ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 421:

  A politically exposed person (PEP) maintains an account at a bank. Last month a money laundering analyst filed a suspicious transaction report about unusual wire deposits originated by unknown individuals in the home country of the official. To whom should this situation be escalated?

  A. The board of directors
  B. The line of business executive
  C. The bank's anti-money laundering officer
  D. The Financial Action Task Force's PEP Hotline
  C. The bank's anti-money laundering officer

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  According to the ACAMS CAMS Certification Study Guide (6th edition), the bank's anti-money laundering officer is responsible for overseeing the implementation and maintenance of the bank's anti-money laundering program, which includes reporting and escalating suspicious activities involving PEPs. The anti-money laundering officer should be informed of any unusual or potentially illicit transactions involving PEPs, and decide on the appropriate course of action, such as filing additional reports, conducting enhanced due diligence, or terminating the relationship with the PEP. The other options are not correct because they are either not directly involved in the anti-money laundering program, or not the appropriate authority to contact in this situation. References: ACAMS CAMS Certification Study Guide (6th edition), page 77-78. 123456789

• Question 422:

  The Financial Action Task Force (FATF) routinely publishes a catalog of jurisdictions requiring enhanced monitoring , which is commonly called the:

  A. Yellow notice.
  B. Red notice.
  C. Grey list.
  D. White list.
  C. Grey list.

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  The FATF Grey List consists of countries with AML/CFT deficiencies that have committed to reforms . Option C (Correct): Grey-listed jurisdictions are under increased monitoring and must address identified deficiencies within a set timeframe. Option A (Incorrect): Yellow notices are used by INTERPOL , not FATF. Option B (Incorrect): Red notices refer to INTERPOL arrest warrants , not FATF monitoring lists. Option D (Incorrect): FATF does not maintain a "white list" of compliant jurisdictions.

• Question 423:

  An employee hears a colleague on the telephone with a customer giving advice on how to ensure that a suspicious transaction report will not be filed as a result of a future transaction. What action should the employee take?

  A. Report the conversation to the local police
  B. Report the conversation to the compliance officer
  C. Tell the colleague that it is against policy to give such advice
  D. Ignore the situation because the colleague is the relationship manager for that customer
  B. Report the conversation to the compliance officer

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  According to the Anti-Money Laundering Specialist (the 6th edition) resources, the employee should report the conversation to the compliance officer because the colleague is engaging in tipping off, which is a serious violation of anti-money laundering laws and regulations. Tipping off is the act of informing a person or entity that they are the subject of a suspicious transaction report or an investigation, or providing any information that may compromise or impede the investigation. Tipping off can result in criminal penalties, civil liabilities, and disciplinary actions for the individual and the institution. Therefore, the employee has a duty to report the colleague's misconduct to the compliance officer, who is responsible for ensuring compliance with the anti- money laundering policies and procedures, and taking appropriate corrective actions.

• Question 424:

  A bank's anti-money laundering section receives an anonymous tip that a customer might be engaging in possible money laundering. Which two facts should be considered during the course of an investigation into this matter? (Choose two.)

  A. The customer has had a long-standing account at the bank
  B. The customer in on the exempt list for currency transaction reporting requirements
  C. The customer is issuing a number of wires to several relatively high-risk jurisdictions
  D. The customer's account has had a large volume of activity, but the month-end balance is usually low
  C. The customer is issuing a number of wires to several relatively high-risk jurisdictions
  D. The customer's account has had a large volume of activity, but the month-end balance is usually low

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  The customer's wire transfers to high-risk jurisdictions and the large volume of activity with low month-end balance are two facts that should be considered during the course of an investigation into possible money laundering. These facts may indicate that the customer is trying to move funds from or to countries that have weak anti-money laundering (AML) controls, or that are known to be a source or destination of illicit funds12. They may also suggest that the customer is using a technique called "smurfing" or "structuring", which involves breaking down large amounts of cash into smaller transactions to avoid detection or reporting34. The other two facts are not necessarily indicative of money laundering, as the customer may have a legitimate reason to have a long-standing account at the bank or to be on the exempt list for currency transaction reporting requirements. References: 1: FFIEC BSA/AML Examination Manual, Appendix F: Money Laundering and Terrorist Financing Red Flags, Geographic Concerns, 5; 2: AML Red Flags .What are the Top 10 Indicators?, ComplyAdvantage, 6; 3: FFIEC BSA/AML Examination Manual, Appendix F: Money Laundering and Terrorist Financing Red Flags, Transaction Has Unusual Features, 5; 4: Money Laundering Red Flags | Key Behaviours and Indicators, High Speed Training, 7.

• Question 425:

  Historically, a tour guide has made monthly cash deposits averaging $10,000. Over the past three months, the monthly deposits have averaged $100,000. When the financial institution questions the increased deposits,the tour guide explains

  that there have been numerous conventions in town so business has increased substantially.

  Which further action(s) should the financial institution take?

