ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 641:

  Which economic and social factors could create a dependency on illicit activities and money laundering? (Select Two.)

  A. Wider exposure to organized crime and corruption
  B. Weakness of public service and governmental funding
  C. Weakness of private sector legitimacy
  D. Weaker financial inclusion
  E. Weaker development of economy and job opportunities
  A. Wider exposure to organized crime and corruption
  E. Weaker development of economy and job opportunities

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  Wider exposure to organized crime and corruption: When individuals or communities are exposed to organized crime networks or corrupt practices, they may become more susceptible to engaging in illicit activities. Organized crime groups often exploit vulnerabilities, leading to money laundering. Weaker development of economy and job opportunities: In regions with limited economic growth and scarce job prospects, individuals may turn to illicit activities as a means of survival. Poverty and lack of legitimate income sources can drive people toward money laundering.

• Question 642:

  Which transaction monitoring processes would alert a bank for red flag activity?

  A. A client who does not typically make extravagant credit card purchases books an airline ticket on a travel website.
  B. The company has a name that is similar to that of a company whose directors are named on the bank's internal blacklist.
  C. A client makes a prepayment on their credit card and a week later makes multiple cash withdrawals using an automated teller machine (ATM) in a foreign country.
  D. A charity account receives multiple electronic transfers and then sends a wire transfer to a higher-risk country.
  D. A charity account receives multiple electronic transfers and then sends a wire transfer to a higher-risk country.

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  This is a red flag of money laundering or terrorist financing that involves the use of non-profit organizations (NPOs) as conduits for illicit funds. NPOs may be vulnerable to abuse by criminals who exploit their legitimate activities, reputation, and access to funds and resources. A transaction monitoring process that would alert a bank for this red flag activity is to analyze the source, destination, frequency, and purpose of the funds transferred to and from the charity account, and to compare them with the expected profile and activity of the NPO. If the bank detects any inconsistency, discrepancy, or deviation from the norm, it should raise an alert and conduct further investigation. References: FATF Report: Risk of Terrorist Abuse in Non-Profit Organisations, page 9 Transaction Monitoring Processes for Red Flag Activity in Banking AML Red Flags ?What are the Top 10 Indicators? - ComplyAdvantage, section "Red flags related to the nature of transactions"

• Question 643:

  According to the Second European Union Money Laundering Directive, what may knowledge of criminal conduct be inferred from?

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

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  The following were the key features of the Second Directive: It extended the scope of the First Directive beyond drug-related crimes. The definition of "criminal activity" was expanded to cover not just drug trafficking, but all serious crimes, including corruption and fraud against the financial interests of the European community. It explicitly brought bureaux de change and money remittance offices under AML coverage. It clarified that knowledge of criminal conduct can be inferred from objective factual circumstances.

• Question 644:

  How can a `free-look provision' as part of a life insurance policy help criminals to launder money?

  A. A policy owner can decide how to pay the premium within a pre-defined period.
  B. A policy owner is able to terminate the contract without penalties such as surrender charges.
  C. A policy owner has freedom to decide who the beneficiary of the policy will be and can in this way move money to a related third party.
  D. A policy owner has freedom to decide who the beneficiary of the policy will be and can in this way move money to an unrelated third party.
  B. A policy owner is able to terminate the contract without penalties such as surrender charges.

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  A free-look provision is a period of time, typically 10 to 30 days, in which a new life insurance policy owner can terminate the policy and have their premium refunded1. This can help criminals to launder money by purchasing a policy with illicit funds and then cancelling it within the free-look period to receive a clean check from the insurance company2. This way, they can disguise the source and origin of their funds and avoid any penalties or charges that would otherwise apply to early termination of the policy. References: 1: Investopedia, What Is a Free Look Period and How Does It Work? 2: FinCEN, Anti-Money Laundering Program and Suspicious Activity Reporting Requirements for Insurance Companies

• Question 645:

  Potential indicators of money laundering associated with Trust and Company Service Providers include: (Select Two.)

  A. use of legal persons in jurisdictions with strict secrecy laws.
  B. structuring cash deposits into third party accounts.
  C. multi-jurisdictional wire transfers with no legal purpose.
  D. generation of rental income to legitimize illicit funds.
  E. frequent deposits to or withdrawals from bank accounts.
  A. use of legal persons in jurisdictions with strict secrecy laws.
  C. multi-jurisdictional wire transfers with no legal purpose.

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  This is stated in the Certified Anti-Money Laundering Specialist (the 6th edition) manual on page 595, which states: "Potential indicators of money laundering associated with Trust and Company Service Providers include the use of legal persons in jurisdictions with strict secrecy laws, structuring cash deposits into third party accounts, multi-jurisdictional wire transfers with no legal purpose, and frequent deposits to or withdrawals from bank accounts."

• Question 646:

  Which scenario best justifies why a financial institution (FI) might close a customer's account ?

  A. The account has transactions that triggered multiple Suspicious Activity Reports (SARs) .
  B. The account shows periodic fixed amount remittances for tuition fees .
  C. The customer uses a shipping company dealing with specially designated nationals (SDNs) .
  D. The customer is the object of a civil subpoena .
  C. The customer uses a shipping company dealing with specially designated nationals (SDNs) .

