ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 451:

  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
  D. International wire transfers

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  International wire transfers are considered to be of highest money laundering risk because they can facilitate the rapid and anonymous movement of funds across borders and jurisdictions, making it difficult for law enforcement and regulators to trace the origin and destination of the funds, and to identify the beneficial owners and controllers of the accounts involved. International wire transfers can also be used to layer and integrate illicit proceeds into the legitimate financial system, by disguising the source, ownership, and purpose of the funds. International wire transfers can involve multiple intermediaries, complex payment chains, and inconsistent or incomplete information, which can increase the risk of money laundering and terrorist financing. Therefore, international wire transfers are subject to enhanced due diligence, record-keeping, and reporting requirements under various anti-money laundering and counter-terrorist financing (AML/ CTF) regulations and standards, such as the Financial Action Task Force (FATF) Recommendations1, the European Union (EU) Funds Transfer Regulation2, and the United States (US) Bank Secrecy Act3. References: 1: FATF (2012), International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation, FATF, Paris, France, Recommendation 16 and Interpretive Note to Recommendation 16. 2: Regulation (EU) 2015/847 of the European Parliament and of the Council of 20 May 2015 on information accompanying transfers of funds and repealing Regulation (EC) No 1781/2006 (OJ L 141, 5.6.2015, p. 1) 4 3: 31 U.S.C. 5311-5330 and 31 C.F.R. Chapter X You cannot make international money transfers unless the money is credited to the account. So first priority saving account, subsequent risk international wire transfer "A savings account, as well as a checking account, can be one of the riskiest financial instruments for money laundering operations given the ease with which it can be opened and operated".

• Question 452:

  Which statements regarding the USA PATRIOT ACT best describe key aspects that have extraterritorial reach? (Choose three.)

  A. It allows for the US Attorney General to subpoena records from a foreign bank with US correspondent accounts, including those that are located outside the US.
  B. It allows foreign banks to voluntarily designate a registered agent in the US to accept service of subpoenas.
  C. It allows the Secretary of the Treasury to order a US financial institution (FI) to close a correspondent account when a subpoena has not been responded by a foreign bank in a timely manner.
  D. It obliges the government to trace the origin of the funds when a seizure of assets occurs in a correspondent account that has been opened and maintained for a foreign bank in the US.
  E. It excludes as foreign FIs businesses that would be considered broker-dealers, money transmitters, and currency exchangers.
  F. It allows federal banking supervisors to require records of the identity of the owners of a foreign bank from a Fl operating in the US.
  A. It allows for the US Attorney General to subpoena records from a foreign bank with US correspondent accounts, including those that are located outside the US.
  B. It allows foreign banks to voluntarily designate a registered agent in the US to accept service of subpoenas.
  C. It allows the Secretary of the Treasury to order a US financial institution (FI) to close a correspondent account when a subpoena has not been responded by a foreign bank in a timely manner.

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  The USA PATRIOT Act is a comprehensive legislation that was enacted in response to the terrorist attacks of September 11, 2001, and aimed to strengthen the US government's ability to prevent, detect, and prosecute money laundering and terrorist financing. Among its many provisions, the USA PATRIOT Act contains several sections that have extraterritorial reach, meaning that they apply to foreign entities or activities that have a nexus with the US. Three of these sections are: Section 319(b), which allows for the US Attorney General or the Secretary of the Treasury to issue a subpoena or other legal order to any foreign bank that maintains a correspondent account in the US, requiring the production of records relating to such account or any account at the foreign bank, including records maintained outside the US12. This section also allows foreign banks to voluntarily designate a registered agent in the US to accept service of such subpoenas or orders12. Section 313, which prohibits US financial institutions from establishing, maintaining, administering, or managing correspondent accounts for foreign shell banks, which are banks that have no physical presence in any country and are not affiliated with a regulated financial group34. This section also requires US financial institutions to take reasonable steps to ensure that their correspondent accounts with foreign banks are not being used to provide banking services indirectly to foreign shell banks34. Section 311, which authorizes the Secretary of the Treasury to designate foreign jurisdictions, financial institutions, classes of transactions, or types of accounts as being of "primary money laundering concern" and to impose special measures to address such concerns . These special measures may include requiring US financial institutions to obtain and retain information on the beneficial owners of foreign accounts, prohibiting or imposing conditions on the opening or maintaining of correspondent or payable-through accounts for foreign financial institutions, or requiring US financial institutions to identify the customers of their foreign correspondent account holders . The Secretary of the Treasury may also order a US financial institution to terminate a correspondent account within 10 days if the foreign bank fails to comply with a subpoena or other request for information under Section 319(b) . References: 1: USA PATRIOT Act, Section 319(b) 2: ACAMS, CAMS Certification Package - 6th Edition, Chapter 4, page 121 3: USA PATRIOT Act, Section 313 4: ACAMS, CAMS Certification Package - 6th Edition, Chapter 4, page 120 USA PATRIOT Act, Section 311 ACAMS, CAMS Certification Package - 6th Edition, Chapter 4, page 119 Reference: https://www.jonesday.com/-/media/files/publications/2007/10/extraterritorial-application-of-the-usa-patriot-ac /files/extraterritorial-application-of-the-usa-patriot-ac/fileattachment/graves_ganguli.pdf https://www.lawfareblog.com/ long- arm-us-law-patriot-act-anti-money-laundering-act-2020-and-foreign-banks