  A. Immediately terminate the relationship
  B. Schedule a periodic review of activity
  C. Perform further investigation, it appropriate report the activity to the authorities and consider terminating the relationship
  D. Perform further investigation, if appropriate report the activity to the authorities and place a limit on future transactions
  C. Perform further investigation, it appropriate report the activity to the authorities and consider terminating the relationship

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  The financial institution should perform further investigation to verify the legitimacy of the tour guide's explanation and the source of funds. If the investigation reveals any suspicious or unusual activity, such as inconsistent cash flow patterns, involvement of high-risk customers or jurisdictions, or indications of money laundering or terrorist financing, the financial institution should report the activity to the authorities and consider terminating the relationship. The financial institution should also document the investigation and its findings, and update the customer's risk profile accordingly. References: CAMS Study Guide - 6th Edition, Chapter 4, page 112 CAMS Certification Exam Outline, Domain 1, Task 1.2, Skill 1.2.2 ACAMS MoneyLaundering.com, Article: "How to Conduct Effective Customer Due Diligence"

• Question 426:

  What are the rules imposed by the Office of Foreign Assets Control (OFAC) for legal entities and persons related to the US? (Select Two.)

  A. A subsidiary of a legal entity of the US, which is formally registered in a foreign country, is exempt from OFAC rules.
  B. Nationals of the US must comply with OFAC rules, regardless of where they are located in the world.
  C. A foreign individual visiting the US for a short vacation is obligated to follow OFAC rules.
  D. Any foreign corporation is also penalized if it conducts transactions with sanctioned countries under OFAC rules.
  E. The head office of a foreign legal entity which has a branch in the US does not need to comply with OFAC rules.
  B. Nationals of the US must comply with OFAC rules, regardless of where they are located in the world.
  D. Any foreign corporation is also penalized if it conducts transactions with sanctioned countries under OFAC rules.

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  The rules imposed by the Office of Foreign Assets Control (OFAC) for legal entities and persons related to the US are: Nationals of the US must comply with OFAC rules, regardless of where they are located in the world. This means that US citizens, permanent residents, and entities organized under US law are subject to OFAC sanctions and prohibitions, even if they operate or reside outside the US. Any foreign corporation is also penalized if it conducts transactions with sanctioned countries under OFAC rules. This means that non-US entities that engage in trade or financial dealings with OFAC-designated countries, entities, or individuals are liable to face civil or criminal penalties, as well as secondary sanctions that could restrict their access to the US market or financial system. The other options are not correct, because: A subsidiary of a legal entity of the US, which is formally registered in a foreign country, is not exempt from OFAC rules. This means that foreign-incorporated entities that are owned or controlled by US persons or entities are also subject to OFAC sanctions and prohibitions, unless they are specifically authorized or licensed by OFAC. A foreign individual visiting the US for a short vacation is not obligated to follow OFAC rules. This means that non-US persons who are temporarily present in the US are not subject to OFAC sanctions and prohibitions, unless they are involved in transactions that have a US nexus or violate other US laws. The head office of a foreign legal entity which has a branch in the US does not need to comply with OFAC rules. This means that non-US entities that have a presence or operation in the US are not subject to OFAC sanctions and prohibitions, unless they are involved in transactions that have a US nexus or violate other US laws.

• Question 427:

  What does the Basel Committee's Customer Due Diligence for Banks paper suggest that a bank needs to have in place when establishing an account for a corporate business entity?

  A. An understanding of the structure of the company
  B. A policy requiring all identified beneficial owners to undergo a national police check
  C. A process to ensure that the approval of senior management is obtained prior to opening the account
  D. A fee structure that reflects the banks' costs in monitoring the risks associated with entity's business activities
  A. An understanding of the structure of the company

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  According to the Basel Committee's Customer Due Diligence for Banks paper, one of the essential elements of a sound KYC programme is customer identification. This includes obtaining sufficient information to understand the nature and purpose of the customer relationship, the source of funds, and the beneficial ownership and control structure of the customer1. For corporate business entities, this means that a bank needs to have an understanding of the structure of the company, such as its legal form, its ownership, its directors, its line of business, and its geographical locations2. This will help the bank to assess the risk profile of the customer, to verify its identity and legitimacy, and to monitor its transactions for any suspicious activities. References: 1: Customer due diligence for banks, Basel Committee on Banking Supervision, October 2001, Section III. 2 2: General Guide to Account Opening and Customer Identification, Basel Committee on Banking Supervision, February 2003, Section 2.2.1 Reference: https://www.bis.org/publ/bcbs77.pdf

• Question 428:

  According to Basel Committee on Banking Supervision guidelines, which of the following statements best describes the relationship between the internal audit function and compliance?

  A. The internal audit methodology should include an assessment of compliance risk.
  B. An internal audit program of adequacy of the bank's compliance function should be es-tablished, but should not include review of transactions.
  C. The compliance function and internal audit function should be combined.
  D. The auditors should not discuss internal audit findings with compliance management to maintain independence.
  A. The internal audit methodology should include an assessment of compliance risk.

