ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 501:

  At a minimum, who should receive role-specific AML training? (Select Three.)

  A. Consultants
  B. Information technology staff
  C. Customer facing staff
  D. Board of Directors
  E. Human resources staff
  F. AML/Compliance staff
  B. Information technology staff
  C. Customer facing staff
  F. AML/Compliance staff

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  1.Information Technology Staff: These employees handle systems, databases, and software used for transaction monitoring, customer due diligence (CDD), and other AML processes. They need to understand how to configure and maintain AML systems, recognize suspicious patterns, and ensure data security. 2.Customer Facing Staff: Frontline employees, such as tellers, relationship managers, and customer service representatives, interact directly with customers. They play a crucial role in identifying red flags, conducting enhanced due diligence (EDD), and reporting suspicious activities. Training helps them recognize unusual behavior and follow proper procedures. 3.AML/Compliance Staff: These professionals are directly responsible for AML program management, policy development, and regulatory compliance. They need in-depth knowledge of AML laws, regulations, and best practices. Training ensures they stay updated and can effectively implement AML controls.

• Question 502:

  The recommended way lot a financial institution to respond to a request from a law enforcement agency is to:

  A. train all staff to enable them to respond to subpoenas.
  B. hand over documents that are protected by attorney-client privilege
  C. freeze the identified account immediately
  D. have an audit trail system to produce requested documentation
  D. have an audit trail system to produce requested documentation

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  Financial institutions are required by law to maintain records and documentation of customer transactions and to provide this information to law enforcement agencies upon request. However, financial institutions should also have policies and procedures in place to ensure that they comply with legal and regulatory requirements and protect customer privacy. Providing protected documents that are privileged under attorney-client privilege or freezing an account immediately may not be the appropriate response and may expose the financial institution to legal or reputational risks. CAMS (6th ed.), Chapter 6, p. 261-262.

• Question 503:

  A bank received a subpoena regarding one of its clients. The Financial Intelligence Unit (FIU) of the bank should review the subpoena and:

  A. File a Suspicious Activity Report (SAR), including the receipt of the subpoena in the SAR narrative.
  B. Perform a transaction review and respond fully to the subpoena.
  C. Close the client's account by informing the client of the subpoena.
  D. Adjust the client's risk score and close the case.
  B. Perform a transaction review and respond fully to the subpoena.

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  Banks must comply with legal subpoenas while ensuring AML compliance. Option B (Correct): The bank should review client transactions and respond fully to law enforcement. Option A (Incorrect): Filing a SAR simply because of a subpoena is not required unless suspicious activity is identified. Option C (Incorrect): Tipping off the client about the subpoena is illegal under AML laws. Option D (Incorrect): Risk scores should be reviewed but not automatically adjusted solely based on a subpoena .

• Question 504:

  A senior government official is trying to open an account in a financial institution (FI) that operates in a different country from where the official is domiciled. The official is using an asset manager intermediary to represent them. According to the Wolfsberg Group, which next steps should the FI take regarding the opening of the account? (Select Three.)

  A. Report to authorities that a possible suspicious activity is being undertaken by a politically exposed person.
  B. Screen for applicable sanctions only for the official in the name of the person for whom the account will be opened.
  C. Reasonably establish if the source of wealth and funds of the official is legitimate.
  D. Perform due diligence procedures on the managing intermediary.
  E. Determine whether the intermediary representative is acting on the officer's behalf.
  F. Ensure the official's client file is updated so that the information is maintained in a consistent and complete manner.
  C. Reasonably establish if the source of wealth and funds of the official is legitimate.
  D. Perform due diligence procedures on the managing intermediary.
  E. Determine whether the intermediary representative is acting on the officer's behalf.

