ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 671:

  The local manager of a remote mortgage origination department of a financial institution has just discovered that sanctions screening of new customers is not being performed. Which action should the local manager take in this situation?

  A. Start screening new customers
  B. Immediately inform the regulators
  C. Immediately inform senior management
  D. Do nothing because the department only handles a very small number of mortgages
  C. Immediately inform senior management

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  This action is the most appropriate because it demonstrates the local manager's responsibility and accountability for the sanctions compliance program. Sanctions screening is an important part of the Know Your Customer (KYC) and Anti-Money Laundering (AML) processes, as it helps to identify and prevent transactions with sanctioned individuals or entities, which could expose the financial institution to legal, regulatory, and reputational risks. Failing to perform sanctions screening could result in violations of sanctions laws and regulations, which could lead to fines, penalties, sanctions, or even criminal prosecution. Therefore, the local manager should immediately inform senior management of the issue, so that they can take corrective actions, such as implementing screening procedures, conducting a risk assessment, reviewing existing customers, reporting any potential violations, and providing training and guidance to the staff. The other actions are not appropriate because they either do not address the root cause of the problem, or they could worsen the situation. Starting screening new customers without informing senior management could create a false sense of compliance, and it could also miss the existing customers who may be sanctioned. Immediately informing the regulators without informing senior management could undermine the trust and communication within the organization, and it could also trigger an investigation or enforcement action before the issue is resolved internally. Doing nothing because the department only handles a very small number of mortgages could be a sign of negligence or indifference, and it could also expose the financial institution to significant risks, as even one transaction with a sanctioned party could have serious consequences. References: CAMS Certification Package - 6th Edition | ACAMS, Chapter 4: Developing and Implementing an AML Training Program, pp. 97-98 CAMS Certifications: How to Get CAMS Certified | ACAMS, CAMS Study Guide, pp. 76-77 What is Sanctions Screening and How Does It Work? | Jumio, Introduction and Benefits of Sanctions Screening Sanctions Screening: Challenges and Control Considerations, Background and Regulatory Expectations for Sanctions Screening Sanction Screening: A Complete Guide | KYC AML Guide, What is Sanction Screening and Why is it Important?

• Question 672:

  Money laundering can cause which consequences for a financial institution? (Select Two.)

  A. Increases in corporate taxes
  B. Increases in investigation costs and fines
  C. Reduction in number of employees
  D. Reduction or loss of profitable business
  E. Increases in correspondent banking facilities
  B. Increases in investigation costs and fines
  D. Reduction or loss of profitable business

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  Money laundering can have serious consequences for financial institutions. They may face increased investigation costs and fines from regulators and law enforcement agencies for failing to detect or prevent money laundering activities. Additionally, money laundering can result in a loss of profitable business as customers and counterparties may no longer want to do business with the institution due to its reputation for being associated with illicit activity. Certified Anti-Money Laundering Specialist (CAMS) Study Guide, 6th Edition, page 76.

• Question 673:

  A bank receives a wire transfer that references the sale of equipment to a sanctioned company. The bank's operations team removes the sanctioned company reference and allows the wire transfer to process. This is a description of what type of activity?

  A. U-turn payment
  B. Cover payment misuse
  C. Layering
  D. Wire stripping
  D. Wire stripping

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  Wire stripping is the process of removing or altering the identifying information associated with a wire transfer to make it difficult to trace the origin or destination of the funds. This technique is commonly used in money laundering schemes to conceal the illicit source of funds and avoid detection by authorities or sanctions screening systems. In this case, the bank's operations team deliberately removed the reference to the sanctioned company from the wire transfer message, thus violating the FinCEN "Travel Rule" and facilitating the evasion of sanctions. References: Wire Stripping in Anti Money Laundering Parlance Wire Transfer Red Flags: Understanding Money Laundering and Fraud Risks Wire Stripping

• Question 674:

  Which method do terrorist financiers use to move funds without leaving an audit trail?