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  According to the Basel Committee on Banking Supervision guidelines, the internal audit function should evaluate the adequacy and effectiveness of the bank's compliance function and its compliance risk management framework1. This includes assessing the compliance risk inherent in the bank's activities, products, services, and systems, as well as the compliance policies, procedures, controls, and reporting mechanisms2. The internal audit function should also review the transactions and records of the bank to ensure compliance with applicable laws, regulations, and internal standards3. The other statements are incorrect because: B. An internal audit program of adequacy of the bank's compliance function should be established, but should not include review of transactions. This statement is false because the internal audit function should review the transactions and records of the bank to ensure compliance, as mentioned above3. C. The compliance function and internal audit function should be combined. This statement is false because the compliance function and the internal audit function should be separate and independent from each other, to avoid conflicts of interest and ensure objectivity and credibility. D. The auditors should not discuss internal audit findings with compliance management to maintain independence. This statement is false because the internal audit function should communicate and coordinate with the compliance function on a regular basis, to share information, insights, and recommendations, and to avoid duplication of work. However, the internal audit function should maintain its independence and report directly to the board of directors or the audit committee. References: 1: The internal audit function in banks, Principle 10, p. 9 2: The internal audit function in banks, Principle 10, p. 10 3: The internal audit function in banks, Principle 10, p. 11 The internal audit function in banks, Principle 2, p. 4 The internal audit function in banks, Principle 10, p. 11

• Question 429:

  Normal account-opening procedures reveal a customer who contacted a financial institution to open a bank account is the brother of a prominent member of a foreign judiciary. Which of the following actions should the anti-money laundering specialist recommend immediately?

  A. Monitor the customer's account.
  B. Perform enhanced due diligence.
  C. File a suspicious transaction report with the competent authority.
  D. Contact the institution's legal advisor.
  B. Perform enhanced due diligence.

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  A customer who is the brother of a prominent member of a foreign judiciary is considered a politically exposed person (PEP) or a family member of a PEP. PEPs are individuals who hold or have held positions of public trust or influence in a foreign country, such as heads of state, senior politicians, high-ranking military officers, judges, or executives of state-owned enterprises. PEPs pose a higher risk of money laundering, corruption, or bribery due to their access to public funds, influence over policy decisions, or connections to other powerful individuals. Therefore, financial institutions are required to perform enhanced due diligence (EDD) on PEPs and their family members, as well as monitor their transactions and activities more closely. EDD is a set of additional measures that go beyond the standard customer due diligence (CDD) to obtain more information about the customer, such as their source of wealth, source of funds, expected account activity, business relationships, and reputation. EDD also involves conducting ongoing reviews and updating the customer risk profile regularly. EDD helps the financial institution to mitigate the risks associated with PEPs and detect any signs of money laundering or other illicit activities. References: ACAMS Study Guide1, Chapter 2: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), pages 51-52 FATF Guidance on Politically Exposed Persons2, pages 9-10, 13-14, 17-18 Wolfsberg Group Guidance on Politically Exposed Persons3, pages 2-3, 6-7

• Question 430:

  What correspondent banking risk factor increases the risk for a Correspondent Bank?

  A. Multi-national financial institution with global operations
  B. Offers international funds transfer to customers
  C. Major service provider to money service businesses
  D. Limited product offering to customers in high-risk jurisdictions
  C. Major service provider to money service businesses

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  Correspondent banking is a service that allows banks to access financial services in different jurisdictions through intermediary banks, known as correspondent banks. Correspondent banking can facilitate cross- border transactions, foreign exchange, and other financial activities for banks and their customers. However, correspondent banking also poses various risks, such as money laundering, terrorist financing, fraud, corruption, tax evasion, and sanctions evasion. Correspondent banks may have no direct relationship with the customers of the respondent banks, making it difficult to verify their identity and monitor their transactions. Correspondent banks may also rely on the compliance programs of the respondent banks, which may not meet the standards of the correspondent banks' jurisdictions. One of the risk factors that increases the risk for a correspondent bank is being a major service provider to money service businesses (MSBs). MSBs are entities that provide money transmission, currency exchange, check cashing, prepaid cards, and other similar services. MSBs are often considered high-risk customers, because they may serve as conduits for illicit funds, especially if they operate in jurisdictions with weak anti- money laundering regulations or oversight. MSBs may also have a large and diverse customer base, making it challenging to conduct customer due diligence and transaction monitoring. Therefore, correspondent banks that provide services to MSBs may face higher exposure to money laundering and other financial crimes, and may need to apply enhanced due diligence and risk mitigation measures. References: Understanding Risk in Correspondent Banking GUIDANCE ON CORRESPONDENT BANKING SERVICES Correspondent Bank: Definition and How It Works Correspondent banking ?why it's important to understand the risks Reference: https://www.fatf-gafi.org/media/fatf/documents/reports/Guidance-Correspondent-Banking- Services.pdf