ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 471:

  The compliance officer for a private bank has been tasked with reviewing the procedure for authorized signatories on customer accounts to ensure it is in line with relevant Wolfsberg Anti-Money Laundering Principles for Private Banking. Which three statements from the procedure are in line with Wolfsberg? (Choose three.)

  A. Where the Authorized Signatory is not a lawyer or accountant, due diligence as to the source of funds and wealth of the Authorized Signatory should be undertaken.
  B. The responsible private banker must establish the identity of a holder of general powers over an account (e.g. a signatory for the account) and, as appropriate, verify that identity.
  C. Where due diligence has been satisfactorily completed on all authorized signers, the responsible private banker may reduce the due diligence performed on the account holder and/or beneficial owner.
  D. The responsible private banker must obtain the necessary documentation establishing the authorized signer's authority to act on behalf of the account holder or beneficial owner (e.g. a Power of Attorney).
  E. If an individual has signing authority over an account but does not act on a professional basis as a manager of funds, the responsible private banker must understand and document the relationship between that authorized signer, the account holder, and, if different, the beneficial owner of the account.
  B. The responsible private banker must establish the identity of a holder of general powers over an account (e.g. a signatory for the account) and, as appropriate, verify that identity.
  D. The responsible private banker must obtain the necessary documentation establishing the authorized signer's authority to act on behalf of the account holder or beneficial owner (e.g. a Power of Attorney).
  E. If an individual has signing authority over an account but does not act on a professional basis as a manager of funds, the responsible private banker must understand and document the relationship between that authorized signer, the account holder, and, if different, the beneficial owner of the account.

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  The three statements from the procedure that are in line with Wolfsberg are: B. The responsible private banker must establish the identity of a holder of general powers over an account (e.g. a signatory for the account) and, as appropriate, verify that identity. This is consistent with the Wolfsberg Principle 1.2.1, which states that the bank will establish the identity of its clients and beneficial owners prior to establishing business relationships with such persons1. D. The responsible private banker must obtain the necessary documentation establishing the authorized signer's authority to act on behalf of the account holder or beneficial owner (e.g. a Power of Attorney). This is consistent with the Wolfsberg Principle 1.2.3, which states that the bank will obtain the necessary documentation establishing the authority of the authorized signatory to act on behalf of the client or beneficial owner1. E. If an individual has signing authority over an account but does not act on a professional basis as a manager of funds, the responsible private banker must understand and document the relationship between that authorized signer, the account holder, and, if different, the beneficial owner of the account. This is consistent with the Wolfsberg Principle 1.2.4, which states that the bank will understand and document the relationship between the authorized signatory, the client and, if different, the beneficial owner of the account1. References: 1: Wolfsberg Anti-Money Laundering Principles for Private Banking (2012)

• Question 472:

  A precious metals dealer opens a new account with a bank. Which requires a referral to AML investigations for further review?

  A. International incoming payments from foreign companies in which the precious metals dealer has an established relationship
  B. Payments on the account reference unknown companies from high-risk jurisdictions
  C. International outgoing wires to diamond dealers that are part of the diamond pipeline
  D. Multiple daily point of sale transactions from third parties that appear to be individuals
  B. Payments on the account reference unknown companies from high-risk jurisdictions

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  According to the ACAMS Study Guide for the CAMS Certification Exam (6th edition), page 211, dealers in precious metals and stones (DPMS) are vulnerable to money laundering and terrorist financing risks due to the high value, portability, and fungibility of their products. Therefore, DPMS should apply a risk-based approach to their AML/CFT compliance program and monitor their customers and transactions for any red flags or suspicious activities. One of the red flags for DPMS is receiving payments from or sending payments to unknown or unverified third parties, especially if they are located in high-risk jurisdictions that have weak AML/CFT controls, are subject to sanctions, or are known to be sources or destinations of illicit funds. Such payments may indicate that the DPMS is being used as a conduit or a front for money laundering, terrorist financing, tax evasion, or other criminal activities. Therefore, if a precious metals dealer opens a new account with a bank and receives or makes payments that reference unknown companies from high-risk jurisdictions, the bank should refer the account to AML investigations for further review and verification of the source and purpose of the funds, the identity and legitimacy of the third parties, and the nature and rationale of the business relationship.

• Question 473:

  Which method to launder money through deposit-taking institutions is closely associated with international trade?