• Question 453:

  Which principle about safeguarding privacy and data should an auditor adhere to when performing an AML investigation?

  A. Countries should clarify where AML and Data Protection Privacy laws are not balanced.
  B. AML and Data Protection Privacy laws should not be mutually exclusive.
  C. During evidence gathering, privacy laws are less important than local AML laws.
  D. Terrorist financing is more relevant in the context of data protection and supersedes laws.
  B. AML and Data Protection Privacy laws should not be mutually exclusive.

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  An auditor who performs an AML investigation should adhere to the principle that AML and Data Protection Privacy laws should not be mutually exclusive. This means that the auditor should respect and protect the personal data of the individuals involved in the investigation, while also complying with the AML obligations and requirements. The auditor should balance the legitimate interests of preventing and detecting money laundering and terrorist financing with the fundamental rights and freedoms of the data subjects, and apply the data protection principles of lawfulness, fairness, transparency, purpose limitation, data minimisation, accuracy, storage limitation, integrity, and confidentiality. The auditor should also take into account the relevant legal frameworks and guidance on data protection and AML, such as the EU General Data Protection Regulation (GDPR), the EU Anti-Money Laundering Directive (AMLD), the Council of Europe Convention 108+ on data protection, and the Guidelines on data protection for the processing of personal data for AML/CFT purposes issued by the Consultative Committee of the Convention 108+. The auditor should also cooperate and consult with the data protection authorities and the AML authorities, as appropriate, to ensure compliance and consistency.

• Question 454:

  In performing a risk analysis, which factor(s) should a financial institution review?

  A. The level of its gross revenue
  B. Recent regulatory actions against financial institutions of comparable size
  C. Its customer base, location, products and services
  D. The adequacy and completeness of its STR filings
  C. Its customer base, location, products and services

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  these are the main factors that determine the inherent money laundering risk of a financial institution. The customer base, location, products and services of a financial institution affect the type, volume, and complexity of transactions that it processes, as well as the exposure to high-risk customers, jurisdictions, and activities12. A financial institution should review these factors regularly and conduct a comprehensive risk assessment to identify, measure, and mitigate its money laundering risk34. References: Anti Money Laundering Risk Assessment - Financial Crime Academy1 Anti-Money-Laundering (AML) Risk Approach Explained | Okta2 Anti-Money Laundering (AML) Risk Assessment | ACAMS4 2024 National Money Laundering Risk Assessment (NMLRA)5

• Question 455:

  The Office of Foreign Assets Control requirements have an extraterritorial reach because compliance is required by:

  A. US persons in the US.
  B. intermediaries of a transaction with a US nexus.
  C. entities registered in the US.
  D. foreign financial intelligence units.
  B. intermediaries of a transaction with a US nexus.

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  The Office of Foreign Assets Control (OFAC) is the U.S. Treasury Department's agency that administers and enforces economic sanctions programs against countries, groups, and individuals that pose a threat to the national security, foreign policy, or economy of the U.S. OFAC's requirements have an extraterritorial reach because they apply not only to U.S. persons (citizens, permanent residents, entities, and those physically present in the U.S.), but also to any person or entity that engages in a transaction that has a connection to the U.S., such as using the U.S. financial system, U.S. goods, or U.S. persons. This means that intermediaries of a transaction with a U.S. nexus, such as foreign banks, brokers, or agents, are required to comply with OFAC's regulations and may face penalties for violating them. OFAC's jurisdiction does not depend on the registration or incorporation of an entity in the U.S., nor does it extend to foreign financial intelligence units, unless they are involved in a transaction with a U.S. nexus.

• Question 456:

  Upon filing a suspicious transaction report, which of th following elements should be the highest anti-money laundering priority in making the decision to keep the account open?

  A. Financial impact on the institution if the account is closed.
  B. Procedures to ascertain the potential risk to the organization.
  C. Additional Administrative costs of monitoring the account.
  D. Total number of accounts the institution closed in the last month.
  B. Procedures to ascertain the potential risk to the organization.

