ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 391:

  Which action should countries take related to the financing of terrorist acts in accordance with the Financial Action Task Force 40 Recommendations?

  A. Oppose
  B. Sanction
  C. Prosecute
  D. Criminalize
  D. Criminalize

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  The FATF 40 Recommendations are the international standards for combating money laundering, terrorist financing, and proliferation financing. They provide a comprehensive and consistent framework of measures that countries should implement in their national systems. Recommendation 5 of the FATF 40 Recommendations states that countries should criminalize the financing of terrorism, terrorist acts and terrorist organizations. This means that countries should adopt laws that make it an offence to provide or collect funds or other assets with the intention or knowledge that they will be used to carry out terrorist acts or support terrorist organizations. Countries should also ensure that such offences are punishable by effective, proportionate and dissuasive sanctions. Furthermore, countries should ensure that terrorist financing offences extend to any person who wilfully provides or collects funds or other assets by any means, directly or indirectly, with the unlawful intention that they should be used or in the knowledge that they are to be used, in full or in part, in order to carry out terrorist acts or support terrorist organizations. Therefore, the correct answer is D. Criminalize, as this is the action that countries should take related to the financing of terrorist acts in accordance with the FATF 40 Recommendations. References: FATF website FATF 40 Recommendations - February 2012 FATF Recommendation 5 -Criminalisation of Terrorist Financing https://www.fatf-gafi.org/publications/methodsandtrends/documents/fatf-action-against- terroristfinancing-feb-2019.html

• Question 392:

  What is the first step that an investigator should take when beginning a financial investigation into a potential suspicious activity?

  A. Contacting the country's financial intelligence unit (FIU) officers to seek advice on whether the potential suspicious activity is indeed suspicious.
  B. Determining whether the potential suspicious activity is consistent with the customer's transactional behavior, nature of business, and occupation.
  C. Gathering and assessing internal sources of information, including information obtained from the customer, transactions, and value and volume.
  D. Identifying and reviewing external information, including online presence, customer-related entities, and relevant media.
  C. Gathering and assessing internal sources of information, including information obtained from the customer, transactions, and value and volume.

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  The first step in a financial investigation is to review and analyze all internal sources of information related to the suspicious transaction. Option C (Correct): Gathering and assessing internal data helps investigators establish a baseline for normal vs. suspicious customer behavior. This includes reviewing KYC (Know Your Customer) documentation, transaction history, and any previous alerts on the customer. Option B (Incorrect): This is part of the investigation, but an investigator first needs to gather data before determining consistency with expected behavior. Option A (Incorrect): An FIU is typically contacted after internal analysis has been completed and a Suspicious Activity Report (SAR) is warranted. Option D (Incorrect): External information is useful, but internal data should be reviewed first to confirm whether a case needs escalation.

• Question 393:

  What are two legal risks of having inadequate privacy policies and procedures? (Choose two.)

  A. Diminished reputation
  B. Industry of regulatory sanctions
  C. Charges of deceptive business practices
  D. Higher marketing and public relations costs
  B. Industry of regulatory sanctions
  C. Charges of deceptive business practices

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  Having inadequate privacy policies and procedures can expose an organization to legal risks such as industry or regulatory sanctions and charges of deceptive business practices. Industry or regulatory sanctions can result from violating the laws and regulations that govern data privacy and protection, such as the GDPR, the CCPA, or the GLBA. These sanctions can include fines, penalties, injunctions, or revocation of licenses. Charges of deceptive business practices can arise from misleading or false statements about how the organization collects, uses, or discloses personal data, or from failing to comply with its own privacy policies and procedures. These charges can lead to lawsuits, settlements, or enforcement actions by authorities such as the FTC or the state attorneys general. References: The 4 Biggest Risks of Non-Compliance With Data Privacy Regulations Security and privacy laws, regulations, and compliance: The complete guide An Ethical Approach to Data Privacy Protection

• Question 394:

  Why do governments and multi-national bodies impose economic sanctions?

