ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 611:

  Which practices should financial institutions (FIs) adopt for the process of terminating customer relationships ? (Select Three.)

  A. Utilizing a flexible communication style that adapts to different customer situations during the termination process.
  B. Implementing a standardized procedure for customer termination that includes risk assessments and necessary documentation.
  C. Performing a final review of a customer's transaction history and records to address any unresolved issues prior to termination.
  D. Keeping records of the termination process, including the justification for the decision and any correspondence with the customer.
  E. Notifying the customer of the termination decision only after completing the termination process to prevent possible disputes.
  B. Implementing a standardized procedure for customer termination that includes risk assessments and necessary documentation.
  C. Performing a final review of a customer's transaction history and records to address any unresolved issues prior to termination.
  D. Keeping records of the termination process, including the justification for the decision and any correspondence with the customer.

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  Terminating customer relationships due to AML risks requires clear procedures and documentation . Option B (Correct): A standardized termination procedure ensures compliance, fairness, and consistency . Option C (Correct): A final review of transactions helps identify suspicious activity before closure . Option D (Correct): Documenting termination decisions protects the FI from legal and regulatory risks . Option A (Incorrect): While clear communication is important , termination decisions should be consistent and policy-driven . Option E (Incorrect): Customers should be notified appropriately but not necessarily after termination.

• Question 612:

  When must a United States (U.S.) bank block or reject an international funds transfer when there is an Office of Foreign Assets Control designated party to the transaction?

  A. Only if the U.S. bank is involved in the funds transfer
  B. Only if a U.S. person or entity is the ultimate beneficiary
  C. Only if a non-U.S. person or entity is the ultimate beneficiary
  D. Only if the U.S. bank's correspondent informs it of the involvement of the designated party
  A. Only if the U.S. bank is involved in the funds transfer

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  A U.S. bank must block or reject an international funds transfer when there is an OFAC designated party to the transaction, regardless of the beneficiary or the correspondent bank. This is because the U.S. bank is prohibited from dealing with any person or entity that is on the Specially Designated Nationals and Blocked Persons List (SDN List) or subject to any other OFAC sanctions program1. The SDN List includes individuals, groups, and entities, such as terrorists and narcotics traffickers, that are designated under programs that are not country-specific2. The U.S. bank must also report any blocked or rejected transactions to OFAC within 10 business days3. References: 1: FFIEC BSA/AML Office of Foreign Assets Control - Office of Foreign ... 2: Specially Designated Nationals And Blocked Persons List (SDN) Human ... 3: [Reporting Blocked Transactions | Office of Foreign Assets Control]

• Question 613:

  Why is the Mutual Legal Assistance Treaty (MLAT) a gateway for international cooperation?

  A. They provide a legal basis for transmitting evidence that can be used for prosecution and judicial proceedings
  B. They receive reports of suspicious transactions from financial institutions to disseminate to local Law enforcement and foreign FIUs
  C. They obtain intelligence that might lead to evidence
  D. They issue the Prmc4es of Information Exchange Between Financial intelligence Units (FIUs)
  A. They provide a legal basis for transmitting evidence that can be used for prosecution and judicial proceedings

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  A Mutual Legal Assistance Treaty (MLAT) is an agreement between two or more countries for the purpose of gathering and exchanging information in an effort to enforce public or criminal laws1. MLATs provide a legal basis for transmitting evidence that can be used for prosecution and judicial proceedings, such as witness statements, bank records, search and seizure orders, and asset forfeiture2. MLATs also facilitate the cooperation and coordination between law enforcement authorities of different jurisdictions in investigating and prosecuting transnational crimes, such as money laundering, terrorist financing, corruption, and cybercrime3. The other options are incorrect because: B. MLATs do not receive reports of suspicious transactions from financial institutions, but rather request specific information or evidence from foreign authorities. Financial institutions report suspicious transactions to their domestic Financial Intelligence Units (FIUs), which may then share the information with foreign FIUs through other mechanisms, such as the Egmont Group or bilateral agreements4. C. MLATs do not obtain intelligence that might lead to evidence, but rather request evidence that is already available or can be obtained by foreign authorities. Intelligence is a broader term that refers to any information that is relevant to the security or interests of a country, and may not be admissible as evidence in a court of law5. Intelligence may be obtained through other means, such as covert operations, surveillance, or informants6. D. MLATs do not issue the Principles of Information Exchange Between Financial Intelligence Units (FIUs), but rather follow them. The Principles of Information Exchange are a set of guidelines that were adopted by the Egmont Group of FIUs in 2001, and aim to enhance the cooperation and communication among FIUs in exchanging financial information and intelligence7. The Principles of Information Exchange are not legally binding, but rather reflect the best practices and standards of the FIU community. References: 1: Mutual legal assistance treaty - Wikipedia 2: FREQUENTLY ASKED QUESTIONS REGARDING LEGAL ASSISTANCE IN CRIMINAL MATTERS, page 1 3: The Mutual Legal Assistance Problem explained | wilmap 4: ACAMS, CAMS Certification Package - 6th Edition, Chapter 4, page 125 5: Intelligence - Wikipedia 6: Intelligence cycle - Wikipedia 7: Egmont Group of Financial Intelligence Units - Wikipedia Principles for Information Exchange Between Financial Intelligence Units for Money Laundering and Terrorism Financing Cases

