ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 651:

  Which method is indicative of potential money laundering and terrorist financing activity?

  A. Client converts 500 Euro in mixed denomination notes to small denomination U.S. bills in a single transaction
  B. A commercial client in the export business regularly receives wire transfers from high risk countries
  C. An unknown client purchases multiple monetary instruments for one person during the course of one day
  D. An unknown client pays $1,000 in cash for an urgent transfer to a high risk country
  D. An unknown client pays $1,000 in cash for an urgent transfer to a high risk country

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  This method is indicative of potential money laundering and terrorist financing activity because it involves several red flags, such as: The use of cash, which is anonymous and difficult to trace The urgency of the transfer, which may suggest a need to move funds quickly before they are detected The destination of the transfer, which may be a high risk country with weak anti-money laundering (AML) and counter-terrorism financing (CTF) controls or sanctions The lack of information about the client and the beneficiary, which may indicate a lack of due diligence or customer identification These factors may indicate that the client is trying to conceal the source, ownership, or purpose of the funds, or that the funds are related to illicit activities such as money laundering or terrorist financing. References: ACAMS CAMS Certification Video Training Course1, Module 2: Money Laundering Risks and Methods, Lesson 2.2: Money Laundering Methods ACAMS CAMS Study Guide, 6th Edition2, Chapter 2: Money Laundering Risks and Methods, Section 2.2: Money Laundering Methods, pp. 35-36 ACAMS CAMS Examination Preparation Seminar, 6th Edition3, Chapter 2: Money Laundering Risks and Methods, Section 2.2: Money Laundering Methods, Slide 14

• Question 652:

  When an existing customer becomes a politically exposed person (PEP), what should the KYC analyst do during the review/refresh period?

  A. Seek the compliance officer's advice before marking the authorized signatory as PEP.
  B. Update the new authorized signatories in the customer profile.
  C. Perform enhanced due diligence for the customer and update the KYC profile.
  D. Update the list of signatories and perform enhanced due diligence in the next periodic refresh cycle.
  C. Perform enhanced due diligence for the customer and update the KYC profile.

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  When an existing customer becomes a politically exposed person (PEP), the KYC analyst should perform enhanced due diligence (EDD) for that customer. EDD involves gathering additional information about the customer, assessing the risk associated with their PEP status, and updating the KYC profile accordingly. The goal is to ensure compliance with regulations, verify customer identities, and mitigate the higher risk posed by PEPs. Regular monitoring and updates during the review/refresh period are essential to stay informed about any changes in the customer's status or risk profile.

• Question 653:

  Based on the USA PATRIOT Act, what action might the US take to demonstrate extraterritorial reach?

  A. Send requests for information to a non-US based financial institution (FI)
  B. Hand over potential penalties from the US to another government
  C. Freeze U. S. accounts that contain funds from the non-US FI
  D. Initiate a lawsuit in the home country of the non-US FI
  A. Send requests for information to a non-US based financial institution (FI)

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  Based on the USA PATRIOT Act, one action that the US might take to demonstrate extraterritorial reach is to send requests for information to a non-US based financial institution (FI). The USA PATRIOT Act expanded the authority of the US government to issue subpoenas and other legal orders to foreign banks that maintain a correspondent account in the US, requiring them to produce records relating to such account or any account at the foreign bank, including records maintained outside the US12. This provision was intended to enhance the ability of the US to investigate and prosecute money laundering and terrorist financing activities that involve foreign FIs3. References: 1: USA PATRIOT Act, Section 319(b) 2: Britannica, USA PATRIOT Act, History and Society 3: Princeton Legal Journal, FISA and the USA PATRIOT Act: Reforms and Legal Implications

• Question 654:

  After an institution files an STR with regard to a particular account, a law enforcement agent requests the institution to keep the account open until advised otherwise by law enforcement. What steps should the institution take?

