ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 621:

  How should a financial institution deter money laundering through new accounts? Choose 3 answers

  A. Document the identity of the party opening the account
  B. Query owner's names against FATF database
  C. Determine the beneficial owner(s) of the account
  D. Seek to determine the source of deposited funds
  A. Document the identity of the party opening the account
  C. Determine the beneficial owner(s) of the account
  D. Seek to determine the source of deposited funds

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  One of the key components of an effective anti-money laundering (AML) program is to implement adequate customer due diligence (CDD) measures for new accounts. This includes verifying the identity of the party opening the account, determining the beneficial owner(s) of the account, and seeking to determine the source of deposited funds. These measures help the financial institution (FI) to understand the nature and purpose of the customer relationship, assess the risk profile of the customer, and detect and report any suspicious or unusual activity. Documenting the identity of the party opening the account and the beneficial owner(s) of the account also helps the FI to comply with the record-keeping and reporting requirements of the AML laws and regulations, and to cooperate with the authorities in case of investigations or inquiries. Seeking to determine the source of deposited funds helps the FI to prevent the introduction of illicit funds into the financial system, and to identify any discrepancies or inconsistencies between the customer's profile and activity. References: 1: FATF Guidance for a Risk-Based Approach for the Banking Sector1 2: OCC Bulletin 2020-10: Customer Due Diligence and Bank Secrecy Act/Anti-Money Laundering Examination Procedures2 3: ACAMS Study Guide for the CAMS Certification Examination3

• Question 622:

  An accounting firm opened an account at a bank that is intended to be used as the operational account for the business. After a few months, a comprehensive review of the account was triggered due to unusual activity on the account. Which most likely triggered the review?

  A. The account receives international payments that are substantially higher than other fees they typically receive.
  B. The account sends monthly donations to several charities that operate in the same communities as the accounting firm.
  C. The account receives several payments a day from multiple customers who operate in different industries.
  D. The account receives international wires from companies in the Middle East where the accounting firm has several branches.
  A. The account receives international payments that are substantially higher than other fees they typically receive.

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  this activity is unusual and inconsistent with the expected behavior of an accounting firm's operational account. The account should normally receive fees from clients that are proportional to the services rendered and reflect the market rates. Receiving international payments that are substantially higher than other fees could indicate that the account is being used to launder money or finance terrorism by disguising illicit funds as legitimate income. This could trigger a red flag for the bank and prompt a comprehensive review of the account.

• Question 623:

  In addition to monitoring for suspicious activity, what are electronic monitoring systems also valuable for?

  A. Identifying how customers are using products
  B. Highlighting the skills of the system analysts
  C. Proving to the Board of Directors that the FIU is doing its job
  D. Meeting mandatory regulatory requirements for system implementation
  D. Meeting mandatory regulatory requirements for system implementation

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  "Transaction Monitoring Systems and Ongoing Monitoring: Since the transactional monitoring system is key to mitigating ML risk within the bank, the Committee recognizes that AML risks require more than just appropriate policies and procedures; banks must have adequate and appropriate monitoring systems. For most banks, this will involve an IT monitoring system. If the bank does not believe it needs an IT monitoring system, it should document the rationale for why it does not need one.

• Question 624:

  A suspicious transaction report has been filed on an account owned by the wife of the bank's Chief Executive Officer. Which of the following is the most important consideration when deciding whether to recommend closing the account?

  A. The institution's anti-money laundering policy
  B. Requests from the competent authority
  C. Customer relations
  D. Chief Executive's reputational risk
  B. Requests from the competent authority

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  The most important consideration when deciding whether to recommend closing the account is the requests from the competent authority, such as the Financial Intelligence Unit (FIU), the regulator, or the law enforcement. According to the FAQs related to Suspicious Transaction Reporting issued by the Financial Monitoring Unit of Pakistan1, reporting entities should not terminate the relationship with the customer after filing a STR, unless instructed by the competent authority. This is because closing the account may alert the customer of the STR, compromise the investigation, or hinder the collection of further evidence. Therefore, the reporting entity should consult with the competent authority before taking any action to close the account. The other options are less important or irrelevant considerations. The institution's anti-money laundering policy may provide some guidance on how to handle high-risk customers or accounts, but it should not override the requests from the competent authority. Customer relations and the Chief Executive's reputational risk are not valid reasons to keep the account open if there is evidence of money laundering or terrorist financing. The reporting entity should act in accordance with the law and the best interests of the public, not the personal or business interests of the customer or the bank's management.

