ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 601:

  To understand if the customer operates in line with the firm's risk appetite for a specific industry segment, a financial institution must:

  A. obtain sufficient customer information to understand the nature and purpose of customer relationships for the purpose of developing a customer risk profile.
  B. obtain identifying information for beneficial owners through a completed certification form from the individual opening the account on behalf of the legal entity customer.
  C. obtain the name and address, country identification number and date of birth of a non-customer who purchases a monetary instrument.
  D. obtain the name, date of birth for an individual, address and identification number from each customer before opening the account.
  A. obtain sufficient customer information to understand the nature and purpose of customer relationships for the purpose of developing a customer risk profile.

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  Customer due diligence (CDD) is a key component of anti-money laundering (AML) and counter-terrorism financing (CTF) compliance. CDD helps financial institutions identify and verify their customers, assess their risk levels, and monitor their transactions for suspicious activity. One of the main objectives of CDD is to understand the nature and purpose of customer relationships, which involves collecting and analyzing relevant information about the customer's business activities, expected transaction patterns, source and destination of funds, and beneficial ownership. This information helps financial institutions develop a customer risk profile, which is a tool to measure and manage the risk exposure of each customer. A customer risk profile reflects the financial institution's risk appetite, which is the level and type of risk that the institution is willing and able to accept. By comparing the customer's risk profile with the institution's risk appetite, the institution can determine if the customer operates in line with the firm's expectations and requirements for a specific industry segment. For example, if the institution has a low risk appetite for customers involved in high-risk sectors such as gambling, cryptocurrency, or arms trade, it can use the customer risk profile to identify and mitigate any potential risks associated with such customers. Therefore, to understand if the customer operates in line with the firm's risk appetite for a specific industry segment, a financial institution must obtain sufficient customer information to understand the nature and purpose of customer relationships for the purpose of developing a customer risk profile.

• Question 602:

  An analyst reviewing trade finance transactions notices an increase in price of 25% over 12 months for commodities with the same specification and quantity. Which action should the analyst take?

  A. Produce an investigation report that finds evidence to substantiate the analyst's suspicion and submit a SAR/STR.
  B. Produce an investigation report that considers client activity and factors that may have legitimately affected transaction cost.
  C. Produce an updated due diligence record for the client so that monitoring can be enhanced.
  D. Produce a SAR/STR that describes apparent trade-based money laundering and submit to the Financial Investigation Unit (FIU).
  B. Produce an investigation report that considers client activity and factors that may have legitimately affected transaction cost.