  A. The institution should close the account in order not to be caught in the middle of a law enforcement investigation
  B. The institution should follow the request ofthe law enforcement agent and keep the account open
  C. The institution should request a written letter from the law enforcement (agency signed by an appropriate authorized signature
  D. The institution should keep the account open only if doing so comportswith the bank's own AML procedures
  C. The institution should request a written letter from the law enforcement (agency signed by an appropriate authorized signature

• Question 655:

  Which unusual or suspicious activity by a financial institution's (FI's) employee requires additional investigation and scrutiny?

  A. The employee avoids taking periodic vacations despite having accrued vacation time.
  B. The employee assists with transactions of a disclosed ultimate beneficiary.
  C. The employee lives a lavish lifestyle within their means.
  D. The employee is involved in a minimal number of unresolved exceptions.
  A. The employee avoids taking periodic vacations despite having accrued vacation time.

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  an employee who avoids taking periodic vacations despite having accrued vacation time may be trying to conceal fraudulent or illegal activities that would be exposed in their absence. This is a common red flag for internal fraud and money laundering, as it indicates a lack of segregation of duties, internal controls, and oversight. Employees who engage in such behavior may also exhibit other signs of stress, defensiveness, or secrecy. References: Learn about red flags for internal fraud, section "An employee may be a higher internal fraud risk when a combination of the following red flags are present", bullet point 1: "Unwilling to share duties or take leave." Money Laundering Red Flags | Key Behaviours and Indicators, section "Employee Red Flags", bullet point 1: "Avoiding taking holidays or time off work." Top 10 AML Red Flags: Warning Signs and Financial Risks, section "AML Red Flags Categories", sub- section "Employee Red Flags", bullet point 1: "Avoiding taking vacations or sick leaves."

• Question 656:

  According to the Financial Action Task Force, which action must a financial institution take to fulfill customer due diligence obligations?

  A. Secure a written declaration from the customer confirming the source of the funds.
  B. Obtain information on the intended nature of the banking relationship.
  C. Identify shareholders listed on the stock exchange of corporate entities holding fifty percent of the shares.
  D. Verify the customer is not on any sanction lists.
  D. Verify the customer is not on any sanction lists.

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  According to the Financial Action Task Force (FATF), a financial institution must take certain steps to fulfill its customer due diligence (CDD) obligations [1][2]. These steps include verifying the customer's identity, understanding the customer's business, and assessing the customer's risk profile. Additionally, the financial institution must verify that the customer is not on any sanction lists, such as the OFAC Specially Designated Nationals list. This step is important to ensure that the financial institution is not doing business with any individuals or entities that are subject to economic sanctions. Other steps include obtaining information on the intended nature of the banking relationship, securing a written declaration from the customer confirming the source of the funds, and identifying shareholders listed on the stock exchange of corporate entities holding fifty percent of the shares.

• Question 657:

  AML training programs should extend beyond basic concepts to deliver targeted training by:

  A. offering internal policies training, such as customer identification and verification procedures and policies.
  B. offering general background and history training pertaining to money laundering controls.
  C. offering periodic refresher training on AML bases (usually annually) for existing employees.
  D. offering appropriate training tailored to the individual's specific roles, such as alerts for investigators and suspicious activity report writers.
  A. offering internal policies training, such as customer identification and verification procedures and policies.

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  A. Offering internal policies training: This is crucial. Employees need to understand the specific procedures and policies related to customer identification and verification. These internal policies ensure consistency and compliance. B. Offering general background and history training: While historical context is valuable, it's not the primary focus. AML training should prioritize practical knowledge and current best practices. C. Offering periodic refresher training: Absolutely! Regular refresher training keeps employees up-to-date with evolving AML regulations and reinforces their understanding. D. Offering tailored training for specific roles: This is essential. Different roles require different expertise. For example, investigators need to recognize red flags, while report writers must understand how to create effective suspicious activity reports. Internal Policies Training: AML training should cover internal policies thoroughly. This includes customer identification and verification procedures, as well as other relevant policies specific to the organization. Employees need to understand how these policies translate into day-to-day practices. General Background and History: While historical context can be interesting, it's not the primary focus of AML training. Instead, the emphasis should be on practical knowledge, current best practices, and real-world scenarios. Periodic Refresher Training: Regular refresher training is essential. AML regulations evolve, and employees need to stay informed. Annual or periodic refreshers reinforce knowledge and ensure compliance. Tailored Training for Specific Roles: Different roles within an organization have distinct responsibilities related to AML. Tailored training ensures that employees understand their specific duties. For example, investigators need to recognize suspicious patterns, while report writers must know how to create effective reports.