  A. To impede kleptocracy
  B. To enforce foreign policy objectives
  C. To combat an imminent terrorist threat
  D. To prevent fraudulent international trade transactions
  B. To enforce foreign policy objectives

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  "Increasingly, countries are using economic sanctions instead of military force as an instrument of foreign policy" Reference: https://en.wikipedia.org/wiki/Economic_sanctions

• Question 395:

  A quarterly review is conducted on a retail customers account at a bank located in a jurisdiction with currency reporting thresholds. A number of large deposits of financial instruments drawn on other institutions in amounts under thresholds were noted. This activity did not fit the accounts historical profile. A suspicious transaction report will most likely be filed if what also occurred?

  A. The customer has defaulted on a large loan with the bank
  B. The deposited financial instruments were sequentially numbered
  C. Four deposits were made during this period that exceeded the thresholds
  D. The customer purchased financial instruments exceeding the threshold on three occasions
  B. The deposited financial instruments were sequentially numbered

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  A suspicious transaction report (STR) is a document that financial institutions must file with the relevant authorities when they detect or suspect any activity that may be related to money laundering, terrorist financing, or other criminal offences. An STR should include the details of the customer, the transaction, the reason for suspicion, and any other relevant information. One of the indicators of suspicious activity is the use of financial instruments, such as checks, money orders, or cashier's checks, that are drawn on other institutions and deposited in amounts under the currency reporting thresholds. This may suggest that the customer is trying to avoid the detection and reporting of large cash transactions, which is a technique known as structuring or smurfing. Structuring is illegal and may indicate that the customer is laundering money from illicit sources or evading taxes. Another indicator of suspicious activity is the use of financial instruments that are sequentially numbered, meaning that they have consecutive serial numbers. This may suggest that the customer has obtained the instruments from the same source or issuer, and that they are using them to launder money or finance illegal activities. Sequentially numbered instruments may also indicate that the customer is involved in fraud, such as check kiting or counterfeit checks. Therefore, if a bank conducts a quarterly review on a retail customer's account and finds that the customer has made a number of large deposits of financial instruments drawn on other institutions in amounts under the thresholds, and that the instruments were sequentially numbered, the bank will most likely file an STR. This is because this activity does not fit the customer's historical profile, and it raises a high level of suspicion that the customer is engaged in money laundering or other criminal activities.

• Question 396:

  What are three elements of a sound Customer Due Diligence Program?

  A. Determination of what type of customer the financial institution will accept
  B. Training as to how and to what extent to identify prospective customers
  C. Obtaining date of birth and address of a prospective customer
  D. Determination of who in the institution should be assigned to the prospective customer as a liaison
  A. Determination of what type of customer the financial institution will accept
  B. Training as to how and to what extent to identify prospective customers
  C. Obtaining date of birth and address of a prospective customer

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  A sound Customer Due Diligence Program (CDD) is a key component of an effective anti-money laundering and counter-terrorism financing (AML/CFT) framework. According to the Financial Action Task Force (FATF), the global standard-setter for AML/CFT, CDD involves the following elements1: Identifying the customer and verifying their identity using reliable, independent sources of information or documents. Identifying the beneficial owner and taking reasonable measures to verify their identity, so that the financial institution understands who ultimately owns or controls the customer or the funds. Understanding and obtaining information on the purpose and intended nature of the business relationship. Conducting ongoing due diligence on the business relationship and scrutinizing transactions to ensure that they are consistent with the financial institution's knowledge of the customer, their business and risk profile, and the source of funds. Therefore, the three elements of a sound CDD program that are listed in the question are: Determination of what type of customer the financial institution will accept: This involves defining the customer acceptance policy and risk appetite of the financial institution, and applying appropriate risk- based measures to accept or reject customers based on their risk profile and the financial institution's ability to manage and mitigate those risks2. Training as to how and to what extent to identify prospective customers: This involves providing adequate and regular training to the staff who are responsible for conducting CDD, and ensuring that they are aware of the legal and regulatory requirements, the internal policies and procedures, the risk indicators, the verification methods, and the reporting obligations3. Obtaining date of birth and address of a prospective customer: This is part of the basic information that is required to identify and verify the customer's identity, and to establish their risk profile and the source of funds. The date of birth and address can also be used to check against various databases and watchlists to detect any potential matches with sanctioned or high-risk individuals or entities. The element that is not part of a sound CDD program is: Determination of who in the institution should be assigned to the prospective customer as a liaison: This is not a mandatory or essential element of CDD, although it may be a good practice to assign a dedicated relationship manager or contact person to each customer, especially for high-risk or complex customers, to ensure effective communication, monitoring, and service delivery. References: FATF Guidance on Customer Due Diligence and Financial Inclusion 1 ACAMS Study Guide for the CAMS Certification Examination (6th Edition), Chapter 2: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) 2 ACAMS Study Guide for the CAMS Certification Examination (6th Edition), Chapter 4: Developing an AML/CFT Program 3 ACAMS Study Guide for the CAMS Certification Examination (6th Edition), Chapter 5: Conducting and Supporting the Investigation Process 4 Wolfsberg Group Guidance on Customer Due Diligence (CDD)