  A. Forming a shell company
  B. Using Black Market Peso Exchange
  C. Structuring cash deposits withdrawals
  D. Investing in legitimate business with illicit funds
  B. Using Black Market Peso Exchange

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  The Black Market Peso Exchange (BMPE) is a trade-based money laundering technique commonly used by narcotics traffickers in Colombia and Mexico. The central feature uses a money trader to ensure that US drug sales revenue doesn't cross any borders. Instead, those dollars are used to purchase any number of legitimate commodities from unsuspecting businesses on behalf of legitimate South American businesspersons, whose legitimate imports are used to obtain pesos for the drug cartels. This method is closely associated with international trade because it involves the exchange of goods and currencies across different countries, and it exploits the discrepancies between the official and unofficial exchange rates. References: CAMS Certification Package - 6th Edition | ACAMS, Chapter 2: Money Laundering Risks and Methods, page 35 Black Market Peso Exchange in Money Laundering - Financial Crime Academy What is BMPE ? - Sanction Scanner Overview - FinCEN.gov Reference: http://fraudaid.com/Dictionary-of-Financial-Scam-Terms/black_market_peso_exchange.htm

• Question 474:

  Which three stages of money laundering are on-line banking vulnerable to?

  A. Placement
  B. Layering
  C. Integration
  D. Structuring
  A. Placement
  B. Layering
  C. Integration

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  Online banking is vulnerable to all three stages of money laundering, namely placement, layering, and integration, because it allows the movement of funds across different accounts, jurisdictions, and institutions with speed, anonymity, and convenience. Online banking can facilitate the following money laundering methods: Placement: The initial stage of money laundering, where illicit funds are introduced into the financial system. Online banking can enable placement by allowing the deposit of cash or checks through ATMs, mobile devices, or remote deposit capture, or the transfer of funds from prepaid cards, digital wallets, or cryptocurrencies to bank accounts. Layering: The second stage of money laundering, where illicit funds are moved, disguised, or concealed to obscure their origin and ownership. Online banking can enable layering by allowing the transfer of funds between multiple accounts, often in different jurisdictions or currencies, or the purchase of financial products or services, such as money orders, wire transfers, or online gambling, that create complex transaction trails. Integration: The final stage of money laundering, where illicit funds are reintroduced into the legitimate economy as apparently legal income or assets. Online banking can enable integration by allowing the transfer of funds to legitimate businesses, investments, or charities, or the purchase of goods or services, such as real estate, luxury items, or travel, that provide a cover for the source of funds. References: ACAMS CAMS Certification Video Training Course1, Module 2: Money Laundering Risks and Methods, Lesson 2.1: The Three Stages of Money Laundering ACAMS CAMS Study Guide, 6th Edition2, Chapter 2: Money Laundering Risks and Methods, Section 2.1: The Three Stages of Money Laundering, pp. 29-34 ACAMS CAMS Examination Preparation Seminar, 6th Edition3, Chapter 2: Money Laundering Risks and Methods, Section 2.1: The Three Stages of Money Laundering, Slides 9-13

• Question 475:

  Which activities conducted by a lawyer could be a red flag for money laundering? (Select Two.)

  A. The lawyer does not have experience in providing the particular services requested.
  B. The lawyer worked unusual hours to perform case duties.
  C. The lawyer was paid substantially higher than usual fees.
  D. The lawyer does not document case notes for the services provided.
  E. The lawyer spent two days working a case.
  A. The lawyer does not have experience in providing the particular services requested.
  C. The lawyer was paid substantially higher than usual fees.

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  Lawyers who lack experience in providing specific services requested by clients or receive unusually high fees can raise red flags for money laundering. Inadequate documentation of case notes may also be suspicious, but the absence of experience and excessive fees are more significant indicators. These behaviors warrant further scrutiny to assess potential money laundering risks

• Question 476:

  When assessing and managing money laundering risks while operating in foreign jurisdictions different from that of the head office, an effective AML monitoring program should:

  A. provide all foreign jurisdiction reports to the head office for approval.
  B. be tailored to the higher of standards between the jurisdictions.
  C. be consistent with the head office audits.
  D. conform to the foreign jurisdiction policies to align with the head office policies.
  D. conform to the foreign jurisdiction policies to align with the head office policies.

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  When assessing and managing money laundering risks while operating in foreign jurisdictions different from that of the head office, an effective AML monitoring program should conform to the foreign jurisdiction policies to align with the head office policies. This ensures that the organization's AML/CFT risk management remains consistent across all jurisdictions, while allowing local compliance staff to assess and manage the risks specific to their jurisdiction. Additionally, the program should be tailored to the higher of standards between the jurisdictions, and should be consistent with the head office audits. Providing all foreign jurisdiction reports to the head office for approval is not necessary, as long as the program is consistent with the head office policies.

