ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 721:

  A compliance officer is developing an anti-money laundering program for a financial institution located in a Financial Action Task Force member country. The institution conducts business with customers located in countries/jurisdictions that are not members of Financia Action Task Force. Which of the following issues should be addressed in the program?

  1.

  The requirement to identify the beneficial owners of accounts.

  2.

  The requirement for customer identification for the opening of new accounts.

  3.

  The financial institution's obligation to report suspicious transactions.

  4.

  The obligation to freeze funds involved in suspicious transactions.

  A. 1, 2, and 3 only
  B. 1, 2, and 4 only
  C. 1, 3, and 4 only
  D. 2, 3, and 4 only
  A. 1, 2, and 3 only

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  A financial institution located in a Financial Action Task Force (FATF) member country should address the following issues in its anti-money laundering program when dealing with customers located in countries /jurisdictions that are not members of FATF: The requirement to identify the beneficial owners of accounts: Beneficial owners are the natural persons who ultimately own or control a customer or a legal entity. Identifying the beneficial owners of accounts is a key component of customer due diligence (CDD) and helps the financial institution to assess the risk profile of the customer, prevent the misuse of legal entities for money laundering or terrorist financing, and comply with the FATF Recommendations12. The requirement for customer identification for the opening of new accounts: Customer identification is the process of verifying the identity of a customer using reliable and independent sources of information or documents. Customer identification is another essential element of CDD and helps the financial institution to establish a business relationship with the customer, prevent identity fraud, and comply with the FATF Recommendations13. The financial institution's obligation to report suspicious transactions: Suspicious transactions are transactions that have no apparent economic or lawful purpose, or are inconsistent with the customer's known profile or business activities, or indicate involvement in money laundering or terrorist financing. Reporting suspicious transactions to the competent authorities is a core obligation of the financial institution under the FATF Recommendations14 and helps to detect and deter illicit activities and support law enforcement investigations. The obligation to freeze funds involved in suspicious transactions is not an issue that should be addressed in the anti-money laundering program, as it is not a requirement under the FATF Recommendations. The FATF Recommendations require the financial institution to freeze funds or other assets of designated persons and entities that are subject to targeted financial sanctions related to terrorism, proliferation of weapons of mass destruction, or other threats to the international financial system1 . However, the financial institution is not obliged to freeze funds involved in suspicious transactions, unless it receives a specific order from the competent authorities or the courts. References: The FATF Recommendations, as amended November 2023 Interpretive Note to Recommendation 10 (Customer Due Diligence), paragraphs 5(b) and 6 Recommendation 10 (Customer Due Diligence), paragraph 1 Recommendation 20 (Reporting of Suspicious Transactions) Recommendation 6 (Targeted Financial Sanctions Related to Terrorism and Terrorist Financing), Recommendation 7 (Targeted Financial Sanctions Related to Proliferation), Recommendation 8 (Non-Profit Organisations)

• Question 722:

  Which of the following poses the greatest money laundering risk for a financial institution offering on-line services to customers?

  A. There is greater difficulty in matching the customer with the provided identification doc-umentation.
  B. There is no human scrutinizing the customer's transactions, thus increasing the potential for large transactions.
  C. Institutions offering on-line services have no possibility to properly verify the identity of their customers.
  D. Customers can directly access their accounts without being detected.
  A. There is greater difficulty in matching the customer with the provided identification doc-umentation.