• Question 397:

  A relationship manager in a bank has had a private banking customer for 10 years. The customer has business accounts and investments and seeks advice on the creation of a company overseas. The relationship manager refers the customer to the commercial banking manager and vouches for the customer. Which of the following risk factors is the most important?

  A. The proposed offshore jurisdiction is known for its strong privacy laws limiting access to customer information by law enforcement.
  B. The customer does not want to provide more information than when the first account was opened.
  C. The company wants to transfer funds in large, even amounts.
  D. Entities that are to receive funds from this company are located in the same country.
  A. The proposed offshore jurisdiction is known for its strong privacy laws limiting access to customer information by law enforcement.

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  The most important risk factor in this scenario is the proposed offshore jurisdiction that is known for its strong privacy laws limiting access to customer information by law enforcement. This indicates that the customer may be trying to evade tax, hide the source or destination of funds, or engage in other illicit activities that could expose the bank to money laundering or terrorist financing risks. Offshore jurisdictions are often used by criminals to create complex corporate structures that obscure the beneficial ownership and control of the entities involved. The bank should conduct enhanced due diligence on the customer, the offshore company, and the nature and purpose of the transactions. References: ACAMS CAMS Certification Study Guide, 6th Edition, Chapter 2, page 35-36, 38-39 ACAMS CAMS Certification Video Training Course, Module 2, Lesson 2.3, Offshore Financial Centers 1, CAMS Certification Package - 6th Edition | ACAMS, Offshore Financial Centers and Money Laundering 2, CAMS Certifications: How to Get CAMS Certified | ACAMS, CAMS Exam Outline, Domain 2, Task 2.3

• Question 398:

  A bank is preparing for a regulatory exam after a previous regulatory exam identified weaknesses in its AML program . Since the last exam, the bank has:

  Improved its written AML program Hired an experienced AML compliance officer Demonstrated a stronger culture of compliance

  Focused on clearing its transaction monitoring case backlog and enhancing its sanctions screening program Which of the following are correct ? (Select Two.)

  A. The bank is likely to face secondary sanctions from global financial institutions despite addressing many of the previous concerns.
  B. The bank is protected from reputational risk arising from any regulatory action because regulatory orders must remain confidential.
  C. The bank may face the risk of regulatory orders to remediate its AML program despite addressing many of the previous concerns.
  D. The bank may face civil or criminal penalties if it is unable to demonstrate sustained improvement in addressing the previous concerns.
  E. The regulatory agency may require the bank's board of directors to publicly share the actions taken to address the previous concerns in order to limit its reputational risk.
  C. The bank may face the risk of regulatory orders to remediate its AML program despite addressing many of the previous concerns.
  D. The bank may face civil or criminal penalties if it is unable to demonstrate sustained improvement in addressing the previous concerns.

