ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 381:

  An internal investigation log is primarily intended to:

  A. Provide training on investigations to the anti-money laundering officer and Financial IntelligenceUnit.
  B. Track the status of investigations into unusual activity.
  C. Report status of investigations to the Board of Directors.
  D. Report status of investigations to the Board of Directors.
  E. Detect and monitor possible suspicious activity.
  B. Track the status of investigations into unusual activity.

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  An internal investigation log is primarily intended to track the status of investigations into unusual activity. This is to ensure that the investigations are conducted in a timely, thorough, and consistent manner, and that the results and recommendations are documented and communicated to the relevant parties12. An internal investigation log can also help the organization to identify any trends, patterns, or gaps in its anti- money laundering (AML) compliance program, and to measure its effectiveness and efficiency3. An internal investigation log is not intended to provide training on investigations to the anti-money laundering officer and Financial Intelligence Unit (FIU), report status of investigations to the Board of Directors, or detect and monitor possible suspicious activity. These are separate functions that may involve the use of the internal investigation log, but are not its primary purpose. References: 1: How to Conduct Effective AML Investigations - Blog | Unit211 2: BSA/AML Internal Audit: PwC2 3: Anti-Money Laundering: 5 Steps to Conduct an Audit3

• Question 382:

  What are three indicators of money laundering associated with using electronic funds transfers? Choose 3 answers

  A. Funds transfers to or from a financial secrecy haven without an apparent business reason
  B. Regular and frequent transfers from the account of a large company said to be payment for goods bought on credit
  C. Funds transfers are received or sent from the same person to or from different accounts
  D. Payment or receipts with no apparent link to legitimate contracts, goods or services
  A. Funds transfers to or from a financial secrecy haven without an apparent business reason
  C. Funds transfers are received or sent from the same person to or from different accounts
  D. Payment or receipts with no apparent link to legitimate contracts, goods or services

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  According to the Anti-Money Laundering Specialist (the 6th edition) resources, electronic funds transfers (EFTs) are transactions that involve the movement of funds electronically from one account to another, either within the same financial institution or across different institutions, domestically or internationally1. EFTs can be used for legitimate purposes, such as facilitating trade, commerce, and remittances, but they can also be exploited by money launderers to conceal the origin, ownership, and destination of illicit funds2. Some of the indicators of money laundering associated with using EFTs are: Funds transfers to or from a financial secrecy haven without an apparent business reason. Financial secrecy havens are jurisdictions that offer a high degree of banking secrecy, low or no taxes, lax regulation and supervision, and weak or non-existent anti-money laundering and counter-terrorist financing (AML/CTF) measures3. Money launderers may use these havens to hide their illicit funds, evade taxes, and avoid scrutiny from authorities. Funds transfers to or from these havens without a clear or plausible explanation may indicate an attempt to launder money or finance terrorism. Funds transfers are received or sent from the same person to or from different accounts. This may indicate a layering technique, which is the process of moving funds through multiple accounts, institutions, or jurisdictions to obscure the audit trail and the source and ownership of the funds4. Money launderers may use this technique to avoid detection, reporting, or freezing of their funds by authorities or financial institutions. Payment or receipts with no apparent link to legitimate contracts, goods or services. This may indicate a trade-based money laundering technique, which is the process of using trade transactions to disguise the movement of illicit funds, either by over- or under-invoicing, misrepresenting the quantity or quality of goods, or falsifying documents. Money launderers may use this technique to transfer value across borders, evade taxes or customs duties, or justify the movement of funds that have no legitimate origin or purpose. The other option is incorrect because: Regular and frequent transfers from the account of a large company said to be payment for goods bought on credit is not necessarily an indicator of money laundering associated with using EFTs. This may be a normal business practice for some companies that have a high volume of transactions or a long-term relationship with their suppliers or customers. However, this may also be a red flag if the company is not well-known, has no physical presence, has no apparent business activity, or is located in a high-risk jurisdiction. Therefore, this option requires further investigation and verification before concluding that it is an indicator of money laundering. References: 1: ACAMS, CAMS Study Guide, 6th Edition, Chapter 5, p. 104 2: ACAMS, CAMS Study Guide, 6th Edition, Chapter 5, p. 105 3: ACAMS, CAMS Study Guide, 6th Edition, Chapter 5, p. 107 4: ACAMS, CAMS Study Guide, 6th Edition, Chapter 5, p. 106 : ACAMS, CAMS Study Guide, 6th Edition, Chapter 5, p.