• Question 625:

  A bank account is established for a new business customer. The business was established five years ago with an address in another state. The business website contains few details other than stating it is a real estate business. One principal

  has an international telephone number and appears to be living in another country. The other principal works out of a recreational vehicle.

  What warrants enhanced due diligence in this scenario?

  A. Shell company
  B. Human trafficker
  C. Politically exposed person
  D. Money laundering through real estate
  D. Money laundering through real estate

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  Money laundering through real estate is a common method of disguising the source and ownership of illicit funds. Real estate transactions often involve large amounts of money, complex legal structures, and cross- border transfers, which can obscure the true nature and origin of the funds. The new business customer in this scenario raises several red flags that warrant enhanced due diligence, such as: The business was established five years ago but has a vague website and no physical presence in the state where it is registered. One of the principals has an international phone number and lives abroad, which could indicate a foreign shell company or a politically exposed person. The other principal works out of a recreational vehicle, which could suggest a lack of legitimate business activity or income. The business claims to be a real estate business, but does not provide any details about its projects, clients, or partners. These factors suggest that the business may be involved in money laundering through real estate, either by purchasing properties with illicit funds, using properties to generate illegal income, or selling properties to launder money. Therefore, the financial institution should conduct enhanced due diligence to verify the identity, background, and source of funds of the business and its principals, as well as the purpose and nature of the account relationship. References: ACAMS Study Guide for the CAMS Certification Examination - 6th Edition, Chapter 2: Money Laundering Risks and Methods, pp. 46-47 Enhanced Due Diligence in Construction and Real Estate, by James Swenson, Ethixbase 360 Due Diligence and Legal Considerations in Commercial Real Estate, by Justia

• Question 626:

  How does the Financial Acton Task Force (FATF) communicate its findings regarding jurisdictions with strategic anti-money laundering / Counter Financing of Terrorism deficiencies?

  A. By issuing documentation to the private sector
  B. By issuing two formal documents three times per year
  C. By issuing informal communication to FATF members
  D. By issuing four formal documents to the deficient jurisdictions
  B. By issuing two formal documents three times per year

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  The FATF communicates its findings regarding jurisdictions with strategic AML/CFT deficiencies by issuing two formal documents three times per year, namely the FATF Public Statement and the Improving Global AML/CFT Compliance: Ongoing Process document1. These documents identify the jurisdictions that have serious and/or systemic deficiencies in their AML/CFT regimes and the progress they have made in addressing them. The FATF also calls on its members and other jurisdictions to apply counter-measures or enhanced due diligence measures to protect the international financial system from the risks emanating from these jurisdictions1. References: High-risk and other monitored jurisdictions - Financial Action Task Force (FATF)

• Question 627:

  Which is an example of structuring with regards to money laundering?

  A. A person uses the hawala system to transfer 10,000 USD from Australia to a family member in China.
  B. A person deposits 100,000 USD in cash at a bank.
  C. A person deposits substantial sums of currency into a number of local branches by making several cash transactions of less than 10,000 USD.
  D. A person deposits a large amount of more than 100,000 USD in cash and transfers it to another person's account.
  C. A person deposits substantial sums of currency into a number of local branches by making several cash transactions of less than 10,000 USD.

