ACAMS CAMS Online Practice Questions and Exam Preparation

ACAMS CAMS Online Questions & Answers

• Question 751:

  One area of responsibility for the Board of Directors when implementing a successful AML program is to:

  A. ensure the appointment of a qualified chief AML officer.
  B. create a culture of compliance based on the profit expectation.
  C. manage the day-to-day processes of the compliance program.
  D. hire a third-party firm to be responsible for the AML compliance.
  A. ensure the appointment of a qualified chief AML officer.

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  The Board of Directors is the primary governing body of a financial institution and has the fiduciary duty to oversee and approve the BSA/AML compliance program. One of the key responsibilities of the Board is to ensure the appointment of a qualified chief AML officer who has the authority, expertise, and resources to implement and manage the BSA/AML program effectively. The chief AML officer is accountable to the Board and senior management for the performance of the BSA/AML program and should report regularly on the status, issues, and challenges of the program. The Board should also evaluate the chief AML officer's performance and provide feedback and guidance as needed. References: The Board's Role in AML Compliance Board Member Responsibilities for BSA/AML Compliance Responsibilities of the Board of Directors in Implementing a Successful AML Program

• Question 752:

  A bank's transaction surveillance system triggers an alert for a deposit of 250.000 USO into a client's account. According to the bank's KYC information, the client works for a financial advisory firm, and earns approximately 100,000 USD per

  year. Which actions should be taken? (Select Three.)

  File the suspicious transaction immediately to the financial intelligence unit.

  A. Discard the alert as a false positive hit
  B. Request information and documentation from the client on the background of the transaction.
  C. Contact the client advisor to learn if he has any insight on the transaction background.
  D. Review the alert if the deposit is made in cash.
  E. Review the transaction background in the bank's transaction platform.
  B. Request information and documentation from the client on the background of the transaction.
  C. Contact the client advisor to learn if he has any insight on the transaction background.
  E. Review the transaction background in the bank's transaction platform.

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  According to the Certified Anti-Money Laundering Specialist (CAMS) Manual , 6th edition, if a bank's transaction surveillance system triggers an alert for a deposit of 250.000 USD into a client's account, the bank should take the following actions: Request information and documentation from the client on the background of the transaction (CAMS Manual, 6th edition, page 46). Contact the client advisor to learn if he has any insight on the transaction background (CAMS Manual, 6th edition, page 47). Review the transaction background in the bank's transaction platform (CAMS Manual, 6th edition, page 47). Discarding the alert as a false positive hit and reviewing the alert if the deposit is made in cash should not be done. The bank should request additional information and documentation from the client to better understand the nature of the transaction. Additionally, the bank should reach out to the client advisor to learn if they have any insight on the transaction background. Finally, the bank should review the transaction background in the bank's transaction platform to determine if any additional alerts or anomalies are present. (CAMS Manual, 6th Edition, Pages 117-118)

• Question 753:

  Which step should financial institutions take when complying with sanctions requirements ?

  A. Adopt automatic screening systems to detect designated persons and entities.
  B. Change the risk profile to "high-risk" if an existing customer becomes a sanctioned entity and continue monitoring further transactions.
  C. Conduct enhanced due diligence (EDD) for prohibited entities on the sanctions list.
  D. Freeze the funds or assets of designated persons and entities once this decision is approved by the board.
  A. Adopt automatic screening systems to detect designated persons and entities.

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  Sanctions compliance is mandatory for financial institutions (FIs) to prevent transactions with sanctioned individuals, entities, and countries . Option A (Correct): Automatic sanctions screening is essential for detecting and blocking transactions involving sanctioned individuals or entities. Option B (Incorrect): If a customer is sanctioned, their transactions must be frozen immediately, not just monitored. Option C (Incorrect): EDD is not relevant for prohibited entities--sanctions require immediate asset freezing. Option D (Incorrect): Funds must be frozen immediately, without waiting for board approval. Best Practices for Sanctions Compliance: Use automated screening tools to detect sanctioned entities. Immediately block and report prohibited transactions. Regularly update sanctions screening lists (e.g., OFAC, UN, EU).

• Question 754:

  Which of the following activities conducted at a financial institution is the strongest example of avoiding reporting thresholds?

  A. Making small cash deposits over the course of a week.
  B. Performing transactions by check (cheque) or other payment instrument.
  C. Conducting small cash transactions at multiple locations during the same day.
  D. Establishing both a personal and business account and depositing cash in both.
  C. Conducting small cash transactions at multiple locations during the same day.

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  Conducting small cash transactions at multiple locations during the same day is the strongest example of avoiding reporting thresholds. This is a common technique used by money launderers to evade the attention of financial institutions and regulators, who are required to report cash transactions above a certain amount (usually $10,000) to the authorities. By splitting the large sum of money into smaller amounts and depositing them at different branches or ATMs, the money launderer can avoid triggering the reporting requirement and conceal the source and destination of the funds. This practice is also known as smurfing or structuring12. References: ACAMS CAMS Certification Study Guide, 6th Edition, Chapter 2, page 36 ACAMS CAMS Certification Video Training Course, Module 2, Lesson 2.2, Structuring and Smurfing 1, Smurfing Money Laundering: Mechanics, Detection, and Prevention 2, AML and eWallets - The Risks and How To Comply | ComplyAdvantage

• Question 755:

  A law enforcement agency is reviewing a suspicious transaction report (STR) filed by a financial institution for suspicious activity on a client's account. Subsequently, the agency requests further information. Which supporting documentation might the law enforcement agency request from the institution to facilitate its investigation?