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  Trade finance transactions involve the financing of the movement of goods and services across borders. Trade finance products include letters of credit, guarantees, documentary collections, open account, and supply chain finance. Trade finance transactions are exposed to various risks, such as credit risk, operational risk, fraud risk, and money laundering risk. Money laundering risk refers to the possibility that trade finance transactions are used to conceal the origin, ownership, or destination of illicit funds, or to evade taxes, sanctions, or exchange controls. Trade-based money laundering (TBML) is a form of money laundering that involves the manipulation of trade transactions, such as mispricing, misinvoicing, over- or under-shipping, or falsifying documents, to transfer value or obscure the true nature of the funds12. An analyst reviewing trade finance transactions should be alert to any red flags or indicators of potential TBML, such as significant discrepancies between the value or quantity of the goods and the invoice, payment, or contract; unusual or complex shipment routes or methods; involvement of high-risk jurisdictions, entities, or commodities; or lack of transparency or documentation of the trade transaction12. If the analyst notices an increase in price of 25% over 12 months for commodities with the same specification and quantity, this could be a sign of mispricing, which is a common technique of TBML. Mispricing involves inflating or deflating the price of the goods to transfer value or evade taxes or duties. For example, an exporter may overprice the goods to move funds out of a country with exchange controls, or an importer may underprice the goods to reduce the customs duty payable12. However, an increase in price of 25% over 12 months for commodities with the same specification and quantity does not necessarily indicate TBML, as there could be other legitimate factors that may have affected the transaction cost, such as market fluctuations, supply and demand, quality, transportation, insurance, or other fees. Therefore, the analyst should not jump to the conclusion that TBML is occurring, but rather conduct a thorough investigation to verify the validity and rationale of the price change. The analyst should produce an investigation report that considers the client activity and factors that may have legitimately affected the transaction cost, such as: The nature and purpose of the client's business and trade activities The client's profile, risk rating, and transaction history The source and destination of the funds and the goods The market price and trends of the commodities involved The contractual terms and conditions of the trade transaction The supporting documents, such as invoices, bills of lading, certificates of origin, inspection reports, etc. The due diligence and verification procedures performed by the bank or the third parties The compliance with the relevant laws, regulations, and standards of the jurisdictions involved The investigation report should document the findings, analysis, and conclusions of the analyst, and provide evidence and references to support the assessment. The investigation report should also include any recommendations or actions to be taken by the bank or the authorities, such as: Requesting additional information or clarification from the client or the counterparties Conducting enhanced due diligence or monitoring of the client or the transaction Escalating the case to the senior management or the compliance department Reporting the case to the Financial Investigation Unit (FIU) or the relevant regulator Filing a Suspicious Activity Report (SAR) or a Suspicious Transaction Report (STR) if there are reasonable grounds to suspect TBML or other criminal activity Therefore, the best action for the analyst to take is to produce an investigation report that considers the client activity and factors that may have legitimately affected the transaction cost, as this would allow the analyst to determine whether the price increase is justified or indicative of TBML, and to take appropriate measures accordingly. References: Trade Finance and Trade-Based Money Laundering Trade-Based Money Laundering: Red Flag Indicators

• Question 603:

  When performing an investigation, which key steps should be taken to maintain and secure supporting documentation used to perform an investigation of a suspicious activity?

  A. Disseminate the rationale for the investigative approach and the objective basis for the determination.
  B. Perform the alerting transaction with alternative thresholds to ensure they are calibrated correctly.
  C. Ensure that a secure archive has information available to the client.
  D. Maintain a record of the transaction activity that generated the alert
  D. Maintain a record of the transaction activity that generated the alert

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  According to the ACAMS CAMS Certification Study Guide (6th edition), one of the key steps of conducting an investigation of a suspicious activity is to maintain and secure supporting documentation used to perform the investigation. This includes the transaction activity that generated the alert, the analysis performed, the decision made, and the rationale for the decision. This documentation serves as evidence of the investigation process and the compliance with the relevant policies and procedures. It also helps to ensure consistency, accountability, and transparency in the investigation process1 References: 1: ACAMS CAMS Certification Study Guide (6th edition), page 156.

• Question 604:

  A bank compliance officer has implemented enhanced monitoring rules that have identified some unusual activity that may be indicative of human trafficking. Which red flag should prompt additional transactional review?

  A. Wire transfer activity from countries with significant migrant populations
  B. Cash deposits that occur in cities where the customer resides and conducts business
  C. Cash deposits that occur in cities where the customer does not reside or conduct business
  D. Cash deposits that occur in cities where the customer does not reside or conduct business followed by same-day withdrawals
  D. Cash deposits that occur in cities where the customer does not reside or conduct business followed by same-day withdrawals

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  A customer's account appears to function as a funnel account whereby cash deposits occur in cities/states where the customer does not reside or conduct business. Frequently, in the case of funnel accounts, the funds are quickly withdrawn (same day) after the deposits are made

• Question 605:

  Which actions are involved when a prosecutor instructs a bank to freeze the assets and bank accounts held by one of its clients? (Choose three.)

  A. Inform other banks in the same geographical area to freeze the client's assets if they are a member of that bank, too.
  B. Extend the account and asset freeze to the client's family members as a precautionary measure.
  C. Ensure the client and beneficiaries are unable to access any frozen assets during the freeze order.
  D. The institution does not need to comply with the request if the client's assets make the task unusually difficult or complex to access.
  E. An affidavit must accompany the freeze order for the bank to comply with the request.
  F. The institution should obtain a copy of the court order to freeze the assets of the named individuals.
  C. Ensure the client and beneficiaries are unable to access any frozen assets during the freeze order.
  E. An affidavit must accompany the freeze order for the bank to comply with the request.
  F. The institution should obtain a copy of the court order to freeze the assets of the named individuals.

