ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 461:

  Which are social/economic consequences of money laundering? (Choose two.)

  A. Civil war
  B. Weakening financial institutions
  C. Increase in corruption and organized crime
  D. Increase in tax revenue
  E. Weakening of the country's infrastructure
  B. Weakening financial institutions
  C. Increase in corruption and organized crime

  ---

  Money laundering has severe social and economic impacts, including increased crime rates, corruption and erosion of public trust. Money laundering fuels criminal activities by providing the necessary financial resources for criminals to continue their operations. As illicit funds circulate within the financial system, they enable the growth of criminal organizations and contribute to an increase in crime rates, including organized crime1. Money laundering also facilitates corruption and undermines public trust in financial institutions and the wider economy. This erosion of public trust is exacerbated by trade-based money laundering, which involves the manipulation of international trade transactions to disguise the origins of illicit funds2. Money laundering also weakens financial institutions by exposing them to reputational, operational, legal and regulatory risks. Money launderers exploit the vulnerabilities of financial systems and compromise their integrity and stability. Money laundering can also distort the allocation of resources, create inflationary pressures, and undermine the effectiveness of monetary policy3. References: 1: Consequences Of Money Laundering Are: Understanding The Social, Economic, and Penalties Impacts1 2: Consequences of Money Laundering and Financial Crime2 3: Money laundering, its impact and consequences3

• Question 462:

  A company is endorsing the execution of terrorism through different activities, such as developing content for pro-terrorist television messages, encouraging the support of terrorist activities via the web, advertising the use of cryptocurrencies, and paying producers and reporters for television and web messaging. What specific action should be considered financing of terrorism?

  A. Encouraging supportive web messages
  B. Paying producers and reporters for television and web messaging
  C. Developing pro-terrorist content
  D. Advertising the use of cryptocurrencies
  B. Paying producers and reporters for television and web messaging

  ---

  Financing terrorism generally refers to providing money or other support, such as personnel or technology, to terrorist activities. This can include providing funds to terrorist networks, providing services to support terrorist operations, and providing resources to support terrorist activities. In this case, paying producers and reporters for television and web messaging would be considered financing of terrorism, as it is providing support for terrorist activities.

• Question 463:

  A new AML Officer for a US-based money service business (MSB) is drafting procedures around types of activity that require further review. Which should be included? (Choose two.)

  A. A customer visiting multiple branches of the MSB on the same day in order to transfer funds internationally.
  B. A customer buying several money orders totaling over $10,000 USD using debit card on the same day using government-issued identification.
  C. A customer sending funds to a family member living in a high-risk jurisdiction that is subject to civil unrest.
  D. A customer buying multiple money orders for $250 totaling $2,000 USD.
  E. A customer attempting to buy money orders under $3,000 USD in cash multiple times a day.
  A. A customer visiting multiple branches of the MSB on the same day in order to transfer funds internationally.
  E. A customer attempting to buy money orders under $3,000 USD in cash multiple times a day.

  ---

  A customer visiting multiple branches of the MSB on the same day in order to transfer funds internationally is a potential indicator of structuring, which is a technique used by money launderers to avoid reporting thresholds or detection by authorities. A customer attempting to buy money orders under $3,000 USD in cash multiple times a day is also a possible sign of structuring, as well as an attempt to evade the identification and recordkeeping requirements for MSBs. Both scenarios should be included in the procedures for further review by the AML Officer. References: BSA/AML Risk Assessment for Money Services Businesses (MSBs), section "Risk Factors", sub- section "Structuring": "Structuring is the practice of conducting financial transactions in a specific pattern calculated to avoid the creation of certain records and reports required by the BSA and/or 31 CFR Chapter X. Structuring is illegal and is often indicative of money laundering or other illicit activity." Money Services Business (MSB) -- AML Compliance Guide, section "AML Compliance Requirements for MSBs", sub-section "Identification and Recordkeeping": "MSBs must verify the identity of any person who conducts a transaction of $3,000 or more. They must also keep records of the transaction, including the name, address, date of birth, and identification number of the customer, as well as the amount, date, and method of payment."

• Question 464:

  A SAR/STR should be filed when the accountable institution identifies that:

  A. a customer makes a cash deposit in round dollars.
  B. cash transactions have values which avoid reporting thresholds.
  C. an alert is generated by a transaction monitoring system.
  D. an employee is not clearing alerts in a timely manner.
  B. cash transactions have values which avoid reporting thresholds.