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  According to the Wolfsberg Group, the FI should take the following steps regarding the opening of the account for the senior government official: Reasonably establish if the source of wealth and funds of the official is legitimate. This is to ensure that the FI is not facilitating the laundering of proceeds of corruption, bribery, or other illicit activities by the official, who is considered a politically exposed person (PEP) and poses a higher risk of financial crime. The FI should obtain information and documentation on the origin and ownership of the funds, the official's income and assets, and the purpose and expected activity of the account. Perform due diligence procedures on the managing intermediary. This is to verify the identity, reputation, and regulatory status of the intermediary, who acts as a third party on behalf of the official. The FI should also assess the intermediary's own AML/CFT policies and controls, and the nature and extent of the relationship between the intermediary and the official. Determine whether the intermediary representative is acting on the officer's behalf. This is to establish the beneficial ownership and control of the account, and to avoid any potential conflicts of interest or undue influence by the intermediary. The FI should obtain a written confirmation from the intermediary that they are authorized to act on behalf of the official, and that they will disclose any changes in the beneficial ownership or control of the account.

• Question 505:

  What are three potential issues for foreign financial institutions maintaining correspondent accounts with U.S. banks under the Patriot Act? Choose 3 answers

  A. Cancellation of correspondent banking relationships
  B. Forfeiture of funds in a U.S. interbank account
  C. Prohibition of correspondent accounts for shell banks
  D. U.S. residents maintaining private banking accounts
  A. Cancellation of correspondent banking relationships
  B. Forfeiture of funds in a U.S. interbank account
  C. Prohibition of correspondent accounts for shell banks

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  The Patriot Act, enacted in 2001, introduced several provisions to enhance the anti-money laundering and counter-terrorist financing (AML/CFT) measures for U.S. banks and their foreign correspondent relationships. Some of the potential issues for foreign financial institutions (FFIs) maintaining correspondent accounts with U.S. banks under the Patriot Act are: Cancellation of correspondent banking relationships: The Patriot Act requires U.S. banks to conduct due diligence and enhanced due diligence on their foreign correspondent accounts, and to terminate any account that poses a significant risk of money laundering or terrorist financing. This may result in the cancellation of correspondent banking relationships with FFIs that do not meet the U.S. standards or cooperate with the U.S. authorities. The loss of correspondent banking relationships may affect the FFIs' ability to access the U.S. financial system and provide services to their customers. Forfeiture of funds in a U.S. interbank account: The Patriot Act authorizes the U.S. government to seize and forfeit any funds in a U.S. interbank account that are involved in or traceable to money laundering or terrorist financing activities. This means that FFIs may face the risk of losing their funds in a U.S. interbank account if they or their customers are suspected or accused of engaging in illicit activities. The forfeiture of funds may have significant financial and reputational consequences for the FFIs and their customers. Prohibition of correspondent accounts for shell banks: The Patriot Act prohibits U.S. banks from establishing or maintaining correspondent accounts for shell banks, which are banks that have no physical presence in any country and are not affiliated with a regulated financial group. This means that FFIs that are shell banks or have relationships with shell banks cannot access the U.S. financial system through correspondent accounts. The prohibition of correspondent accounts for shell banks aims to prevent the use of shell banks as vehicles for money laundering and terrorist financing. References: CAMS Study Guide, 6th Edition, Chapter 4: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), pp. 81-841 USA PATRIOT Act, Title III: International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, Sections 312, 319, and 3132 Wolfsberg Anti-Money Laundering Principles for Correspondent Banking, October 2014, pp. 3-43 Reference: http://www.ffiec.gov/bsa_aml_infobase/p ages_manual/olm_027.htm

• Question 506:

  Which of the following customer transactions with a securities dealer would indicate the highest suspicion of money laundering?

  A. Frequent trades in unlisted securities throughout the day on a regular basis.
  B. Recurring transfers of money into a brokerage account subsequently invested in short-term securities.
  C. An unexplained high level of account activity with very low levels of securities transactions
  D. Investment in securities with a significantly lower risk than the customer's expressed risk tolerance.
  B. Recurring transfers of money into a brokerage account subsequently invested in short-term securities.

