A bank receives a wire transfer that references the sale of equipment to a sanctioned company. The bank's operations team removes the sanctioned company reference and allows the wire transfer to process. This is a description of what type of activity?
A. U-turn payment
B. Cover payment misuse
C. Layering
D. Wire stripping
A bank sells reloadable open-loop prepaid cards to both customers and non-customers. What is a red flag associated with these cards that may indicate money laundering?
A. A bank customer historically purchases several prepaid cards near year-end.
B. A non-bank customer regularly loads large amounts of cash onto several prepaid cards.
C. A non-bank customer consistently uses the bank to obtain cash advances using a prepaid card.
D. A bank customer routinely purchases five prepaid cards in small even-dollar amounts on a monthly basis.
A client who owns a swimming pool company requests to open 19 accounts at a bank, each with a debit card for its swimming pool technicians. When asked about the purpose of each account, the client explains that each technician needs a separate checking account to purchase pool chemicals.
Which available source could be used in the bank's internal investigation on this client's activities?
A. Client's credit bureau report
B. Local law enforcement investigation report
C. Interview swimming pool technicians and chemical suppliers
D. Internet search showing how such business are typically operated
Which product is considered to be of highest money laundering risk?
A. Credit cards
B. Savings accounts
C. Time deposit accounts
D. International wire transfers
A compliance officer at a large financial institution has been tasked by senior management to lead a team in an internal review and potential revision of the institution's customer onboarding program following a regulatory enforcement action of another institution.
Which step should the compliance officer perform first?
A. Reviewing the institution's risk assessment
B. Revising training materials for frontline staff
C. Conducting enhanced due diligence on high risk customers
D. Resolving substantive discrepancies in customer verification
A bank provides trade financing for a company whose primary export is steel. Which action by the company indicates possible money laundering?
A. The company often deals with foreign currency exchanges.
B. The company regularly understates the value of goods exported.
C. The company frequently sells above or below its competitors' price.
D. The company frequently transfers funds to other bank accounts located in other jurisdictions.
Which statement about a multinational institution's ability to fully investigate unusual activity in all its foreign operations is correct?
A. Local privacy and data protection laws may prevent an affiliate from sharing information.
B. Certain account documents may be stored only in local language which will prohibit a global assessment.
C. The institution should consult with the customer and request permission to conduct a full investigation into all the accounts.
D. Enterprise-wide compliance oversight rules issued in the global institution's headquarters country will override any local limitations in other countries.
An anti-money laundering analyst is reviewing a new customer list to confirm potentially high risk customers have been identified and subject to enhanced due diligence. Which new customer warrants enhanced due diligence?
A. A non-profit hospital
B. A fundraising organization
C. An employee benefit plan trust
D. A medical practice limited partnership
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
A comprehensive set of risk-based guidelines for maintaining business relationships is being developed. Which situation indicates that the institution should terminate the relationship with a client?
A. The client does business in countries with active terrorist organizations.
B. The client conducts international financial transactions exceeding U.S. $500 million.
C. The client exceeds the criteria of an acceptable risk model created by another institution that is not similar in size and complexity.
D. The client exceeds the criteria of an acceptable risk model created by the institution and does not perform acceptable remedial actions.
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