  A. Previously filed STRs on the same customer
  B. Account opening documents and account statements
  C. Copies of promotional materials sent to the customer
  D. A copy of the institution's STR policy and procedures
  B. Account opening documents and account statements

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  A law enforcement agency may request account opening documents and account statements from the institution to facilitate its investigation of a suspicious transaction report (STR). These documents can provide valuable information about the identity, background, source of funds, and transaction patterns of the customer, as well as any red flags or anomalies that may indicate money laundering or other criminal activities. Account opening documents may include identification documents, verification documents, customer due diligence forms, risk assessment forms, etc. Account statements may include transaction details, balances, fees, charges, etc. References: ACAMS, CAMS Examination Study Guide, 6th Edition, Chapter 4, pp. 115-116 FATF Guidance: The Role of Hawala and Other Similar Service Providers in Money Laundering and Terrorist Financing, October 20131, p. 20 Basel Committee on Banking Supervision, Sound management of risks related to money laundering and financing of terrorism, June 20172, p. 11

• Question 756:

  When creating an anti-money laundering program for a foreign bank with branches in the United States, which of the following are included among the four minimum elements required under the USA PATRIOT Act?

  1.

  The development of a Know Your Customer program.

  2.

  An ongoing employee training program.

  3.

  The designation of a compliance officer.

  4.

  An independent audit function to test the program.

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

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  According to the USA PATRIOT Act, the four minimum elements required for an anti-money laundering program for a foreign bank with branches in the United States are: An ongoing employee training program. This is to ensure that the employees are aware of the anti- money laundering policies and procedures, the legal and regulatory requirements, the red flags and indicators of suspicious activity, and their roles and responsibilities in detecting and reporting money laundering and terrorist financing. The designation of a compliance officer. This is to ensure that there is a person responsible for overseeing the implementation and effectiveness of the anti-money laundering program, ensuring compliance with the applicable laws and regulations, and liaising with the regulators and law enforcement agencies. An independent audit function to test the program. This is to ensure that the anti-money laundering program is periodically reviewed and evaluated by an independent and qualified auditor, who can assess the adequacy and effectiveness of the program, identify any weaknesses or deficiencies, and recommend corrective actions or improvements. The development of internal policies, procedures, and controls. This is to ensure that the foreign bank has a written and documented anti-money laundering program that establishes the standards, guidelines, and processes for preventing, detecting, and reporting money laundering and terrorist financing, and that the program is consistent with the risk profile and business activities of the foreign bank. The development of a Know Your Customer program is not a minimum element required under the USA PATRIOT Act, although it is a recommended best practice and may be required by other laws or regulations. References: CAMS Study Guide - 6th Edition, Chapter 5, pages 141-142 CAMS Certification Exam Outline, Domain 2, Task 2.2, Skill 2.2.1 Anti-Money Laundering Initiatives Under the USA Patriot Act, FindLaw, March 2008 [The U.S. PATRIOT Act and AML: What You Need to Know], Dow Jones Risk and Compliance, June

• Question 757:

  During the course of work on behalf of a client, a lawyer participated in the movement of money. If the lawyer suspects an act of money laundering, which of the following should the lawyer do according to European Union Money Laundering Directives?

  A. Follow bank secrecy laws.
  B. Report the facts to the competent authorities.
  C. Inform the client of the intent to terminate services.
  D. Adhere to business confidentiality laws.
  D. Adhere to business confidentiality laws.

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  According to the FATF Recommendations, financial institutions should maintain all necessary records on transactions and customers for at least five years, and make them available to competent authorities upon appropriate authority1. This includes records and documents related to suspicious transactions that have been reported to the financial intelligence unit (FIU) or other designated authorities. Providing the supporting documentation to competent authorities upon request is essential for the investigation and prosecution of money laundering and terrorist financing offences, as well as for the identification and tracing of criminal assets2. Hinting to the customer that she should come in and explain her behavior is not a correct answer, as it may tip off the customer about the suspicion and compromise the effectiveness of the reporting system. Financial institutions should not disclose to the customer or to third parties that a suspicious transaction report (STR) or related information is being reported to the FIU3. Maintaining adequate written documentation of all individuals and transactions reported is not a sufficient answer, as it does not imply cooperation with competent authorities. Financial institutions should not only keep records, but also provide them to the authorities when requested. Submitting information upon receiving a legal request from parties involved in a civil lawsuit is not a relevant answer, as it does not relate to the cooperation with competent authorities for AML/CFT purposes. Civil lawsuits are not part of the AML/CFT framework, and financial institutions should not disclose confidential information to private parties without proper legal grounds. References: FATF Recommendation 11: Record-keeping 1 FATF Recommendation 31: Powers of law enforcement and investigative authorities 2 FATF Recommendation 21: Tipping-off and confidentiality 3

• Question 758:

  Which is a key goal of EU Directives on money laundering?