• Question 477:

  Which two statements are true regarding the European Union Money Laundering Directives? (Choose two.)

  A. They apply to member states of the European Union
  B. They require member states to enact laws and/or regulations to comply with the directives
  C. They set forth non-binding best practices for financial institutions within the member states
  D. They have extraterritorial impact and apply to states that have diplomatic relations with member states
  A. They apply to member states of the European Union
  B. They require member states to enact laws and/or regulations to comply with the directives

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  The European Union Money Laundering Directives (AMLDs) are issued periodically by the European Parliament to prevent money laundering and terrorist financing and establish a consistent regulatory environment across the EU1. They apply to all member states of the European Union and require them to enact laws and/or regulations to comply with the directives2. The directives are legally binding and set forth minimum standards and obligations for financial institutions and other entities within the member states3. The directives do not set forth non-binding best practices, but rather harmonize the AML/CFT rules and procedures across the EU4. The directives do not have extraterritorial impact and do not apply to states that have diplomatic relations with member states, unless they are part of the European Economic Area (EEA) or have equivalent AML/CFT regimes5. References: 1: Guide to EU Anti Money Laundering Directives (AMLD) - ComplyAdvantage 2: Directive - 2015/849 - EN - Fourth Anti-Money Laundering Directive - EUR-Lex 3: EU context of anti-money laundering and countering the financing of terrorism - European Commission 4: EU Anti-Money Laundering Directives (AMLD) | LSEG - Refinitiv 5: Anti-money laundering and countering the financing of terrorism legislative package - European Commission Reference: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32015L0849andfrom=FR

• Question 478:

  Which three characteristics make non-profit organizations vulnerable to misuse for terrorist financing?

  A. Enjoying the public trust
  B. Having access to a considerable sources of funds
  C. Being listed as government nonprofit organization
  D. Having a global presence fornational and international operations and financial transactions
  A. Enjoying the public trust
  B. Having access to a considerable sources of funds
  D. Having a global presence fornational and international operations and financial transactions

• Question 479:

  Financial institutions (FIs) perform AML risk assessments to ensure:

  A. a record for regulators indicating an AML risk assessment was completed at least once.
  B. internal audit assurance that all AML-related policy and procedures are board approved.
  C. satisfaction of the board of directors' approved risk appetite.
  D. proper controls surrounding higher-risk products, services, customers, and geographic locations.
  D. proper controls surrounding higher-risk products, services, customers, and geographic locations.

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  AML risk assessments are a key component of the risk-based approach to AML compliance, as required by the MLR 20171 and the FATF Recommendations2. AML risk assessments help FIs to identify, assess, and mitigate the money laundering and terrorist financing risks they face, taking into account their specific products, services, customers, and geographic locations. AML risk assessments also help FIs to allocate their resources and implement their AML policies and procedures in a proportionate and effective manner. AML risk assessments are not meant to be a one-off exercise, but rather an ongoing process that should be updated regularly to reflect changes in the FI's risk profile and the external environment. References: 1: The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 2: The FATF Recommendations - International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation Reference: https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/faqs/17.%20WolfsbergRisk-Assessment-FAQs-2015.pdf

• Question 480:

  Which statements describe risks that are associated with international business corporations? (Select Two.)

  A. They are inexpensive to acquire.
  B. They are established as an off-shore company.
  C. They are created in a tax haven.
  D. They facilitate asset protection.
  E. They are established with nominee directors.
  C. They are created in a tax haven.
  E. They are established with nominee directors.

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  International business corporations (IBCs) are entities that are created in jurisdictions that offer low or no taxes, high confidentiality, and minimal regulation. They are often used by individuals and businesses to avoid or evade taxes, conceal assets, and launder money. Some of the risks associated with IBCs are: They are created in a tax haven. Tax havens are countries or territories that have low or no taxes, lax financial regulation, and high secrecy. They attract IBCs that seek to reduce their tax liabilities, hide their beneficial owners, and evade scrutiny from authorities. Tax havens pose a risk to the global financial system, as they facilitate tax evasion, money laundering, corruption, and illicit financial flows They are established with nominee directors. Nominee directors are individuals who act as the legal representatives of an IBC, but have no actual control or authority over its activities. They are often used to shield the true beneficial owners of the IBC from detection and accountability. Nominee directors pose a risk to the transparency and integrity of the IBC, as they can enable fraud, tax evasion, money laundering, and other criminal activities