• Question 383:

  Which of the following is considered a shell bank as defined by the USA PATRIOT Act?

  A. A bank incorporated in an offshore jurisdiction without a physical presence or employees.
  B. An Internet bank operating in the U.S. providing services worldwide.
  C. A local bank with offices in a non-cooperative jurisdiction which is subject to minimal regulatory supervision.
  D. A bank run by a foreign holding company with offices and staff in an offshore jurisdic-tion.
  A. A bank incorporated in an offshore jurisdiction without a physical presence or employees.

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  According to the USA PATRIOT Act, a shell bank is defined as "a bank that has no physical presence in any country" (Section 313(a)(1)). A physical presence means "a place of business that is maintained by a bank and is located at a fixed address, other than solely a post office box or an electronic address, in a country in which the bank is authorized to conduct banking activities, at which location the bank employs one or more individuals on a full-time basis and maintains operating records related to its banking activities" (Section 313 (a)(2)). Therefore, option A is the correct answer, as it describes a bank that has no physical presence or employees in any country. Options B, C, and D are not correct, as they describe banks that have some form of physical presence or affiliation with another bank in a country. References: USA PATRIOT Act, Title III, Subtitle A, Section 313, Prohibition on United States Correspondent Accounts with Foreign Shell Banks, 1. ACAMS Study Guide for the Certified Anti-Money Laundering Specialist (the 6th edition), Chapter 4: International Standards and Global Initiatives, page 103.

• Question 384:

  Pursuant to the Third European Union Money Laundering Directive, how long after being out of prominent office should a person NOT be considered to be a Politically Exposed Person (PEP)?

  A. 1 year
  B. 2 years
  C. 3 years
  D. 4 years
  B. 2 years

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  According to the Third European Union Money Laundering Directive (3rd AMLD), a politically exposed person (PEP) is an individual who is or has been entrusted with prominent public functions, such as heads of state, government ministers, judges, senior military officers, or members of parliament1. The 3rd AMLD requires institutions and persons covered by the Directive to apply enhanced customer due diligence measures when dealing with PEPs residing in another Member State or in a third country, in order to prevent money laundering and terrorist financing risks1. The 3rd AMLD also specifies that a person who is no longer entrusted with a prominent public function shall not be considered a PEP after a period of at least one year has elapsed since that person left office, unless the institution or person covered by the Directive has knowledge or reason to believe that the person is still exposed to specific risks2. However, the Commission Directive 2006/70/EC, which lays down implementing measures for the 3rd AMLD, extends this period to at least two years, and allows Member States to extend it further, depending on the level of risk and the type of prominent public function involved3. References: 1: Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing 2: Article 3(8) of Directive 2005/60/EC 3: Article 2 of Commission Directive 2006/70/EC of 1 August 2006 laying down implementing measures for Directive 2005/60/EC of the European Parliament and of the Council as regards the definition of `politically exposed person' and the technical criteria for simplified customer due diligence procedures and for exemption on grounds of a financial activity conducted on an occasional or very limited basis

• Question 385:

  A financial institution (FI) is investigating an alert generated by the automated transaction monitoring system . The AML analyst must determine whether the alert should be escalated for further investigation or archived as a false positive . Which action might be reasonable for the AML analyst to take?

  A. Perform below-the-line testing to ensure the automated monitoring system is operating effectively.
  B. Send a request for information (RFI) to the counterparty bank involved in the transaction that caused the alert.
  C. Request information from the relationship manager assigned to the account that caused the alert.
  D. Restrict the client's access to the account.
  C. Request information from the relationship manager assigned to the account that caused the alert.

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  The AML analyst must gather additional information before determining if an alert is suspicious. Option C (Correct): Requesting information from the relationship manager helps determine if the transaction is in line with the customer's profile . Option A (Incorrect): Below-the-line testing is useful for calibrating AML models , but it does not help in real-time case evaluation . Option B (Incorrect): Directly contacting a counterparty bank may not be appropriate without internal analysis first. Option D (Incorrect): Restricting access is a serious action that should only be taken after a full investigation .