  A. Establish a consistent regulatory environment across the EU to prevent money laundering
  B. Address control of payments in EU countries to reduce money laundering
  C. Allow member states to discuss the draft legislation with the cooperation of the EU Financial Intelligence Units (FIUs)
  D. Build a network of financial institutions (FIs) that work together to prevent money laundering across the EU
  A. Establish a consistent regulatory environment across the EU to prevent money laundering

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  The key goal of EU Directives on money laundering is to establish a consistent regulatory environment across the EU to prevent money laundering and terrorist financing, and to align EU policy with international standards and best practices. EU Directives are legal acts that set out the objectives and principles that member states must achieve, but leave the choice of methods and measures to the national authorities. EU Directives on money laundering aim to harmonize the rules and obligations for FIs and other obliged entities in the areas of customer due diligence, record-keeping, reporting, supervision, and sanctions. They also aim to address the emerging threats and vulnerabilities of the financial system, such as the use of virtual assets, prepaid cards, high-risk third countries, and beneficial ownership. By creating a consistent regulatory environment across the EU, the Directives seek to enhance the effectiveness and cooperation of the AML /CFT regime, and to protect the integrity and stability of the internal market and the financial system. References: 1: Guide to EU Anti Money Laundering Directives (AMLD) - ComplyAdvantage1 2: Directive - 2015/849 - EN - Fourth Anti-Money Laundering Directive - EUR-Lex2 3: EU context of anti-money laundering and countering the financing of terrorism3

• Question 759:

  Which three statements are true about on-line banking offering a significant money laundering risk to a financial institution?

  A. The nature of on-line banking can make it difficult to establish who is controlling the account
  B. The ease of access through the internet enables cross border movement of funds
  C. Due to client confidentiality, information collected on-line cannot be shared with law enforcement agencies on mere suspicion
  D. The speed of electronic transaction enables execution of multiple complex transactions within short time frame
  A. The nature of on-line banking can make it difficult to establish who is controlling the account
  B. The ease of access through the internet enables cross border movement of funds
  D. The speed of electronic transaction enables execution of multiple complex transactions within short time frame

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  On-line banking offers a significant money laundering risk to a financial institution because: The nature of on-line banking can make it difficult to establish who is controlling the account. On-line banking allows customers to access their accounts remotely, without face-to-face contact with the financial institution. This can pose challenges for verifying the identity and legitimacy of the account holder, especially if the account is opened on-line or through a third-party intermediary. On-line banking can also facilitate the use of anonymous or fictitious identities, or the use of proxies or nominees to hide the true beneficial owner of the account. The ease of access through the internet enables cross border movement of funds. On-line banking allows customers to transfer funds quickly and easily across different jurisdictions, without physical movement of cash or other instruments. This can increase the risk of money laundering, as funds can be moved to or from high-risk countries or regions, or through multiple accounts or financial institutions, to obscure the origin, destination, or purpose of the funds. On-line banking can also enable customers to access or use alternative payment systems or virtual currencies, which may have lower regulatory oversight or transparency standards than traditional banking systems. The speed of electronic transaction enables execution of multiple complex transactions within short time frame. On-line banking allows customers to conduct transactions in real time, with minimal or no human intervention or verification. This can increase the risk of money laundering, as customers can execute multiple transactions in a short period of time, or use complex transaction structures or patterns, to avoid detection or reporting thresholds, or to conceal the source, nature, or ownership of the funds. Online banking can also enable customers to use automated or algorithmic trading systems, which may generate large volumes of transactions that are difficult to monitor or analyze. References: CAMS Study Guide - 6th Edition, Chapter 5, pages 139-140 CAMS Certification Exam Outline, Domain 2, Task 2.1, Skill 2.1.1 Online Banking and Money Laundering, ACAMS Today, September 2012

• Question 760:

  Which test should be included in a bank's Office of Foreign Assets Control sanctions screening audit program?

  A. Reviewing wire transfer screening processes to ensure that potential name hits are investigated promptly
  B. Looking at copies of suspicious activity reports filed with regulators to ensure completeness
  C. Ensuring that all clients with foreign identification are subject to enhanced due diligence
  D. Examining Human Resources processes for conducting criminal background checks on executives
  A. Reviewing wire transfer screening processes to ensure that potential name hits are investigated promptly

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  --- Wire transfers are one of the most common methods of moving funds across borders and jurisdictions, and therefore pose a high risk of violating OFAC sanctions. A bank's OFAC sanctions screening audit program should include a test to review the wire transfer screening processes to ensure that potential name hits are investigated promptly and appropriately, and that any blocked or rejected transactions are reported to OFAC in a timely manner. This test would help the bank to assess the effectiveness of its screening system, identify any gaps or weaknesses, and demonstrate its compliance with OFAC regulations. References: A Framework for OFAC Compliance Commitments1, page 4, section 4: Testing and Auditing OFAC Framework for Sanctions Compliance Programs2, page 2, section 4: Testing and Auditing OFAC Sanctions List Search Tool3