious or unusual transactions, identify changes in customer behaviour or circumstances, and update customer information and risk assessments accordingly.

• Question 299:

  An account officer who maintains an excellent relationship with the finance manager for a correspondent bank customer learns that many records for the correspondent bank have been requested by law enforcement. In the interest of maintaining a good relationship with the customer, the account officer sets up a meeting to discuss the legal request with the customer. The account officer intends to discuss points related to the investigation during the meeting. What should an anti-money laundering specialist recommend?

  A. Discuss all the points being investigated by law enforcement to ensure the correspondent bank is well prepared when approached
  B. Let the account manager's manager know what conversations have taken place with the customer and document the account file accordingly
  C. Limit discussions about the investigation with the customer and by satisfied that the account manager has provided proper notice to the customer
  D. Cancelled the meeting as he has already behaved inappropriately by alerting to the investigation
  C. Limit discussions about the investigation with the customer and by satisfied that the account manager has provided proper notice to the customer

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  the account officer should avoid disclosing any details of the investigation to the customer, as this could compromise the integrity of the law enforcement inquiry, or even constitute tipping off, which is a criminal offense in many jurisdictions12. The account officer should only inform the customer that a legal request has been made, and that the bank is obliged to comply with it, without revealing the nature or scope of the request3. The account officer should also document the communication with the customer, and report it to the appropriate internal authority, such as the compliance officer or the legal department4. References: 1: CAMS Study Guide, 6th Edition, Chapter 5: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), page 151-152. 2: Tipping Off: What It Is and How to Avoid It, ACAMS Today, March 2019. 3: How to Handle Law Enforcement Requests, ACAMS Webinar, June 2018. 4: Best Practices for Responding to Law Enforcement Inquiries, ACAMS White Paper, October 2017.

• Question 300:

  A Money Laundering Reporting Officer's (MLRO) lack of action led to deficiencies in the bank's AML program and a civil monetary penalty being levied against the MLRO. Why was this direct action taken against the MLRO?

  A. The MLRO is the only individual that can be held responsible for AML program deficiencies.
  B. MLROs can be held to an individual accountability standard and face potential penalties for contributing to AML program deficiencies.
  C. The MLRO agreed to the civil penalty so that the bank would not be found liable for the AML program deficiencies.
  D. Action was brought against the MLRO because banks cannot be found liable for AML program deficiencies.
  B. MLROs can be held to an individual accountability standard and face potential penalties for contributing to AML program deficiencies.

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  MLROs are responsible for implementing and enforcing an appropriate risk-based approach for their firm, ensuring compliance with the relevant laws and regulations, and reporting any suspicious activities to the authorities. If they fail to discharge their duties, they may face personal liability and civil or criminal sanctions. MLROs are not the only individuals that can be held responsible for AML program deficiencies, as other senior managers, directors, or partners may also be liable depending on their role and involvement. However, MLROs are often the primary focus of enforcement actions due to their specific responsibilities and obligations. MLROs cannot avoid liability by agreeing to a civil penalty, as this does not absolve them from their legal duties or potential criminal prosecution. Banks can also be found liable for AML program deficiencies and face fines, penalties, or other sanctions. References: Technical factsheet The role of the money laundering reporting officer Consequences of not complying | AUSTRAC Money Laundering Reporting Officer: The Role Of MLRO FinCEN Penalizes U.S. Bank Official for Corporate Anti-Money Laundering Failures