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  According to the CAMS Certification Package - 6th Edition1, the decision to keep or close an account after filing a suspicious transaction report (STR) should be based on a risk-based approach that considers the nature and severity of the suspicious activity, the customer profile and relationship, the regulatory and legal obligations, and the reputational and operational risks for the institution. The financial impact, the administrative costs, and the number of accounts closed are not the primary factors in determining the appropriate course of action. Therefore, the correct answer is B. Procedures to ascertain the potential risk to the organization. References: CAMS Certification Package - 6th Edition1, Chapter 5: Risk Management, Section: Account Closure, pp. 211-212.

• Question 457:

  What is an example of a legal risk a financial institution (FI) could face if it is sanctioned for failure to report suspected fraud activity?

  A. Foreign correspondents could terminate their relationships with the sanctioned bank.
  B. Clients of the bank might draw down the reserves of the bank and lead to liquidity issues.
  C. The bank could be forced to reimburse the victims of the fraudster for the losses suffered.
  D. The bank could see higher default rates on loans granted to companies owned by the fraudster.
  C. The bank could be forced to reimburse the victims of the fraudster for the losses suffered.

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  Failure to report suspected fraud activity is a serious breach of the anti-money laundering (AML) and anti- fraud obligations of a financial institution (FI). It could expose the FI to legal risks, such as civil lawsuits, criminal prosecutions, regulatory sanctions, and reputational damage. One possible legal risk is that the FI could be held liable for the losses suffered by the victims of the fraudster, either by the victims themselves or by a third party acting on their behalf, such as a government agency or a class action representative. This could result in significant financial costs and damages for the FI, as well as loss of trust and confidence from its customers and stakeholders. References: 1: This web article explains what a suspicious activity report (SAR) is, who regulates it, when it is required, and what are the consequences of failing to file it. 2: This guide provides information on how to make a SAR, what to include, how to request a defence against money laundering (DAML), and what happens if you fail to report suspicious activity. 3: This blog post discusses the legal implications of not reporting an alleged crime, such as fraud, and gives examples of cases where individuals or entities were prosecuted or sued for their failure to report.

• Question 458:

  What is operational risk?

  A. The potential forloss of public confidence in an organization's integrity
  B. The potential for loss resulting from too much credit or loan exposure to one borrower
  C. The potential for loss due to inadequate processes, people, systems, or external events
  D. The potential for lawsuits, fines, and penalties increasing an organization's expenses
  C. The potential for loss due to inadequate processes, people, systems, or external events

• Question 459:

  Historically, which of the following vehicles is most often used to hide beneficial ownership?

  A. an offshore company
  B. a professional association
  C. a limited liability partnership
  D. a charitable organization
  A. an offshore company

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  An offshore company is a legal entity that is incorporated or registered in a foreign jurisdiction, usually with low or no taxes, high confidentiality, and minimal regulation. Offshore companies are often used to hide beneficial ownership, as they can create complex and opaque structures that obscure the identity and control of the real owners and beneficiaries of the assets or transactions involved. Offshore companies can also use nominee directors and shareholders, trust and company service providers, and shell companies to further conceal beneficial ownership. According to the web search results, offshore companies are among the most common vehicles for money laundering, tax evasion, corruption, and other illicit activities

• Question 460:

  A company contracts a life insurance policy with a savings feature of 100,000 USD for an individual in a high- risk country. The policy receives monthly cash deposits from unknown third parties. A minimal part of the deposit is invested and the rest is withdrawn by the end of the month. Which are the circumstances to consider as a risk for money laundering? (Select Two.)

  A. The regular withdrawals from the policy by the end of the month
  B. Unidentified third parties depositing cash to the policy
  C. A company established in a high-risk country contracting a policy for a domestic individual
  D. A policy for an amount of 100,000 USD is to be considered high and suspicious
  E. A life insurance policy with a savings feature for a national from a high-risk country
  A. The regular withdrawals from the policy by the end of the month
  B. Unidentified third parties depositing cash to the policy

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  According to the ACAMS CAMS Study Guide (the 6th edition), one of the common methods of money laundering in the insurance sector is to purchase policies with illicit funds, overpay premiums, and then cancel or surrender the policies to receive refunds or payouts1. This allows criminals to move and disguise the source of their funds through the insurance company. Therefore, the regular withdrawals from the policy by the end of the month could indicate a money laundering scheme. Moreover, the FATF Guidance for a Risk-Based Approach for the Life Insurance Sector states that unidentified third parties depositing cash to the policy could also pose a high money laundering risk, as cash transactions are difficult to trace and third parties may act as intermediaries or nominees for the real beneficiaries2. Therefore, the insurance company should conduct enhanced due diligence on the policyholder and the third parties, and monitor the transactions for any suspicious activity.