• Question 614:

  A financial institution (FI) has decided to revamp its compliance program to be more risk-based. Which option should the FI use as part of the new risk-based compliance program?

  A. Leadership-based
  B. Predictive-based
  C. Transaction-based
  D. Data-based
  D. Data-based

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  A risk-based compliance program is one that identifies and prioritizes the highest compliance risks to the FI and implements controls, policies and procedures to mitigate them. A data-based option is the most suitable for a risk-based compliance program, as it allows the FI to collect, analyze and monitor relevant data on its customers, transactions, products, services, geographies and other risk factors. A data-based option also enables the FI to measure the effectiveness of its compliance program and adjust it as needed to respond to changing risks and regulatory expectations12. References: 1: Risk-Based Approach to Compliance Management2 2: A Risk-Based Approach to Regulatory Compliance1

• Question 615:

  According to the Financial Action Task Force, financial institutions should be required to implement:

  A. special procedures for encryption of information to be exchanged with affiliates and branches.
  B. independent AML programs to ensure privacy and safeguard confidential information.
  C. a process to designate an officer at a senior level who ensures a safe exchange of information for AML and terrorism financing purposes.
  D. group-wide programs, including policies and procedures regarding AML compliance.
  D. group-wide programs, including policies and procedures regarding AML compliance.

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  According to the web sources I found, FATF Recommendation 18 requires financial institutions to implement group-wide programmes against money laundering and terrorist financing that include policies and procedures for sharing information within the group for AML/CFT purposes 12 . These programmes should also include compliance management arrangements, screening procedures for hiring employees, an independent audit function and ongoing employee training . 1

• Question 616:

  What are the European Union Directives on Money Laundering?

  A. They are voluntary codes of best practice for the financial sector
  B. They are written by the Wolfsberg Group
  C. They require members to implement certain laws of prevent money laundering
  D. They require financial institutions to report suspicious activity to the Egmont Group in Brussels
  C. They require members to implement certain laws of prevent money laundering

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  "The first European Union Directive, "Prevention of the Use of the Financial System for the Purpose of Money Laundering (Directive 91/308/EEC)," was adopted by the Council of the European Communities in June 1991. Like all directives adopted by the Council, it required member states to achieve (by amending national law, if necessary) the specified results. This First Directive required the members to enact legislation to prevent their domestic financial systems from being used for money laundering"

• Question 617:

  A customer has borrowed the cash surrender value of their life insurance policies. Which requires a further investigation and filing of the suspicious activity report?

  A. The customer uses multiple currency equivalents from different sources to pay the monthly life insurance policy premiums.
  B. The customer has paid the monthly life insurance policy premiums with cash.
  C. The customer directs the payment of the money borrowed to an unrelated third party.
  D. The customer cancels the insurance contract without concern for the penalties after the money is borrowed.
  C. The customer directs the payment of the money borrowed to an unrelated third party.

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  The customer directing the payment of the money borrowed to an unrelated third party is a red flag for potential money laundering, as it could indicate layering or integration of illicit funds. The other options are not necessarily indicative of money laundering, although they could warrant further monitoring or due diligence depending on the customer profile and risk assessment.

• Question 618:

  To ensure compliance with economic sanctions established by governmental authorities in the jurisdictions where it operates, a financial institution requires that all new and existing customers be screened at onboarding and quarterly

  thereafter.

  Is this step sufficient to ensure compliance?