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  When a prosecutor instructs a bank to freeze the assets and bank accounts held by one of its clients, the bank must take the following actions: Ensure the client and beneficiaries are unable to access any frozen assets during the freeze order. This means the bank must prevent any withdrawals, transfers, payments, or other transactions from the frozen accounts or assets. The bank must also notify the client and beneficiaries of the freeze order and the reason for it. The bank must comply with the freeze order until it is lifted by the court or the prosecutor12. An affidavit must accompany the freeze order for the bank to comply with the request. An affidavit is a sworn statement that provides the legal basis and evidence for the freeze order. The affidavit must specify the name of the client, the amount and location of the assets to be frozen, the nature and source of the funds, the suspected criminal activity, and the legal authority for the freeze order3 . The institution should obtain a copy of the court order to freeze the assets of the named individuals. A court order is a legal document that authorizes the bank to freeze the assets and accounts of the client. The court order must be signed by a judge or a magistrate and must include the same information as the affidavit. The bank should keep a copy of the court order for its records and to verify its validity . References: Frozen Bank Account: Here's What You Need to Know Why Is My Bank Account Frozen? - Investopedia What Is a Frozen Account? What Causes It and How to Unfreeze It [Freezing Orders - Practical Law] [Freezing Orders - The Law Society] [Freezing Orders - LexisNexis]

• Question 606:

  An anti-money laundering specialist at a large institution is responsible for informing senior management about the status of the anti-money laundering program across the organization. The global institution handles retail banking, commercial

  banking, global markets, private banking and has an affiliated securities dealer.

  The specialist and the team provide corporate strategic direction to these areas on anti-money laundering related subjects. The following information is reported to executive management on a regular basis:

  1.

  Total number of suspicious transactions identified and reported

  2.

  Suspicious transaction trends

  3.

  Training that has occurred for the various units

  4.

  Status report on the anti-money laundering regulatory environment

  5.

  Summary of exception reports

  Which of the following additional elements is the most useful?

  A. The total credit exposure for non-cooperative countries and territories.
  B. Results of related audits and examinations.
  C. Details on inquiries received from law enforcement.
  D. Notification of management changes in the different major divisions.
  B. Results of related audits and examinations.

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  the results of related audits and examinations are the most useful additional element to report to executive management on a regular basis. Audits and examinations are essential tools to assess the effectiveness and compliance of the anti-money laundering program across the organization. They can identify strengths, weaknesses, gaps, risks, and best practices in the program and provide recommendations for improvement. They can also help to monitor the implementation of corrective actions and remediation plans. Reporting the results of audits and examinations can help executive management to oversee the performance of the program, ensure accountability, and demonstrate commitment to the anti-money laundering objectives12 References: 1: ACAMS Study Guide for the CAMS Certification Examination, 6th Edition, Chapter 2, page 62 2: CERTIFICATION Candidate Handbook, page 16

• Question 607:

  Before providing suspicious activity report documentation to an authorized requestor, the institution should first:

  A. contact a local financial intelligence unit for authorization.
  B. notify outside counsel.
  C. de request a subpoena.
  D. independently verify the requestor.
  D. independently verify the requestor.

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  According to the guidance issued by FinCEN and the Federal banking agencies, when a financial institution receives a request for SAR supporting documentation from FinCEN or an appropriate law enforcement or supervisory agency, it must first verify that the requestor is, in fact, a representative of such an agency. This is to ensure the confidentiality and security of the SAR information and to prevent unauthorized disclosures. A financial institution should have procedures for such verification in its BSA/AML compliance program, which may include, for example, independent employment verification with the requestor's field office or face-to- face review of the requestor's credentials.

• Question 608:

  A compliance officer is conducting a review of the automated transaction monitoring system. What would be most likely to result in a change in the monitoring system parameters?