• Question 386:

  Client A is flagged for a high volume of outgoing transfers. Further investigation reveals Client A has a potentially key role in a network linked to human trafficking. After filing a suspicious activity report, what step should the investigator take next?

  A. Prepare a summary for senior management recommending client off-boarding.
  B. Inform other local financial institutions about the client so they can halt potential services.
  C. Restrain or block the client's account(s) until law enforcement makes an arrest.
  D. Contact the Federal Bureau of Investigation (FBI) to communicate the investigation findings.
  A. Prepare a summary for senior management recommending client off-boarding.

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  After filing a suspicious activity report (SAR), an investigator should prepare a summary for senior management recommending client off-boarding. This is because client off-boarding is a risk-based decision that requires senior management approval and may involve legal considerations. Informing other local financial institutions about the client, restraining or blocking the client's account(s), or contacting law enforcement directly are not appropriate actions for an investigator to take after filing a SAR, as they may compromise the confidentiality of the SAR, violate privacy laws, or interfere with ongoing investigations.

• Question 387:

  An AML compliance officer is drafting plans to address deficiencies identified in an independent audit . Which approach is the best option ?

  A. Draft action plans in consultation with the jurisdiction's FIU to remain aligned with other similar companies.
  B. Only commit to action plans that can be implemented and closed within the three-month management reporting cycle.
  C. Draft action plans that will take many months to fully implement to address the root cause of the deficiencies.
  D. Only commit to action plans that require no new investment to maximize shareholder value.
  C. Draft action plans that will take many months to fully implement to address the root cause of the deficiencies.

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  A long-term, root cause-based approach ensures AML deficiencies are fully remediated . Option C (Correct): Addressing root causes ensures the institution remains compliant and prevents recurring violations. Option A (Incorrect): Consulting with an FIU is unnecessary for internal remediation plans. Option B (Incorrect): Short-term fixes do not resolve systemic AML issues. Option D (Incorrect): AML compliance improvements may require investment--cost-cutting should not compromise compliance. Best Practices for AML Audit Remediation: Conduct root cause analysis before implementing corrective measures. Develop a long-term compliance improvement plan. Allocate sufficient resources for sustainable AML enhancements.

• Question 388:

  A commission rogatory would be used in which gateway to obtain information from another country?

  A. An FIU request under the Egmont principles
  B. An MLAT request
  C. A supervisory channel request with the Basel Committee
  D. A FATF request
  B. An MLAT request

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  A commission rogatory, also known as a letter rogatory or a letter of request, is a formal request from a court in one country to a court in another country for some type of judicial assistance, such as service of process, taking of evidence, or enforcement of judgments1. A commission rogatory would be used in the context of a mutual legal assistance treaty (MLAT) request, which is a bilateral or multilateral agreement that enables countries to cooperate and provide legal assistance to each other in criminal matters2. MLATs are one of the main gateways for obtaining information from another country, especially when the information is not available through other means, such as financial intelligence units (FIUs), supervisory authorities, or international organizations3. FIUs are national agencies that collect, analyze, and disseminate financial information related to money laundering and terrorist financing, and they can exchange information with their counterparts in other countries under the Egmont principles. Supervisory authorities are regulators that oversee the compliance of financial institutions and other entities with anti-money laundering and counter- terrorism financing (AML/ CFT) obligations, and they can share information with their peers in other jurisdictions through supervisory channels, such as the Basel Committee on Banking Supervision. The Financial Action Task Force (FATF) is an inter-governmental body that sets standards and monitors the implementation of AML/CFT measures, and it can provide information and guidance to its members and other jurisdictions, but it does not have the authority to request or compel information from them. References: 1: Letters rogatory - Wikipedia 2: Mutual Legal Assistance Treaties and Letters Rogatory: A Guide for Judges | Federal Judicial Center 3: How US Authorities Obtain Foreign Evidence in Cross-Border Investigations | Global Investigations Review What is an FIU? | Egmont Group of Financial Intelligence Units Basel Committee on Banking Supervision | Bank for International Settlements What is the FATF? | FATF

• Question 389:

  The Wolfsberg Principles for Private Banking list circumstances that would require additional due diligence, including activities that involve which three of these choices?