  A. Extortion
  B. Cash couriers
  C. Casa de cambio
  D. Virtual currency
  B. Cash couriers

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  Cash couriers are individuals who physically transport cash or other monetary instruments across borders or within a country, often to avoid detection by authorities or reporting obligations. Cash couriers are a common method used by terrorist financiers to move funds without leaving an audit trail, as cash is anonymous, portable, and widely accepted12. References: 1: ACAMS CAMS Certification Video Training Course, Module 4: Terrorist Financing, Section 4. 2: Methods of Terrorist Financing, Slide 9 2: ACAMS CAMS Certification Study Guide, 6th Edition, Chapter 4: Terrorist Financing, Page 97 Reference: https://www.fatf-gafi.org/media/fatf/documents/reports/FATF%20Terrorist%20Financing% 20Typologies%20Report.pdf (24)

• Question 675:

  A banker in the credit department wants to assess the risk of all customers, and contacts the compliance officer to request a list of customers with suspicious transaction report filings. What should be done to protect suspicious transaction report information?

  A. Provide the suspicious transaction report information to the credit department
  B. Decline to provide the suspicious transaction report information to the credit department
  C. Seek approval from the board of directors to disclose the suspicious transaction report information
  D. Contact the credit department manager to determine how the suspicious transaction report information can be provided
  B. Decline to provide the suspicious transaction report information to the credit department

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  Suspicious transaction report (STR) information is confidential and should not be disclosed to anyone outside the compliance function or law enforcement authorities. Providing STR information to the credit department could compromise the integrity of the reporting process and expose the institution to legal risks. The compliance officer should decline to provide the STR information to the credit department and explain the reasons for doing so.

• Question 676:

  Who bears the ultimate responsibility for approving a financial institution's relationship with a politically exposed person?

  A. Relationship manager
  B. Enhanced due diligence compliance officer
  C. OKYC analyst
  D. Senior management
  D. Senior management

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  Senior management bears the ultimate responsibility for approving a financial institution's relationship with a politically exposed person (PEP). The institution must ensure that appropriate measures are taken to manage the risks associated with a PEP, including conducting enhanced due diligence and applying appropriate mitigating measures. The relationship manager and the OKYC analyst may identify the risks associated with the PEP and recommend mitigating measures, but it is ultimately the responsibility of senior management to approve the relationship and ensure that the appropriate measures are taken. The enhanced due diligence compliance officer is responsible for ensuring that all due diligence requirements are met.

• Question 677:

  An institution receives a request for credit from a local company that has been a client for many years. The information provided by the company indicates that its assets have increased substantially with the addition of several new

  subsidiaries. Further research performed by the institution indicates the new subsidiaries are recently created shell companies.

  Could this indicate potential money laundering?

  A. No, the company has been a client for many years.
  B. Yes, shell companies are typically created to manage tax liabilities.
  C. No, it is normal for a business to diversify by creating shell companies.
  D. Yes, the shell companies could have been created to hide beneficial ownership.
  D. Yes, the shell companies could have been created to hide beneficial ownership.

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  Shell companies are business entities that exist only on paper, with no physical presence, no employees, and no operations. They are often used for legitimate purposes, such as facilitating mergers and acquisitions, protecting assets, or managing investments. However, they are also frequently exploited for illegal activities, such as tax evasion and money laundering, due to their ability to obscure ownership and financial transactions12. Money launderers can use shell companies to disguise the origin of illicit funds, evade sanctions, and avoid the anti-money laundering (AML) measures that financial institutions use to detect suspicious activity23. The process typically involves setting up a shell company in a jurisdiction known for strict privacy laws, such as a tax haven, and then using it to move and hide illicit funds while hiding the identity of the ultimate beneficiaries13. In this scenario, the fact that the company has been a client for many years does not rule out the possibility of money laundering. The company could have changed its ownership, activities, or risk profile over time, or it could have been involved in money laundering all along without being detected. The fact that the company has added several new subsidiaries that are recently created shell companies is a red flag that indicates potential money laundering. The company could be using the shell companies to hide the source and destination of its funds, or to conceal the identity of its beneficial owners. The institution should perform enhanced due diligence on the company and its subsidiaries, and report any suspicious transactions or activities to the relevant authorities. References: How Shell Companies Are Used in Money Laundering: A Detailed Guide Shell Companies and Money Laundering The Role of Shell Companies in Money Laundering