  A. The local paper runs stories that sully the institution's reputation in the marketplace
  B. Law enforcement issues a subpoena for a particular customer's account records
  C. The national Financial intelligence Unit issues new risk indicators
  D. The institution's creditworthiness thresholds change
  C. The national Financial intelligence Unit issues new risk indicators

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  An automated transaction monitoring system is a tool that analyzes transactions and customer behavior for signs of money laundering or other financial crimes, and generates alerts when suspicious or unusual activity is detected. The system relies on a set of rules and parameters that define what constitutes normal and abnormal transactions, based on the risk profile and business nature of the financial institution or business. These rules and parameters need to be periodically reviewed and updated to ensure that they are effective and compliant with the latest regulations and best practices. One of the factors that would most likely result in a change in the monitoring system parameters is when the national Financial intelligence Unit (FIU) issues new risk indicators. The FIU is a central authority that collects, analyzes, and disseminates financial intelligence related to money laundering, terrorist financing, and other financial crimes. The FIU also provides guidance and feedback to financial institutions and businesses on how to comply with their anti-money laundering (AML) obligations and improve their transaction monitoring systems. The FIU may issue new risk indicators based on its analysis of emerging trends, typologies, and threats in the financial sector, or based on international standards and recommendations. These risk indicators are intended to help financial institutions and businesses identify and report suspicious transactions more effectively and efficiently. Therefore, when the FIU issues new risk indicators, the financial institution or business should review its existing monitoring system parameters and adjust them accordingly to reflect the new risks and scenarios. For example, the FIU may issue new risk indicators related to the use of cryptocurrencies, virtual assets, or online platforms for money laundering or terrorist financing. In that case, the financial institution or business should update its monitoring system parameters to include new rules, thresholds, or patterns that capture these activities and generate alerts for further investigation. References: 1: The Complete Guide to Transaction Monitoring: Everything to Know 2: AML Scenarios: Transaction Monitoring Challenges 3: Setting AML Transaction Monitoring Thresholds 4: Automated Transaction Monitoring ?Considerations for System Implementation 5: ACAMS (2020). CAMS Certification Package (6th Edition)

• Question 609:

  One key aspect of the Office of Foreign Assets Control's extraterritorial reach includes the blocking of certain non-United States initiated transactions for or through the United States (U.S.) for benefit of a restricted person or entity. Under which three circumstances are U.S. banks required to block transactions? (Choose three.)

  A. The transactions are to, or go through, a blocked entity
  B. Those that are by, or on behalf of, a blocked individual or entity
  C. Those that are by or on behalf of a blocked individual and a licensed entity
  D. Those that are in connection with a transaction in which a blocked individual or entity has an interest
  E. Those that are in connection with a transaction in which a blocked individual or entity has no interest
  A. The transactions are to, or go through, a blocked entity
  B. Those that are by, or on behalf of, a blocked individual or entity
  D. Those that are in connection with a transaction in which a blocked individual or entity has an interest

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  U.S. law requires that assets and accounts of an OFAC-specified country, entity, or individual be blocked when such property is located in the United States, is held by U.S. individuals or entities, or comes into the possession or control of U.S.individuals or entities. For example, if a funds transfer comes from offshore and is being routed through a U.S. bank to an offshore bank, and there is an OFAC-designated party to the transaction, it must be blocked. The definition of assets and property is broad and is specifically defined within each sanction program. Assets and property includes anything of direct, indirect, present, future, or contingent value (including all types of bank transactions). Banks must block transactions that: 1. Are by or on behalf of a blocked individual or entity; 2. Are to or go through a blocked entity; or 3. Are in connection with a transaction in which a blocked individual or entity has an interest.

• Question 610:

  What facilitates law enforcement agent obtaining evidence from authorities in a foreign country relating to criminal activity?

  A. Mutual Legal Assistance Treaties (MLAT)
  B. Patriot Act Communications System
  C. The World Wide Network of Information Sharing
  D. MLAT Executive Agreement
  A. Mutual Legal Assistance Treaties (MLAT)