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  The Financial Action Task Force (FATF) Recommendation that should cause an anti-money laundering specialist the most concern is B: Financial institutions should not keep anonymous accounts. This is because anonymous accounts are accounts that are opened or maintained without verifying the identity of the customer or the beneficial owner, or with fictitious or incomplete information. Anonymous accounts pose a high risk of money laundering and terrorist financing, as they can be used to conceal the origin, destination, and purpose of illicit funds, and to evade the detection and reporting of suspicious transactions. Therefore, the FATF Recommendation 10 requires financial institutions to identify and verify the identity of their customers and the beneficial owners, and to prohibit the opening or maintaining of anonymous accounts or accounts in obviously fictitious names1. The other options are also FATF Recommendations, but they are less relevant or applicable to the scenario. Option A: Financial institutions should not warn their customers when information relating to them is being reported to the competent authorities, is the FATF Recommendation 21, which aims to prevent tipping-off, i. e., alerting the customer that they are being investigated or reported for money laundering or terrorist financing. However, this does not directly address the issue of identity verification or anonymous accounts2. Option C: Financial institutions should maintain all necessary suspicious transaction report records on transactions, both domestic and international, for at least 5 years, is the FATF Recommendation 11, which aims to ensure that financial institutions have adequate and consistent records of their customers and transactions, and that these records are available to the competent authorities when needed. However, this does not prevent the opening or maintaining of anonymous accounts in the first place3. Option D: If financial institutions suspect that funds stem from criminal activity, they should be required to close the account, is not a FATF Recommendation, but rather a possible action that financial institutions may take in accordance with their risk assessment and policies. However, the FATF does not mandate or recommend the closure of accounts as a general rule, and advises that financial institutions should consult with the competent authorities before taking such action, as it may alert the customer or compromise the investigation. References: 1: FATF Recommendation 10: Customer due diligence, 1 2: FATF Recommendation 21: Tipping-off and confidentiality, 2 3: FATF Recommendation 11: Record keeping, 3

• Question 507:

  Which aspect of the USA PATRIOT Act impacts foreign financial institutions?

  A. Requiring enhanced due diligence for foreign shell banks
  B. Expanding sanctions requirements to a U.S. financial institution's foreign branches
  C. Expanding the anti-money laundering program requirements to all foreign financial institutions
  D. Providing authority to impose special measures on institutions that are of primary money-laundering concern
  D. Providing authority to impose special measures on institutions that are of primary money-laundering concern

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  Section 311 of the USA PATRIOT Act grants the Secretary of the Treasury the authority to designate foreign jurisdictions, financial institutions, classes of transactions, or types of accounts as being of primary money laundering concern, and to impose one or more of five special measures on them. These special measures range from requiring enhanced recordkeeping and reporting to prohibiting U.S. financial institutions from opening or maintaining correspondent accounts for the designated entities. The purpose of these special measures is to protect the U.S. financial system from money laundering and terrorist financing risks posed by the designated entities. References: USA PATRIOT Act | FinCEN.gov FACT SHEET for Section 312 of the USA PATRIOT Act Final Regulation and Notice of Proposed Rulemaking | FinCEN.gov International Financial Crime: Treasury's Roles and Responsibilities Should Be Updated - GovInfo Reference: https://www.imf.org/external/np/leg/sem/2002/cdmfl/eng/tompki.pdf (8)

• Question 508:

  According to the European Union Money Laundering Directives, "knowledge, intent or purpose"' required as an element for money laundering may be inferred from

  A. Objective factual circumstances.
  B. Subjective factual circumstances.
  C. Objective non-factual circumstances.
  D. Subjective non-factual circumstances.
  A. Objective factual circumstances.

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  According to Article 1(3) of Directive (EU) 2015/849 (4th Anti-Money Laundering Directive, 4AMLD), "knowledge, intent or purpose" required as an element for money laundering may be inferred from objective factual circumstances. This means that the prosecution does not need to prove the actual state of mind of the offender, but can rely on the evidence of the surrounding facts and circumstances that indicate the offender's awareness or intention to launder money. This is consistent with the approach of the Financial Action Task Force (FATF), which defines money laundering as the intentional act of concealing or disguising the origin of criminal proceeds. References: Directive - 2015/849 - EN - Fourth Anti-Money Laundering Directive - EUR-Lex, Article 1(3). Preventing abuse of the financial system for money laundering and terrorist financing, Summary. New Directive on Criminalisation of Money Laundering - eucrim, Introduction.