• Question 678:

  What was cited by the Wolfsberg Group in its Statement on the Suppression of the Financing of Terrorism as being vulnerable to terrorist financing?

  A. Private banking
  B. Correspondent banking
  C. Alternative remittance
  D. Trade finance
  C. Alternative remittance

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  Alternative remittance, also known as underground banking or informal value transfer systems, is a method of transferring money or value without using formal financial institutions or channels. It is often used by migrant workers, refugees, or people who lack access to formal banking services. However, it can also be exploited by criminals and terrorists to move funds across borders without detection or regulation. The Wolfsberg Group, a group of leading international banks that promotes best practices in anti-money laundering and counter- terrorist financing, cited alternative remittance as one of the sectors and activities that are widely used for the financing of terrorism in its Statement on the Suppression of the Financing of Terrorism. The Wolfsberg Group recommended that financial institutions apply enhanced and appropriate due diligence to customers engaged in alternative remittance and report any suspicious transactions to the relevant authorities. References: Wolfsberg Group (2002). Wolfsberg Statement on Anti-Terrorism Financing1 Pieth, M. (ed.) (2002). Financing Terrorism. Springer, Dordrecht2 ACAMS (2020). CAMS Certification Package (6th Edition)3

• Question 679:

  A comprehensive set of risk-based guidelines for maintaining business relationships is being developed. Which situation indicates that the institution should terminate the relationship with a client?

  A. The client does business in countries with active terrorist organizations.
  B. The client conducts international financial transactions exceeding U.S. $500 million.
  C. The client exceeds the criteria of an acceptable risk model created by another institution that is not similar in size and complexity.
  D. The client exceeds the criteria of an acceptable risk model created by the institution and does not perform acceptable remedial actions.
  D. The client exceeds the criteria of an acceptable risk model created by the institution and does not perform acceptable remedial actions.

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  According to the risk-based approach, financial institutions should apply enhanced due diligence and ongoing monitoring to higher-risk clients, and take appropriate measures to mitigate the risks of money laundering and terrorist financing. If the client exceeds the criteria of an acceptable risk model created by the institution, the institution should communicate the issues to the client and request remedial actions, such as providing additional information, documentation, or evidence of compliance. If the client does not cooperate or comply with the institution's requirements, the institution should consider terminating the relationship with the client, as the risk may outweigh the benefits of continuing the business relationship. References: ACAMS CAMS Certification Package - 6th Edition, Chapter 2: Risk Assessments, pp. 51-521 ACAMS CAMS Certification Package - 6th Edition, Chapter 4: Customer Due Diligence, pp. 97-981 ACAMS CAMS Certification Video Training Course, Module 2: Risk Assessments, Lesson 2.3: Risk- Based Approach2 ACAMS CAMS Certification Video Training Course, Module 4: Customer Due Diligence, Lesson 4.3: Enhanced Due Diligence Reference: http://www.fatf-gafi.org/media/fatf/documents/reports/Risk-Based-Approach-Banking-Sector.pdf

• Question 680:

  How can dealers in high-value items be at risk for money laundering?

  A. The value of precious metals such as gold and silver is constantly fluctuating.
  B. Carrying large amounts of gems of high value is physically easy
  C. Paperwork is not required to ship precious metals and gems
  D. Drug dealers prefer cash to precious metalsand gems
  B. Carrying large amounts of gems of high value is physically easy