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  According to the Anti-Money Laundering Specialist (the 6th edition) study guide, one of the main challenges of providing on-line services to customers is the verification of their identity and the authentication of their transactions1. The lack of face-to-face contact and the use of electronic documents increase the risk of identity fraud, impersonation, and account takeover2. Therefore, financial institutions offering on-line services need to implement robust customer due diligence (CDD) measures, such as using multiple sources of information, verifying biometric data, and applying risk-based monitoring3. References: 1: CAMS Study Guide, 6th Edition, Chapter 4, Section 4.1, page 103 2: CAMS Study Guide, 6th Edition, Chapter 4, Section 4.2, page 104 3: CAMS Study Guide, 6th Edition, Chapter 4, Section 4.3, page 105

• Question 723:

  On discovering employees had unintentionally provided assistance to customers who were structuring transactions, an anti-money laundering specialist should recommend

  A. Beginning termination procedures for these employees.
  B. Contacting law enforcement to monitor these employees.
  C. Providing remedial training to these employees.
  D. Transferring these employees to another branch.
  B. Contacting law enforcement to monitor these employees.

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  Structuring is the practice of breaking down large amounts of cash into smaller transactions to avoid triggering currency transaction reports (CTRs) or suspicious activity reports (SARs) by financial institutions. CTRs are required for cash deposits or withdrawals of more than $10,000 in the United States, and SARs are filed when there is a reasonable suspicion of money laundering or other illicit activity. By making multiple deposits of less than $10,000 at different tellers, the owner of the retail store is attempting to evade the reporting requirements and conceal the source or destination of the funds. This is a common technique used by money launderers in the placement stage of the money laundering process, when they try to introduce illegal proceeds into the financial system. Structuring is illegal under the Bank Secrecy Act and can result in civil and criminal penalties.

• Question 724:

  Under requirements for correspondent accounts in the USA PATRIOT Act, the word "certification" refers to a written representation by a

  A. federal receiver" certifying that he is not the beneficial owner of the correspondent account.
  B. respondent bank, certifying that they do not do business with politically exposed persons.
  C. correspondent bank, certifying that they do not open correspondent accounts for alternative remittance companies.
  D. respondent bank, certifying that they do not do business with shell banks.
  D. respondent bank, certifying that they do not do business with shell banks.

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  it describes the word "certification" as a written representation by a respondent bank, certifying that they do not do business with shell banks. This is one of the requirements for correspondent accounts in the USA PATRIOT Act, which is a law enacted in 2001 to enhance the anti-money laundering and counter-terrorist financing (AML/CTF) measures in the United States. The USA PATRIOT Act requires that correspondent banks, which are banks that provide services to other banks, such as clearing, settlement, or cash management, to obtain a certification from their respondent banks, which are banks that receive services from correspondent banks, to ensure that they are not involved in money laundering or terrorist financing activities. One of the elements of the certification is that the respondent bank does not do business with shell banks, which are banks that have no physical presence or meaningful supervision in any jurisdiction, and are often used by money launderers and other criminals to hide their identity and funds. The other options are not necessarily the word "certification" as a written representation by a respondent bank under the USA PATRIOT Act, although they may have some relevance or importance depending on the circumstances and the nature of the correspondent relationship. Option A describes a possible certification by a federal receiver, which is a person appointed by a court to take custody and control of the assets of a failed bank, but this is not related to the correspondent accounts requirements in the USA PATRIOT Act. Option B describes a possible certification by a respondent bank, certifying that they do not do business with politically exposed persons (PEPs), which are individuals who hold or have held prominent public positions or their close associates or family members, and who may pose a higher risk of money laundering or corruption, but this is not a mandatory element of the certification under the USA PATRIOT Act, although it may be a good practice or a risk-based measure. Option C describes a possible certification by a correspondent bank, certifying that they do not open correspondent accounts for alternative remittance companies, which are businesses that provide money transfer or payment services outside the formal banking system, and which may pose a higher risk of money laundering or terrorist financing, but this is not a requirement for the respondent bank under the USA PATRIOT Act, although it may be a regulatory obligation or a risk-based measure for the correspondent bank. References: ACAMS CAMS Certification Video Training Course - 6th Edition1 Exam CAMS: Certified Anti-Money Laundering Specialist (the 6th edition)2 ACAMS CAMS Study Guide - 6th Edition, Chapter 7, pages 156-157 https://www.acams.org/wp-content/uploads/2019/09/ACAMS-CAMS-Study-Guide-6th-Edition-Chapter-7.pdf

• Question 725:

  When under a regulator's consent order or similar action, who at an organization is ultimately accountable for the remediation of any violations of AML/CFT laws and regulations ?

