ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 321:

  Using the customer profile and expected activity information, a financial institution should be able to identify transactions that are difficult to:

  A. make economic sense
  B. make viable profitability.
  C. be strategically viable.
  D. cross verify.
  A. make economic sense

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  Using the customer profile and expected activity information, a financial institution should be able to identify transactions that are difficult to make economic sense. Transactions that don't make economic sense may be suspicious, and should be investigated further to determine if they may be related to money laundering or other illicit activities. For example, if a customer is profiting from a series of transactions that don't make economic sense, such as buying and selling the same stock multiple times in a short period of time, then this could be a sign of money laundering or other illicit activities.

• Question 322:

  A remittance company received a money order from a senior political figure m the Philippines to transfer a large sum of money to a charity group in the Philippines. A review of the charity group revealed a director having dose ties with a

  known terrorist group primarily financed through kidnapping and extortion.

  What is a key risk indicator associated with terrorism financing?

  A. The sender is a Political Exposed Person (PEP) and should be subject to enhanced due diligence
  B. A large sum sent by money order to a charity
  C. There is no risk relating of terrorism financing when the charity group is operating legitimately in that country
  D. There is a link between the charity group and a known terrorist group
  D. There is a link between the charity group and a known terrorist group

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  A key risk indicator associated with terrorism financing is the link between the charity group and a known terrorist group. This indicates that the funds transferred to the charity group may be used to support the terrorist group's activities, such as recruitment, training, propaganda, or attacks. Charities are often vulnerable to abuse by terrorist financiers, as they may operate in high-risk areas, have access to large amounts of cash, and enjoy public trust and legitimacy. Therefore, financial institutions (FIs) should conduct due diligence on the charity group, its directors, its beneficiaries, and its sources and uses of funds, and monitor the transactions for any red flags, such as unusual patterns, amounts, or destinations. FIs should also comply with the relevant sanctions and regulatory requirements, and report any suspicious or unusual activity to the authorities. References: 1: FATF Guidance on Private Sector Information Sharing1 2: Mitigating the risks of terrorist financing | Crowe LLP3 3: ACAMS Study Guide for the CAMS Certification Examination3

• Question 323:

  Which red flags could indicate increased terrorist financing and money laundering risks related to cultural objects and high-value art ? (Select Three.)

  A. Use of art storage facilities located in tax-free zones.
  B. Paying fair market value or premium prices for valuable art, gems, or precious metals at auction.
  C. Engagement of third-party art advisors as representatives at art auctions.
  D. High-quality single pieces of significant value sold on social media platforms.
  E. Use of art and antiquity experts to verify an item's authenticity.
  A. Use of art storage facilities located in tax-free zones.
  C. Engagement of third-party art advisors as representatives at art auctions.
  D. High-quality single pieces of significant value sold on social media platforms.

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  The art and antiquities market is highly vulnerable to money laundering and terrorist financing due to anonymity in transactions, lack of regulatory oversight, and difficulty in tracing ownership . Option A (Correct): Art storage in tax-free zones can be used to obscure ownership and avoid AML scrutiny. Option C (Correct): Using third-party art advisors can facilitate anonymous transactions and shield beneficial ownership. Option D (Correct): High-value art sold on social media without proper provenance raises ML /TF risks due to lack of financial oversight . Why Other Options Are Incorrect: Option B (Incorrect): Paying fair market value does not indicate illicit activity -- underpricing or rapid resale are bigger red flags . Option E (Incorrect): Authenticity verification is common in legitimate art transactions and is not a direct ML/TF red flag. Red Flags for Art and Antiquities Money Laundering: Frequent high-value art transactions with no clear business purpose. Use of intermediaries to conceal beneficial ownership. Rapid resale of newly purchased art at below-market prices. Best Practices for AML in the Art Market: Conduct enhanced due diligence (EDD) on high-value art transactions. Monitor transactions involving politically exposed persons (PEPs). Report suspicious transactions linked to high-risk art traders.

• Question 324:

  What is the result of an increased awareness of the potential for gatekeepers to assist in money laundering in recent years?

  A. The IMF has raised the profile of gatekeepers, requiring that countries regulate them
  B. Lawyers who represent money launderers can more easily be prosecuted
  C. Accountants are no longer considered gatekeepers, since they are not permitted to set up companies or trusts
  D. The FATF recommendations cover lawyers performing financial transactions
  B. Lawyers who represent money launderers can more easily be prosecuted

• Question 325:

  Privacy and data protection restrictions placed upon financial institutions (FIs) in the EU require that FIs must: (Select Two.)

  A. Engage third parties to supplement any missing customer identification information.
  B. Apply data minimization to avoid overreach in data collection.
  C. Inform a customer of any information the FI has obtained as a result of an investigation into unusual activity.
  D. Follow strict guidelines when using machine learning and artificial intelligence.
  B. Apply data minimization to avoid overreach in data collection.
  D. Follow strict guidelines when using machine learning and artificial intelligence.