  A. Foreign jurisdictions
  B. High Risk Countries, including those identified by credible sources as having inadequate Anti-Money Laundering standards
  C. High Risk activities, involving clients and beneficial owners whose source of wealth originates from activities known to be vulnerable to money laundering
  D. Public officials, including those individuals who have or had positions of public trust
  A. Foreign jurisdictions
  B. High Risk Countries, including those identified by credible sources as having inadequate Anti-Money Laundering standards
  C. High Risk activities, involving clients and beneficial owners whose source of wealth originates from activities known to be vulnerable to money laundering

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  The Wolfsberg Principles for Private Banking are a set of guidelines for private banking relationships that aim to prevent and detect money laundering and terrorist financing risks. The Principles state that the bank should conduct additional due diligence on clients and beneficial owners in certain circumstances that may indicate a higher risk of money laundering or terrorist financing. Among the options given, A, B, and C are the correct choices that reflect the circumstances listed in the Principles. Foreign jurisdictions are countries or territories other than the one where the bank operates or where the client or beneficial owner resides. The Principles state that the bank should conduct additional due diligence on clients and beneficial owners who are connected to foreign jurisdictions, especially those that have weak or inadequate anti-money laundering standards, or that are subject to sanctions, embargoes, or similar measures. High Risk Countries are countries or territories that are identified by credible sources, such as the Financial Action Task Force (FATF), as having inadequate anti-money laundering standards, or as being a source, transit, or destination of illicit funds. The Principles state that the bank should conduct additional due diligence on clients and beneficial owners who are connected to high risk countries, and apply enhanced measures to mitigate the risks. High Risk activities are activities that involve clients and beneficial owners whose source of wealth or funds originates from sectors or industries that are known to be vulnerable to money laundering, such as cash- intensive businesses, gambling, arms trade, precious metals and stones, or art and antiquities. The Principles state that the bank should conduct additional due diligence on clients and beneficial owners who are engaged in high risk activities, and verify the legitimacy and origin of their wealth and funds. References: The main reference for this question is the document titled "Wolfsberg Anti-Money Laundering Principles for Private Banking (2012)" published by the Wolfsberg Group. You can access it by clicking here. You can also find more information about the Wolfsberg Principles and their application on the Wolfsberg Group website and the Lexology website.

• Question 390:

  What kind of person should perform the independent testing of an institution's anti-money laundering program?

  A. A certified specialist in the anti-money laundering field
  B. A former anti-money laundering officer from a similar institution
  C. A person who reports directly to the Board of Directors or a Board Committee
  D. A retired government regulator or federal law enforcement officer
  C. A person who reports directly to the Board of Directors or a Board Committee

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  According to the Anti-Money Laundering Specialist (the 6th edition) by ACAMS, the independent testing of an institution's anti-money laundering program should be conducted by a person who reports directly to the Board of Directors or a Board Committee. This ensures that the person conducting the testing has the necessary authority, independence, and objectivity to evaluate the program's adequacy and effectiveness, and to report any findings or recommendations to the senior management1. The person conducting the testing should also have the appropriate knowledge, skills, and experience in the anti-money laundering field, and should be familiar with the institution's products, services, customers, and risks2. The other options are not necessarily suitable or qualified to perform the independent testing of an institution' s anti-money laundering program. For example: A certified specialist in the anti-money laundering field may have the relevant expertise and credentials, but may not have the required independence or reporting line to conduct the testing. For instance, if the certified specialist is an employee of the institution who is involved in the implementation or operation of the anti-money laundering program, then there may be a conflict of interest or a lack of objectivity in the testing process1. A former anti-money laundering officer from a similar institution may have the relevant experience and background, but may not have the current knowledge or familiarity with the institution's anti-money laundering program, policies, procedures, or systems. Moreover, the former anti-money laundering officer may have a personal or professional relationship with the institution or its staff, which may compromise the independence or integrity of the testing process1. A retired government regulator or federal law enforcement officer may have the relevant authority and credibility, but may not have the specific skills or qualifications to conduct the testing. For instance, the retired regulator or law enforcement officer may not be well-versed in the latest anti-money laundering standards, regulations, or best practices, or may not be able to apply them to the institution's unique risk profile, products, services, or customers1. References: Anti-Money Laundering Specialist (the 6th edition) by ACAMS What Is An AML Compliance Program? | ComplyAdvantage