  A. Chief Operating Officer (COO)
  B. Board of Directors
  C. Designated AML Compliance Officer
  D. Chief Executive Officer (CEO)
  B. Board of Directors

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  The Board of Directors holds ultimate responsibility for AML/CFT compliance and governance . Option B (Correct): The Board must oversee, approve, and ensure AML programs are effective . Option A (Incorrect): The COO manages operations , but does not hold ultimate accountability . Option C (Incorrect): While the AML officer executes compliance programs , the Board provides oversight . Option D (Incorrect): The CEO is responsible for strategy , but AML failures fall under Board accountability .

• Question 726:

  What is the appropriate compliance control for identifying politically exposed persons (PEPs) according to the Basel Committee's paper on Customer Due Diligence for Banks?

  A. Determining that a local figure is a PEP
  B. Reviewing when a relationship is established
  C. Reviewing relationships at account opening and on a periodic basis
  D. Requiring that the customer discloses that they are a PEP or an associate of a PEP
  C. Reviewing relationships at account opening and on a periodic basis

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  According to the Basel Committee's paper on Customer Due Diligence for Banks1, banks should review their existing customer relationships on a regular basis, especially for higher risk categories of customers or business relationships. This includes identifying whether the customer or the beneficial owner is a PEP, either at the account opening stage or later, as a result of a change in the customer's circumstances or profile. The paper also states that banks should apply a risk-based approach to determine the appropriate level and type of due diligence depending on the risk profile of the customer or the beneficial owner. References: Basel Committee on Banking Supervision, Customer due diligence for banks, October 20011 FATF Guidance: Politically Exposed Persons (Recommendations 12 and 22), June 20132 ACAMS, CAMS Examination Study Guide, 6th Edition, Chapter 4 Reference: http://www.menafatf.org/sites/default/files/Newsletter/PEPs_in_relat_on_to_AMLCFT.pdf

• Question 727:

  The Basel Committee on Banking Supervision issued a paper in October 2001 in which it presented a Know Your Customer framework and recommended standards applicable to

  A. Offshore banking supervisors.
  B. Financial Intelligence Units.
  C. banks in all countries.
  D. European Financial Institutions.
  C. banks in all countries.

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  The Basel Committee on Banking Supervision (BCBS) issued a paper in October 2001 titled Customer due diligence for banks, which outlined four essential elements of a sound Know Your Customer (KYC) programme. These elements are: customer acceptance policy, customer identification, on-going monitoring of higher risk accounts, and risk management. The paper also recommended that these standards should be applicable to all banks in all countries, regardless of their size, nature, or location. The paper stated that "KYC safeguards go beyond simple account opening and record-keeping and require banks to formulate a customer acceptance policy and a tiered customer identification programme that involves more extensive due diligence for higher risk accounts, and includes proactive account monitoring for suspicious activities."1 References: Customer due diligence for banks by the Basel Committee on Banking Supervision, October 2001. Consolidated KYC Risk Management by the Basel Committee on Banking Supervision, October 2004. Editorial The Basel Committee on Banking Supervision report on customer ... by Journal of Banking Regulation, 2002.

• Question 728:

  What are three risk factors a financial institution should examine with regard to a proposed new product?

  A. The complexity of the product
  B. The need to verify theidentification of the customer
  C. Whether the product is easily transferable
  D. Whether other financial institutions are marketing the product
  A. The complexity of the product
  B. The need to verify theidentification of the customer
  C. Whether the product is easily transferable

• Question 729:

  A corporate services provider in a European Union (EU) country has a prospect from an African country who deals in oil and gas. The prospect intends to develop an oil terminal in his home country with a $75 million dollar loan secured by a third party, which is a trust formed in a Caribbean island with a holding company based in a European secrecy haven. A young lady is presented as an ultimate beneficial owner who has gained her wealth through a fitness studio in her home country. What are two red flags that could indicate money laundering or financing terrorism? (Choose two.)