• Question 509:

  Which Trust parties should be identified to determine the true nature of the Trust relationship according to Basel guidelines? (Choose three.)

  A. Respondents
  B. Payees
  C. Trust Administrators
  D. Trustees
  E. Beneficiaries
  F. Settlors/grantors
  D. Trustees
  E. Beneficiaries
  F. Settlors/grantors

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  According to the Basel guidelines on customer due diligence for banks, a trust is a legal arrangement whereby a person (the settlor or grantor) transfers the legal ownership of specific assets to another person or entity (the trustee) to hold for the benefit of a third person or persons (the beneficiaries)1. The Basel guidelines recommend that banks should identify and verify the identity of the following parties to determine the true nature of the trust relationship: The trustee, who is the person or entity that has the legal authority and duty to manage the trust assets and distribute them to the beneficiaries according to the trust deed2. The trustee may also be the settlor, the beneficiary, or both, depending on the type and structure of the trust. The beneficiaries, who are the persons or entities that have a beneficial interest in the trust assets or income, either presently or in the future4. The beneficiaries may be named individuals, classes of persons, or charitable causes. The settlor or grantor, who is the person or entity that creates the trust and transfers the legal ownership of the assets to the trustee. The settlor or grantor may also retain some rights or powers over the trust, such as the ability to appoint or remove trustees, beneficiaries, or protectors. The other three options are incorrect because: Respondents are not trust parties, but rather financial institutions that maintain correspondent banking relationships with other financial institutions. Respondents are not relevant for the identification of the trust relationship, but rather for the due diligence of the correspondent banking relationship. Payees are not trust parties, but rather persons or entities that receive payments from the trust or other sources. Payees are not relevant for the identification of the trust relationship, but rather for the monitoring of the transactions and activities of the trust. Trust administrators are not trust parties, but rather persons or entities that provide administrative services to the trust, such as accounting, record-keeping, or tax compliance. Trust administrators are not relevant for the identification of the trust relationship, but rather for the assessment of the risk and complexity of the trust.

• Question 510:

  A large cash deposit most likely reflects money laundering when it is

  1.

  from a customer who has never conducted a transaction in cash before.

  2.

  transacted in segments smaller than the reporting thresholds at various times during the day.

  3.

  followed by an immediate wire transfer to an offshore secrecy haven.

  4.

  by a customer who operates a cash-based business.

  A. 1, 2, and 3 only
  B. l, 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 large cash deposit is a red flag for money laundering when it is inconsistent with the customer's profile, behavior, or business activity. A customer who has never conducted a transaction in cash before may be trying to avoid detection or conceal the source of the funds. A customer who transacts in segments smaller than the reporting thresholds at various times during the day may be engaging in structuring or smurfing, which are techniques to evade currency transaction reporting requirements. A customer who follows a large cash deposit with an immediate wire transfer to an offshore secrecy haven may be attempting to layer or move the funds to a jurisdiction with weak anti-money laundering controls or high confidentiality. These scenarios indicate a high risk of money laundering and warrant further investigation and reporting. A customer who operates a cash-based business may have a legitimate reason to make a large cash deposit, depending on the nature and scale of the business. However, this does not mean that the customer is exempt from scrutiny or monitoring, as cash-based businesses are also vulnerable to money laundering abuse. The bank should verify the source and purpose of the funds, and compare the deposit with the customer's expected activity and turnover. References: CAMS Certification Package - 6th Edition, Chapter 4: Conducting and Supporting the Investigation Process, pp. 97-98. Warning signs of money laundering | The Law Society, Section: Cash deposits and withdrawals.