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  Financial institutions must close accounts that violate sanctions laws or pose a severe AML risk . Option C (Correct): Doing business with Specially Designated Nationals (SDNs) violates U.S. OFAC and EU sanctions, requiring account closure. Option A (Incorrect): Multiple SARs do not always require account closure; the institution may continue monitoring the customer. Option B (Incorrect): Tuition payments are normal transactions and do not justify account closure. Option D (Incorrect): A civil subpoena does not imply financial crime and does not require closure. Key Account Closure Triggers: Violation of OFAC, EU, or UN sanctions laws. Confirmed criminal activity (e.g., fraud, money laundering, terrorist financing). Regulatory directive or legal requirement to terminate the account. Best Practices for Account Closure: Document the justification for closure (e.g., sanctions compliance, AML concerns). Notify the customer in a manner that does not constitute "tipping off." File SARs where required before closing high-risk accounts.

• Question 647:

  A client opens a bank account for a multi-level marketing company. The debits and credits of the account are numerous and very involved. Further, there are a lot of international transactions. Also, funds are being tunneled from the company

  to the client's personal account in another jurisdiction.

  Which two steps should law enforcement take in investigating this matter? (Choose two.)

  A. Determine who are the signatories on the account
  B. Ask the bank for the history of this multi-level marketing company
  C. Examine the flow of money from the company to the individual in an effort to determine if it is legitimate
  D. Examine possible Suspicious Activity Report information received from the local Financial Intelligence Units
  A. Determine who are the signatories on the account
  C. Examine the flow of money from the company to the individual in an effort to determine if it is legitimate

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  The correct answer is A and C. Law enforcement should determine who are the signatories on the account and examine the flow of money from the company to the individual in an effort to determine if it is legitimate. These steps would help to identify the source and destination of the funds, the purpose and nature of the transactions, and the possible involvement of money laundering or other financial crimes. Asking the bank for the history of the multi-level marketing company (B) may not be relevant or useful, as the company may have a legitimate business model or a false front. Examining possible Suspicious Activity Report information received from the local Financial Intelligence Units (D) may be helpful, but it is not a necessary step, as the bank may not have filed any reports or the reports may not contain sufficient information. References: ACAMS CAMS Certification Video Training Course1, Module 4: Conducting or Supporting the Investigation Process, Lesson 1: Investigating Techniques for Law Enforcement ACAMS CAMS Certification Study Guide2, Chapter 4: Conducting or Supporting the Investigation Process, Section 4.1: Investigating Techniques for Law Enforcement, pp. 125-126

• Question 648:

  An anti-money laundering audit identifies a significant weakness in how transaction monitoring alerts are cleared. Audit sampling identified potentially suspicious activity that was cleared as not suspicious.

  Management accepts the audit finding and develops a remediation plan.

  What is the role of the auditor during the correction phase?

  A. Directing the remediation of the deficiency in a timely manner
  B. Developing procedures to provide sufficient risk-based documentation for clearing alerts
  C. Providing training to the alert clearing department on the importance of effective alert clearing
  D. Validating the successful remediation of the issue once management indicates the issue is resolved
  D. Validating the successful remediation of the issue once management indicates the issue is resolved

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  The audit function should report to the audit committee of the board of directors (or similar oversight body) and independently evaluate the risk management and controls of the bank through periodic assessments, including the adequacy of the bank's controls to mitigate the identified risks, the effectiveness of the bank's staff's execution of the controls, the effectiveness of the compliance oversight and quality controls and the effectiveness of the training.

• Question 649:

  The vice president of the foreign correspondent banking department at a large United States bank has been notified that a foreign bank with an offshore license wants to open a correspondent account. Which two things must the vice president acquire under the USA PATRIOT Act? (Choose two.)

  A. A list of all the customers of the correspondent bank
  B. A list of the types of businesses served by the correspondent bank
  C. Information relating to the foreign bank's anti-money laundering program
  D. The identity of 10% owners of the correspondent bank, unless it is publicly traded
  C. Information relating to the foreign bank's anti-money laundering program
  D. The identity of 10% owners of the correspondent bank, unless it is publicly traded

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  According to section 312 of the USA PATRIOT Act, U.S. financial institutions that maintain correspondent accounts for foreign financial institutions must apply due diligence to such accounts. The due diligence must include obtaining information relating to the foreign bank's anti-money laundering program, as well as the identity of any person who owns 10% or more of the foreign bank, unless the foreign bank is publicly traded. These requirements are intended to prevent the use of correspondent accounts by foreign shell banks or other entities that may pose a high risk of money laundering or terrorist financing. 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 US PATRIOT ACT | State Street CAMS Exam: USA PATRIOT Act Requirements for Opening a Correspondent Account

• Question 650:

  Which of the following statements is true regarding the 2012 Financial Action Task Force (FATF) 40 Recommendations and/or 11 Immediate Outcomes ?

  A. The cornerstone of the 40 Recommendations is the adoption of a risk-based approach by each jurisdiction.
  B. Each jurisdiction can reach out to the FATF for private access to the interpretive notes to the 40 Recommendations .
  C. The 40 Recommendations have not been updated to reflect the impact of new technology.
  D. The 11 Immediate Outcomes are recommendations specific to high-risk jurisdictions requiring enhanced monitoring .
  A. The cornerstone of the 40 Recommendations is the adoption of a risk-based approach by each jurisdiction.

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  The FATF 40 Recommendations provide a global AML/CFT framework , and the Immediate Outcomes assess effectiveness. Option A (Correct): The risk-based approach (RBA) is the foundation of modern AML compliance and is mandated by FATF Recommendation 1 . Option B (Incorrect): Interpretive notes are public documents available to all jurisdictions, not private. Option C (Incorrect): The 40 Recommendations are regularly updated , incorporating new technology (e.g., virtual assets in 2019). Option D (Incorrect): The 11 Immediate Outcomes assess the effectiveness of AML systems globally , not just for high-risk countries.