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  Financial institutions operating in the EU must comply with GDPR and AML directives , ensuring a balance between privacy and AML compliance . Option B (Correct): Data minimization is a key GDPR principle, ensuring that only necessary data is collected and processed. Option D (Correct): Strict guidelines apply to AI and machine learning models used in AML compliance to prevent bias and ensure transparency. Why Other Options Are Incorrect: Option A (Incorrect): FIs cannot use third parties to supplement missing customer identification unless proper KYC measures are followed. Option C (Incorrect): Customers cannot be informed about ongoing AML investigations due to "tipping off" restrictions under AML laws. Best Practices for AML Compliance Under GDPR: Limit data collection to what is necessary for AML compliance. Ensure AI and machine learning models comply with transparency regulations. Prevent unauthorized data access through strict internal controls.

• Question 326:

  As a result of an audit, a policy exception was identified that had been approved by the compliance officer.

  The auditor determined that the policy exception is a violation of a regulatory requirement.

  What should the auditor do?

  A. Advise the compliance officer on how to appropriately respond to policy exceptions.
  B. Include the regulatory violation in the audit report and report it to the board of directors.
  C. Consult with legal counsel to determine if the approval of the policy exception was acceptable.
  D. Include the regulatory violation in the audit report and recommend the compliance officer be subject to disciplinary action by the board of directors.
  B. Include the regulatory violation in the audit report and report it to the board of directors.

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  The auditor should include the regulatory violation in the audit report and report it to the board of directors. This is because the auditor has the responsibility to report any findings of non-compliance or material weaknesses in the institution's internal controls, policies, and procedures. The auditor should also provide recommendations for corrective actions and follow-up on their implementation. The board of directors has the ultimate oversight and accountability for the institution's compliance program and should be informed of any significant issues or risks that may affect the institution's reputation, operations, or regulatory status12. References: 1: CAMS Certification Package - 6th Edition | ACAMS, Chapter 6: Developing an Effective Anti-Money Laundering Program, p. 125-126 2: The Wolfsberg Group, The Wolfsberg Anti-Money Laundering Principles for Correspondent Banking, October 2014, p. 7, https://www.wolfsberg-principles.com/sites/default/files/wb /pdfs/Wolfsberg-Correspondent-Banking-Principles2014.pdf

• Question 327:

  A bank maintains a number of United States (U.S.) dollar correspondent accounts for foreign financial institutions. Upon a routine review of a U.S. dollar correspondent account owned by Foreign Bank A, a number of transactions appear to

  have been originated by Foreign Bank B outside the expected activity for this account. These transactions appear suspicious and a suspicious transaction report was filed by the compliance officer.

  Which step should the compliance officer take?

  A. File a report with the appropriate tax authorities in the jurisdictions of Foreign Bank A and Foreign Bank B
  B. Notify senior management of the money laundering risks by allowing Foreign Bank A to maintain its U S dollar correspondent account
  C. Notify Foreign Bank A of the discovery and seek documentation supporting Foreign Bank A was collusive and a willing partner with Foreign Bank B in the activity
  D. Notify other U.S. financial institutions who maintain U.S. dollar correspondent accounts for Foreign Bank A and Foreign Bank B in an effort to shut down the activity
  C. Notify Foreign Bank A of the discovery and seek documentation supporting Foreign Bank A was collusive and a willing partner with Foreign Bank B in the activity

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  According to the FFIEC BSA/AML Manual1, a U.S. bank should have policies, procedures, and processes to monitor and report suspicious activity associated with U.S. dollar drafts, which are bank drafts or checks denominated in U.S. dollars and made available at foreign financial institutions. These drafts are drawn on a U.S. correspondent account by a foreign financial institution and can be used to facilitate money laundering or terrorist financing. The manual states that "[t]he potential for facilitating money laundering or terrorist financing, OFAC violations, and other serious crimes increases when a U.S. bank is unable to identify and adequately understand the transactions of the ultimate users (all or most of whom are outside of the United States) of its account with a foreign correspondent."2 Therefore, the compliance officer should notify Foreign Bank A of the discovery and seek documentation supporting Foreign Bank A was collusive and a willing partner with Foreign Bank B in the activity, as this would indicate a breach of the correspondent banking agreement and a possible violation of U.S. laws and regulations. The compliance officer should also document the findings and actions taken, and escalate the matter to senior management and the board of directors as appropriate. The other options are not the best steps for the compliance officer to take. Option A is not relevant, as the issue is not related to tax evasion, but to money laundering or terrorist financing. Option B is premature, as the compliance officer should first verify the nature and extent of the suspicious activity and the involvement of Foreign Bank A before deciding whether to terminate or restrict the correspondent relationship. Option D is not feasible, as the compliance officer does not have the authority or the means to notify other U.S. financial institutions who maintain U.S. dollar correspondent accounts for Foreign Bank A and Foreign Bank B, and this could also interfere with ongoing investigations or law enforcement actions. References: FFIEC BSA/AML Manual, Risks Associated with Money Laundering and Terrorist Financing, U.S. Dollar Drafts Denting Dirty Dollar-Clearing: US Court of Appeals Upholds Money-Laundering Convictions Based on the Use of US Correspondent Banking Accounts, Freshfields Blog AMLA Expands DOJ Grand Jury Subpoena Power Over Correspondent Bank Accounts and Foreign Banks, Money Laundering News

• Question 328:

  Which activity would require an update to the first line training program?