  ---

  According to the ACAMS CAMS Certification Study Guide (6th edition), one of the red flags for money laundering is the structuring of cash transactions to avoid reporting thresholds. Structuring is the practice of breaking down large amounts of cash into smaller deposits or withdrawals that are below the reporting threshold of $10,000 in the United States or equivalent amounts in other jurisdictions. Structuring is done to evade the detection and reporting of cash transactions by financial institutions to the authorities. Therefore, when an accountable institution identifies that a customer is engaging in structuring or other forms of cash transaction manipulation, it should file a SAR/STR to report the suspicious activity1 References: 1: ACAMS CAMS Certification Study Guide (6th edition), page 64. Reference: https://www.fdic.gov/regulations/examinations/supervisory/insights/siwin07/article03_connecting. html

• Question 465:

  An institution has made the decision to exit a client relationship due to anti-money laundering concerns. Prior to starting the close out process, the institution receives a written request from a law enforcement agency to keep the account open.

  The client is the subject of an ongoing investigation and law enforcement wants the institution to continue to monitor the account and report any suspicious activity.

  What is primary consideration the institution should keep in mind when deciding whether to agree to this request?

  A. The anticipated cost of complying with the law enforcement request
  B. The number of suspicious transaction reports previously filed on the client
  C. The fact that the institution has a solid record in complying with law enforcement requests
  D. Whether the institution can continue to meet its regulatory obligations with the accounts open
  D. Whether the institution can continue to meet its regulatory obligations with the accounts open

  ---

  The primary consideration the institution should keep in mind when deciding whether to agree to the law enforcement request is whether the institution can continue to meet its regulatory obligations with the accounts open. This is because the institution has a duty to comply with the applicable laws and regulations, and to protect its reputation and integrity from being associated with money laundering or terrorist financing. The institution should assess the risks and benefits of keeping the account open, and consult with its legal counsel and senior management before making a decision. The institution should also document its decision and the rationale behind it, and communicate it to the law enforcement agency12. References: 1: CAMS Certification Package - 6th Edition | ACAMS, Chapter 7: Conducting or Supporting the Investigation Process, p. 143-144 2: FATF Guidance: Anti-Money Laundering and Terrorist Financing Measures and Financial Inclusion, February 2013, p. 50-51, http://www.fatf-gafi.org/media/fatf/documents/reports /AML_CFT_Measures_and_Financial_Inclusion_2013.pdf

• Question 466:

  Which three are the most commonly used risk criteria?

  A. Country Risk
  B. Customer Risk
  C. Reputation Risk
  D. Product and Service Risk
  A. Country Risk
  B. Customer Risk
  D. Product and Service Risk

  ---

  According to the CAMS Study Guide, the most commonly used risk criteria for assessing the money laundering and terrorist financing risks are country risk, customer risk, and product and service risk. These criteria are based on the FATF Recommendations and the Basel Committee's guidance on sound management of risks related to money laundering and financing of terrorism. Country risk refers to the level of exposure to potential money laundering and terrorist financing activities in a specific jurisdiction, based on factors such as the quality of its AML/CFT regime, its level of corruption, its political and economic stability, its involvement in illicit activities, and its cooperation with international bodies. Customer risk refers to the level of exposure to potential money laundering and terrorist financing activities associated with a specific customer or customer segment, based on factors such as the nature and purpose of the business relationship, the source and destination of funds, the type and volume of transactions, the customer's profile and behavior, and the customer's geographic location. Product and service risk refers to the level of exposure to potential money laundering and terrorist financing activities associated with a specific product or service offered by a financial institution, based on factors such as the complexity, transparency, anonymity, and accessibility of the product or service, the delivery channels and payment methods used, and the degree of oversight and monitoring applied. Reputation risk is not a risk criterion for assessing the money laundering and terrorist financing risks, but rather a potential consequence of failing to manage those risks effectively. Reputation risk refers to the potential damage to the public trust and confidence in a financial institution due to its involvement or association with money laundering and terrorist financing activities, whether directly or indirectly. References: CAMS Study Guide, 6th Edition, Chapter 2: Risk Assessments, pp. 41-461 FATF Recommendations, Recommendation 1: Assessing Risks and Applying a Risk-Based Approach2 Basel Committee on Banking Supervision, Sound management of risks related to money laundering and financing of terrorism, June 2017, pp. 9-143

• Question 467:

  Country A's anti-corruption authority has been investigating the movement of potential proceeds of bribery and corruption to Country B and is now preparing to take the case to a local court. Which method of obtaining the required evidence to prosecute the case would be most effective ?

  A. Make a request for the required evidence using Country A's Mutual Legal Assistance Treaty (MLAT) with Country B.
  B. Use the Egmont Secure Web to obtain the required evidence from Country B's Financial Intelligence Unit (FIU) .
  C. Use the International Criminal Police Organization (INTERPOL) network to obtain the required evidence from Country B.
  D. Make an official request directly from the head of Country A's anti-corruption authority to Country B's corresponding law enforcement authority.
  A. Make a request for the required evidence using Country A's Mutual Legal Assistance Treaty (MLAT) with Country B.