  A. No, screening should occur promptly after list updates
  B. Yes, this is recommended by the international guidance
  C. No, it is necessary to screen and perform enhanced due diligence on new relationships
  D. Yes, screening all existing customer relationships ensures the institutions is not dealing with a sanctioned individual or entity
  A. No, screening should occur promptly after list updates

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  Screening customers at onboarding and quarterly thereafter is not sufficient to ensure compliance with economic sanctions, as sanctions lists may change frequently and the financial institution may not be aware of the latest updates. Screening should occur promptly after list updates to ensure that the financial institution is not dealing with a sanctioned individual or entity, or facilitating a prohibited transaction. This is recommended by the international guidance from the Financial Action Task Force (FATF) and the Wolfsberg Group12. Screening and performing enhanced due diligence on new relationships is also important, but not the only step to ensure compliance.

• Question 619:

  A bank located in New York has identified suspicious transactions at a correspondent bank in ChinA. For one of the international customers, the correspondent bank is not following agreed upon protocols. Which factor indicates that the bank should terminate the relationship?

  A. The correspondent bank has opened branches in a country on the Office of Foreign Assets Control list.
  B. The compliance officer at the correspondent bank is currently being investigated due to bribery allegations.
  C. The correspondent bank has recently exceeded acceptable limits in the primary banks' recently developed risk model.
  D. The primary institution has requested transactional details from the correspondent bank to aide in their investigation.
  A. The correspondent bank has opened branches in a country on the Office of Foreign Assets Control list.

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  the correspondent bank has engaged in a high-risk activity that could expose the primary bank to sanctions violations, reputational damage, and regulatory scrutiny. The Office of Foreign Assets Control (OFAC) administers and enforces economic and trade sanctions against targeted foreign countries, regimes, terrorists, and other threats to the national security, foreign policy, or economy of the United States1. Opening branches in a country on the OFAC list indicates that the correspondent bank is not complying with the sanctions requirements, and could be facilitating transactions for sanctioned entities or individuals. This would pose a serious risk for the primary bank, which is responsible for conducting due diligence and monitoring of its correspondent banking relationships2. Therefore, the primary bank should terminate the relationship with the correspondent bank to avoid any potential liability or penalties. The other options are not as compelling as A, because they do not necessarily indicate that the correspondent bank is violating any laws or regulations, or that the primary bank is exposed to significant risks. Option B could be a cause for concern, but it does not imply that the correspondent bank is involved in any wrongdoing, or that the compliance officer has any influence over the correspondent banking activities. Option C could suggest that the correspondent bank is engaging in unusual or suspicious transactions, but it does not mean that the primary bank should terminate the relationship immediately, as it could also be a result of changes in the correspondent bank's business profile, customer base, or market conditions. Option D is a normal and expected part of the correspondent banking relationship, as the primary bank has the right and obligation to request transactional details from the correspondent bank to verify the legitimacy and source of funds, and to identify any red flags or anomalies.

• Question 620:

  An alert has been triggered by a monitoring system and an investigation has been opened. The activity involves significant and multiple cash deposits into a personal account and transferring funds to an offshore bank on the same day. Further investigation reveals this personal account had experienced low levels of activity for the past 6 months and funds are transferred to the account of a charitable organization. Which of the following is the next step that the Compliance Officer should take?

  A. Prohibit further transactions with the charitable organization.
  B. Conduct enhanced due diligence on the charity's trustees.
  C. Place the charitable organization on the bank's internal "watchlist."
  D. File a suspicious transaction report with the competent authority.
  D. File a suspicious transaction report with the competent authority.

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  The activity described in the question raises several red flags for money laundering, such as large and frequent cash deposits, transfers to offshore jurisdictions, and involvement of a charitable organization that could be a front for illicit funds. The Compliance Officer should file a suspicious transaction report (STR) with the competent authority, such as the Financial Intelligence Unit (FIU), as soon as possible, and provide all the relevant information and documentation to support the suspicion. Filing an STR is a legal obligation for financial institutions and does not require the consent or notification of the customer. The Compliance Officer should also follow the bank's internal policies and procedures for handling such cases, which may include freezing the account, conducting further investigation, or escalating the matter to senior management. References: ACAMS CAMS Certification Study Guide1, Chapter 4: Conducting or Supporting the Investigation, Section 4.4: Reporting, pp. 137-139 ACAMS CAMS Certification Video Training Course2, Module 4: Conducting or Supporting the Investigation, Lesson 4.4: Reporting ACAMS CAMS Certification Exam Outline3, Domain 4: Conducting or Supporting the Investigation, Task 4.4: File internal and external reports, p. 18