  A. The implementation of a new system that provides information for monitoring customer accounts.
  B. The expansion to customer segments that will utilize newly established products.
  C. The maintenance of regulatory requirements for onboarding documentation collections of a customer base.
  D. The onboarding of a new customer type which was previously reviewed and risk rated.
  B. The expansion to customer segments that will utilize newly established products.

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  The first line training program is the training that is provided to the employees who are directly involved in the day-to-day operations of the business, such as sales, customer service, or compliance staff1. The first line training program should cover the essential knowledge and skills that are required for the employees to perform their roles effectively and in compliance with the anti-money laundering and counter-terrorism financing (AML/CFT) policies and procedures of the organization2. The first line training program should also be updated regularly to reflect any changes in the business environment, the regulatory framework, the customer base, the products and services, or the risk assessment of the organization2. Among the four activities listed, the one that would require an update to the first line training program is the expansion to customer segments that will utilize newly established products. This is because the new customer segments and products may pose different or higher AML/CFT risks than the existing ones, and the employees need to be aware of these risks and how to mitigate them. For example, the new customer segments may include politically exposed persons, non-resident customers, or high-net-worth individuals, who may have higher exposure to corruption, tax evasion, or fraud risks3. The new products may include prepaid cards, mobile payments, or cryptocurrencies, which may have higher vulnerability to money laundering, terrorist financing, or cybercrime risks. Therefore, the first line training program should be updated to include the relevant information and guidance on how to identify, verify, monitor, and report these new customer segments and products, and how to apply the appropriate customer due diligence and transaction monitoring measures2. The other three activities do not necessarily require an update to the first line training program, unless they involve significant changes in the AML/CFT policies and procedures of the organization. The implementation of a new system that provides information for monitoring customer accounts may improve the efficiency and effectiveness of the existing AML/CFT processes, but it does not change the nature or level of the AML/CFT risks. The maintenance of regulatory requirements for onboarding documentation collections of a customer base is a routine and ongoing task that should already be covered by the existing first line training program. The onboarding of a new customer type which was previously reviewed and risk rated does not introduce any new AML/CFT risks, as long as the risk rating and the corresponding controls are consistent with the organization's risk appetite and policy. References: 1: What is First Line of Defense? | Definition and Overview 2: Training and Awareness | FATF 3: Politically Exposed Persons (Recommendations 12 and 22) | FATF Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers | FATF

• Question 329:

  Release of the EU's Fourth AML Directive resulted in what change to member state*s procedures? (Select Two.)

  A. The threshold for reporting suspicious transactions decreased from 15,000 EUR to 10,000 EUR.
  B. All financial institutions were required to identify and verify the beneficial owner of legal entities.
  C. Money laundering and terrorist financing were defined as separate crimes, expanding the directive's measures.
  D. The scope of obliged entities was enlarged from casinos to all providers of gambling services.
  E. Knowledge of criminal conduct could be inferred from objective factual circumstances.
  A. The threshold for reporting suspicious transactions decreased from 15,000 EUR to 10,000 EUR.
  B. All financial institutions were required to identify and verify the beneficial owner of legal entities.

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  According to the Certified Anti-Money Laundering Specialist (the 6th edition), Section 2.2.2 The EU Fourth AML Directive, the release of the EU's Fourth AML Directive resulted in the threshold for reporting suspicious transactions decreasing from 15,000 EUR to 10,000 EUR (Answer A) and all financial institutions were required to identify and verify the beneficial owner of legal entities (Answer B). The directive also defined money laundering and terrorist financing as separate crimes, which expanded the directive's measures (Answer C). Answer D is incorrect as the scope of obliged entities was not enlarged from casinos to all providers of gambling services, but rather to all providers of payment services. Answer E is also incorrect as the directive does not provide that knowledge of criminal conduct can be inferred from objective factual circumstances. Reference: Certified Anti-Money Laundering Specialist (the 6th edition), Section 2.2.2 The EU Fourth AML Directive, p. 12.

• Question 330:

  The marketing department presents a business plan targeting individuals holding important public positions. What are some steps the financial institution should implement as part of the plan to target such individuals?

  A. Investigate the sourceof funds
  B. Determine the purpose of the account
  C. Determine if the client appears on the Basel Committee on Banking Supervision's list of public officials
  D. Take all reasonable steps to check the background of the individual based on public information
  A. Investigate the sourceof funds
  B. Determine the purpose of the account
  D. Take all reasonable steps to check the background of the individual based on public information