  ---

  When seeking legal evidence across borders MLATs , are the most formal and effective mechanism . Option A (Correct): MLATs provide a legal framework for exchanging evidence in criminal investigations . Option B (Incorrect): The Egmont Secure Web facilitates intelligence sharing between FIUs , but not legal evidence . Option C (Incorrect): INTERPOL focuses on law enforcement cooperation , but not formal evidence gathering for prosecutions . Option D (Incorrect): Direct requests between anti-corruption authorities may not have legal standing in court .

• Question 468:

  A financial institution's (Fl's) policy is to apply enhanced due diligence (EDD) for every new client to ensure the effectiveness of the program. How should a consultant advise the Fl's management team?

  A. Suggest the management team select the clients that are chosen for EDD.
  B. Suggest the management team ask the regulator for advice on EDD measures.
  C. Suggest EDD for 50% of the clients is appropriate.
  D. Suggest the FI needs to implement a risk-based approach for EDD.
  D. Suggest the FI needs to implement a risk-based approach for EDD.

  ---

  According to the Anti-Money Laundering Specialist (the 6th edition) study guide, a risk-based approach for EDD means that the FI applies more or less stringent measures depending on the level of risk posed by each client. This allows the FI to allocate its resources more efficiently and effectively, and to focus on the clients that pose the highest risk of money laundering or terrorist financing. Applying EDD for every new client, regardless of their risk profile, may not be the best use of the FI's resources, and may not reflect the proportionality and relevance of the EDD measures

• Question 469:

  Which practices are dealers in antiques, precious metals, precious stones, jewelry, and art advised to follow to reduce the element of money laundering risk? Choose 3 answers

  A. Insist on all vendors signing a declaration that the item placed by them for sale was not stolen or acquired through illegitimate means
  B. Verify the identities of all new vendors and customers and conduct due diligence on them
  C. Avoid accepting cash payment from the buyers
  D. Insist all vendors submit an appropriate license issued by enforcement agencies authorizing the sale
  B. Verify the identities of all new vendors and customers and conduct due diligence on them
  C. Avoid accepting cash payment from the buyers
  D. Insist all vendors submit an appropriate license issued by enforcement agencies authorizing the sale

• Question 470:

  After a FATF mutual evaluation process, which are resulting actions for jurisdictions that are determined to have strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing? (Choose two.)

  A. Expect private statements from FATF regarding the level of compliance of the jurisdiction, when insufficient progress is made.
  B. Appeal to FATF for a technical compliance re-rating based on the jurisdiction's own experts criteria.
  C. Demonstrate a high-level commitment to swiftly resolve the identified deficiencies in the FATF mutual evaluation report.
  D. Request FATF for an extension of deadlines in order to provide local awareness on the improvements that are necessary to solve the deficiencies.
  E. Report to FATF on the implementation of their progress under the enhanced follow-up mechanism.
  C. Demonstrate a high-level commitment to swiftly resolve the identified deficiencies in the FATF mutual evaluation report.
  E. Report to FATF on the implementation of their progress under the enhanced follow-up mechanism.

  ---

  According to the FATF Procedures for the Fourth Round of AML/CFT Mutual Evaluations1, jurisdictions that are determined to have strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing are subject to the FATF's International Cooperation Review Group (ICRG) process. The ICRG process involves the following actions for such jurisdictions: Demonstrate a high-level commitment to swiftly resolve the identified deficiencies in the FATF mutual evaluation report. This commitment should be made in writing to the FATF President and should include an action plan with specific deadlines and milestones to address the deficiencies. Report to FATF on the implementation of their progress under the enhanced follow-up mechanism. The FATF will monitor the progress of the jurisdiction through regular reports and on-site visits, and will decide whether the jurisdiction has made sufficient progress to exit the ICRG process or whether further actions are required, such as public statements, counter-measures, or suspension of membership. The other options are not resulting actions for jurisdictions with strategic deficiencies, as they are either not part of the FATF procedures or not consistent with the FATF's objectives and principles. For example, the FATF does not issue private statements regarding the level of compliance of a jurisdiction, nor does it allow a jurisdiction to appeal for a technical compliance re-rating based on its own criteria. The FATF also does not grant extensions of deadlines for jurisdictions to improve their regimes, as this would undermine the credibility and effectiveness of the mutual evaluation process. References: 1: Mutual Evaluations - Financial Action Task Force 2: Procedures for the FATF Fourth Round of AML/CFT Mutual Evaluations Reference: https://www.fatf-gafi.org/publications/high-risk-and-other-monitored-jurisdictions/documents /increased-monitoring-june-2021.html