• Question 658:

  What is a major economic consequence of money laundering through the use of front companies?

  A. Placing more emphasis on manufacturing
  B. Weakening of the legitimate private sector
  C. Creating a more competitive pricing environment
  D. Aligning management principles between criminal enterprises and legitimate businesses
  B. Weakening of the legitimate private sector

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  Undermining the Legitimate Private Sector: One of the most serious microeconomic effects of money laundering is felt in the private sector. Money launderers are known to use front companies: businesses that appear legitimate and engage in legitimate business but are in fact controlled by criminals who commingle the proceeds of illicit activity with legitimate funds to hide the ill-gotten gains. These front companies have a competitive advantage over legitimate firms as they have access to substantial illicit funds, allowing them to subsidize products and services sold at below market rates. This makes it difficult for legitimate businesses to compete against front companies. Clearly, the management principles of these criminal enterprises are not consistent with traditional free market principles, which results in further negative macroeconomic effects Reference: http://people.exeter.ac.uk/watupman/undergrad/rtb/effects2.htm

• Question 659:

  Which two channels can be utilized during a cross-border money laundering investigation to assist in gathering information according to Financial Action Task Force? (Choose two.)

  A. Contacting existing liaison officers in the foreign jurisdiction
  B. Exchanging information between national law enforcement agencies
  C. Contacting the potential suspect or their family members to request information
  D. Submitting only formal requests for information to a financial intelligence unit
  A. Contacting existing liaison officers in the foreign jurisdiction
  B. Exchanging information between national law enforcement agencies

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  According to the Financial Action Task Force (FATF), the global standard-setter for anti-money laundering and counter-terrorist financing, two channels that can be utilized during a cross-border money laundering investigation to assist in gathering information are contacting existing liaison officers in the foreign jurisdiction and exchanging information between national law enforcement agencies. These are two of the methods that the FATF recommends in its guidance on international cooperation1. The FATF states that liaison officers can facilitate the exchange of information and intelligence, provide operational support, and coordinate joint investigations1. The FATF also encourages the use of bilateral or multilateral agreements or arrangements to enable the exchange of information and intelligence between national law enforcement agencies, as well as the use of informal networks or mechanisms, such as the Egmont Group of Financial Intelligence Units1. Option C is incorrect because contacting the potential suspect or their family members to request information is not a recommended channel for cross-border money laundering investigations. This method may alert the suspect of the investigation, compromise the confidentiality of the information, or violate the legal rights of the suspect or their family members. Moreover, the information obtained from the suspect or their family members may not be reliable or admissible in court. Option D is incorrect because submitting only formal requests for information to a financial intelligence unit (FIU) is not a sufficient channel for cross-border money laundering investigations. While FIUs play an important role in collecting, analyzing, and disseminating financial information, they are not the only source of information for cross-border investigations. The FATF guidance states that investigators should also seek information from other competent authorities, such as law enforcement, supervisory, or judicial authorities, depending on the nature and purpose of the information sought1. Furthermore, the FATF guidance advises investigators to use both formal and informal channels of communication, as formal requests may take longer or face legal obstacles. References: FATF, International Co-operation Review Group, Guidance on Investigating and Prosecuting Money Laundering and the Financing of Terrorism, October 2012, pp. 13-18.

• Question 660:

  What should be part of an institution's monitoring and STR filing process? Choose 3 answers

  A. Review on a regular basis of all high-risk accounts and transactions
  B. Review of STR filing trends and typologies
  C. Periodic training on the identification of red flags
  D. Requirement that the Board of Directors approve the filing of an STR
  A. Review on a regular basis of all high-risk accounts and transactions
  B. Review of STR filing trends and typologies
  C. Periodic training on the identification of red flags