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  Structuring is a technique used in the placement stage of money laundering, in which the launderer deposits or withdraws cash in amounts below the reporting threshold to avoid detection or suspicion. Structuring is also known as smurfing, because it involves using multiple individuals or locations to carry out the transactions. Structuring is illegal in many jurisdictions and is a red flag for money laundering. Option A is not an example of structuring, but of using an alternative remittance system, which is a method of transferring money outside the formal financial sector. Hawala is a type of alternative remittance system that relies on a network of brokers who settle the transactions through trust and honor. Hawala can be used for legitimate purposes, but also poses a risk for money laundering and terrorist financing. Option B is not an example of structuring, but of a large cash transaction, which is a common indicator of money laundering. Large cash transactions may involve the proceeds of crime or the attempt to evade taxes or currency controls. Financial institutions are required to report large cash transactions above a certain threshold to the relevant authorities. Option D is not an example of structuring, but of a wire transfer, which is a method of moving funds electronically from one account to another. Wire transfers can be used for legitimate purposes, but also pose a risk for money laundering and terrorist financing, especially if they involve high-risk jurisdictions, shell companies, or complex chains of transactions.

• Question 628:

  A country that does not have strong predicate offenses and is lax in prosecuting AML cases could suffer which social/economic consequence?

  A. US sanctions
  B. Increased organized crime and corruption
  C. Reputation risk for the port
  D. Loss of tax revenue
  B. Increased organized crime and corruption

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  A country that does not have strong predicate offenses and is lax in prosecuting AML cases could suffer increased organized crime and corruption as a social/economic consequence. "Weaknesses in the AML/CFT regime can lead to a range of economic and social consequences, including...increased crime and corruption." (CAMS Manual, 6th Edition, page 32)

• Question 629:

  Who has the day-to-day responsibility of communicating and reinforcing the established anti-money laundering compliance culture and program?

  A. Business lines
  B. Senior management
  C. Board of directors
  D. Compliance officer
  D. Compliance officer

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  The compliance officer is the person who has the day-to-day responsibility of communicating and reinforcing the established anti-money laundering (AML) compliance culture and program within the organization. The compliance officer is also responsible for overseeing the implementation, maintenance, and improvement of the AML policies, procedures, controls, and training. The compliance officer should have sufficient authority, independence, and resources to perform their duties effectively and report to senior management and the board of directors on the status and effectiveness of the AML program. References: 1, Chapter 4: Designing and Implementing an AML Compliance Program 2, FFIEC BSA/AML Examination Manual, Compliance Program - Overview 3, FinCEN Advisory, Guidance on Promoting a Culture of Compliance

• Question 630:

  A bank in the Netherlands has been requested to share information about a series of transactions and related customers with a bank in Italy . Both banks are subject to European Union jurisdiction . Which factor is most important to consider before the Dutch bank shares the requested information with the Italian bank?

  A. The Dutch bank's legal obligations to protect customer privacy and bank secrecy prohibit it from sharing any such information.
  B. The Dutch bank should require a production order from the Italian bank and receive approval from its legal department before sharing the requested information.
  C. The need to fight financial crime outweighs the EU's data protection and privacy regulations .
  D. The Dutch bank should limit any information sharing to what is necessary, reasonable, and proportionate , in line with applicable laws and regulations.
  D. The Dutch bank should limit any information sharing to what is necessary, reasonable, and proportionate , in line with applicable laws and regulations.

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  In the European Union (EU), data protection laws (GDPR) and AML regulations (AMLDs) must be balanced when sharing customer data. Option D (Correct): Data sharing must be "necessary, reasonable, and proportionate," following AML regulations and data protection requirements . Option A (Incorrect): While data protection laws apply, AML/CFT regulations provide exemptions for legitimate investigations. Option B (Incorrect): A formal production order is not always required if information sharing is legally permitted under AML regulations . Option C (Incorrect): Privacy laws still apply , even in financial crime investigations. AML/CFT obligations do not override GDPR but must be balanced appropriately. Key Considerations in Cross-Border AML Data Sharing in the EU: GDPR and AML Regulations Must Align: The General Data Protection Regulation (GDPR) protects customer privacy, but the EU Anti-Money Laundering Directives (AMLDs) require data sharing for AML purposes . Proportionality Principle: Any data shared must be strictly limited to what is necessary for AML purposes (e.g., transaction details but not unnecessary personal data). Regulatory Guidance: Banks must comply with Article 23 of GDPR , which allows exceptions for AML compliance . Why This Matters:Failure to properly balance AML compliance and data privacy can lead to: Regulatory fines under GDPR for data breaches. AML penalties for failing to cooperate in financial crime investigations.