  A. A loan worth $75 million with a third-party guarantor
  B. The guarantor company's ownership structure is overly complex
  C. The prospect wishes to have a corporate structure with a holding company in EU country
  D. The ultimate beneficial owner is young lady who has gained her wealth through a small business
  B. The guarantor company's ownership structure is overly complex
  D. The ultimate beneficial owner is young lady who has gained her wealth through a small business

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  According to the ACAMS study guide1, some of the common red flags for money laundering or financing terrorism are: Customers who provide insufficient or suspicious information, such as unusual or unverifiable identification documents, different taxpayer identification numbers, or vague or inconsistent information about their business or source of funds. Transactions that have unusual features, such as large cash payments, unexplained payments from a third party, use of multiple or foreign accounts, complex or illogical transactions, or transactions that are inconsistent with the customer's profile or expected behavior. Geographic concerns, such as transactions involving high-risk jurisdictions, offshore financial centers, secrecy havens, or countries subject to sanctions or embargoes. Ultimate beneficial ownership that is unclear, such as customers who use shell companies, trusts, or other legal entities to obscure their identity or the identity of the true owners or controllers of the funds or assets. In this scenario, two red flags that could indicate money laundering or financing terrorism are: B. The guarantor company's ownership structure is overly complex. This could be an attempt to hide the true source or destination of the funds, or to evade regulatory or law enforcement scrutiny. The use of a trust formed in a Caribbean island and a holding company based in a European secrecy haven could also indicate geographic concerns, as these jurisdictions are known for their low transparency and high confidentiality. D. The ultimate beneficial owner is a young lady who has gained her wealth through a small business. This could be a case of false or misleading information, as the source of funds is not commensurate with the size or nature of the transaction. The fitness studio business could be a front or a cover for illicit activities, or the young lady could be a nominee or a straw man for the real owner or beneficiary. References: 1 ACAMS. (2020). Study Guide for the Certification Examination: Sixth Edition. Miami, FL: ACAMS.

• Question 730:

  Which of the following should an anti-money laundering specialist consider the most serious deficiency when detected during a regulatory audit of the anti-money laundering program?

  A. The compliance officer fails to have on-going meetings with upper management to keep them apprised of current money laundering trends.
  B. The company's anti-money laundering manual has not been updated to reflect a recent internal control enhancement.
  C. The company has failed to download the most recent regulation from the Financial Intelligence Unit web site.
  D. The company has not implemented an anti-money laundering training program.
  D. The company has not implemented an anti-money laundering training program.

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  According to the ACAMS CAMS Certification Study Guide, 6th Edition, one of the four pillars of an effective anti-money laundering compliance program is the training of appropriate employees on their responsibilities and the institution's policies and procedures. Training is essential to ensure that employees are aware of the risks of money laundering and terrorist financing, the applicable laws and regulations, the red flags and indicators of suspicious activity, and the reporting and record-keeping requirements. Without proper training, employees may not be able to perform their duties effectively and efficiently, and may expose the institution to legal, regulatory, reputational, and operational risks. The other options are less serious deficiencies, but still need to be addressed and corrected. The compliance officer should have regular meetings with upper management to inform them of the current money laundering trends and the status of the compliance program, but this is not as critical as providing training to the employees. The company's anti-money laundering manual should be updated to reflect any changes in the internal controls, policies, or procedures, but this is not as urgent as ensuring that the employees are familiar with the existing ones. The company should download the most recent regulation from the Financial Intelligence Unit web site, but this is not as important as complying with the existing ones. References: ACAMS CAMS Certification Study Guide, 6th Edition, Chapter 2, Section 2.1.4, page 39. ACAMS CAMS Certification Video Training Course, Module 2, Lesson 2.1.4.