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  Regulatory exams assess whether financial institutions comply with AML/CFT laws and have adequately addressed previous deficiencies. Option C (Correct): Regulators may still issue remediation orders if the bank's improvements do not fully resolve prior AML compliance gaps. Option D (Correct): If deficiencies persist, regulators may impose civil or criminal penalties. Why Other Options Are Incorrect: Option A (Incorrect): Secondary sanctions typically apply to institutions violating international sanctions laws, not AML program deficiencies. Option B (Incorrect): Regulatory orders are not always confidential--major enforcement actions may be publicly disclosed. Option E (Incorrect): Boards are responsible for AML oversight but are not always required to disclose corrective actions publicly. Best Practices for Addressing AML Exam Findings: Document all remediation efforts with clear implementation timelines. Demonstrate a culture of compliance through leadership and training. Ensure sustained improvements, not just short-term fixes.

• Question 399:

  Which three do the Office of Foreign Asset Control regulations cover? Choose 3 answers

  A. All persons and entities within the U.S.
  B. All U.S.-domiciled entities and their foreign branches
  C. All foreign-based entities that have U.S. customers
  D. All U.S. citizens
  A. All persons and entities within the U.S.
  B. All U.S.-domiciled entities and their foreign branches
  D. All U.S. citizens

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  The Office of Foreign Assets Control (OFAC) is a department of the U.S. Treasury that administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals1. OFAC regulations cover all persons and entities within the U.S., all U.S.-domiciled entities and their foreign branches, and all U.S. citizens, wherever located or employed2. These include U.S. banks, U.S. corporations, U.S. subsidiaries of foreign corporations, U.S. residents, and U.S. citizens living or traveling abroad3. OFAC regulations do not cover foreign-based entities that have U.S. customers, unless they are owned or controlled by U.S. persons or entities4. References: 1: Home | Office of Foreign Assets Control 2: eCFR :: 31 CFR Chapter V ?Office of Foreign Assets Control, Department of the Treasury 3: FFIEC BSA/AML Office of Foreign Assets Control - Office of Foreign Assets Control 4: Office of Foreign Assets Control (OFAC): Definition, Sanctions

• Question 400:

  A money remittance business will most likely attract money launderers because it:

  1.deals primarily in cash transactions.

  2.engages in international transactions.

  3. conducts transactions for walk-in customers. 4.does not have to comply with transaction reporting.

  A. 1, 2, and 3 only
  B. 1, 2, and 4 only
  C. 1, 3, and 4 only
  D. 2, 3, and 4 only
  A. 1, 2, and 3 only

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  A money remittance business will most likely attract money launderers because it deals primarily in cash transactions, engages in international transactions, and conducts transactions for walk-in customers. These factors make money remittance businesses vulnerable to money laundering risks, such as: Cash transactions: Cash is the preferred medium of exchange for money launderers, as it is anonymous, untraceable, and easily convertible. Money remittance businesses often deal with large amounts of cash, which can be used to place, layer, or integrate illicit funds into the financial system. Cash transactions also pose challenges for customer identification, record keeping, and transaction monitoring. International transactions: Money remittance businesses facilitate cross-border transfers of funds, which can be used to move illicit funds from one jurisdiction to another, or to obscure the origin, destination, or purpose of the funds. International transactions also involve exposure to different legal, regulatory, and cultural environments, which may create inconsistencies or gaps in anti-money laundering (AML) and counter-terrorism financing (CTF) standards and practices. Walk-in customers: Money remittance businesses often serve walk-in customers, who may not have an established relationship with the business, or who may use false or incomplete identification documents. Walk-in customers also increase the volume and complexity of transactions, which may make it difficult to detect suspicious or unusual activity, or to apply risk-based due diligence measures. References: ACAMS CAMS Certification Video Training Course1, Module 2: Money Laundering Risks and Methods, Lesson 2.3: Money Laundering Risks and Methods by Sector ACAMS CAMS Study Guide, 6th Edition2, Chapter 2: Money Laundering Risks and Methods, Section 2.3: Money Laundering Risks and Methods by Sector, pp. 37-38 ACAMS CAMS Examination Preparation Seminar, 6th Edition3, Chapter 2: Money Laundering Risks and Methods, Section 2.3: Money Laundering Risks and Methods by Sector, Slide 16