CAMS Exam Dumps - ACAMS AML Certification Questions and Answers

1. D. The account received a large cash deposit followed by systematic automated teller machine (ATM) withdrawals until the balance was nominal.

This pattern of behavior, known as “structuring” or “smurfing,” is often associated with money laundering. The large cash deposit followed by smaller withdrawals in a systematic manner raises red flags and requires further investigation.

2. E. The customer conducts multiple cash transactions on a regular basis which do not match the customer’s occupation.

Conducting frequent cash transactions that do not align with the customer’s stated occupation or income source is suspicious. It suggests potential attempts to hide the true origin of funds or evade reporting requirements1.

D. Large Cash Deposit Followed by ATM Withdrawals:

The large cash deposit followed by systematic ATM withdrawals is indicative of structuring, a common money laundering technique. Structuring involves breaking down large sums of money into smaller transactions to avoid detection. In this case, the customer’s behavior warrants further scrutiny to determine the purpose behind these transactions.

E. Inconsistent Cash Transactions:

When a customer conducts multiple cash transactions that do not align with their stated occupation or income source, it raises suspicions. Such behavior may indicate an attempt to obscure the true origin of funds or evade reporting requirements. Investigating the reasons behind these inconsistent cash transactions is essential to assess potential money laundering risks1.

According to the ACAMS CAMS Certification Study Guide (6th edition), one of the red flags for money laundering is the structuring of cash transactions to avoid reporting thresholds. Structuring is the practice of breaking down large amounts of cash into smaller deposits or withdrawals that are below the reporting threshold of $10,000 in the United States or equivalent amounts in other jurisdictions. Structuring is done to evadethe detection and reporting of cash transactions by financial institutions to the authorities. Therefore, when an accountable institution identifies that a customer is engaging in structuring or other forms of cash transaction manipulation, it should file a SAR/STR to report the suspicious activity1

 1: ACAMS CAMS Certification Study Guide (6th edition), page 64.

Money laundering negatively affects economic stability by discouraging investment, distorting markets, and eroding public trust.

Option A (Correct):A financial system tainted by money laundering loses credibility, leading to reduced investor and consumer confidence.

Option D (Correct):Foreign investors avoid jurisdictions with weak AML controls due to the risk of sanctions and reputational damage.

Option B (Incorrect):While tax evasion is linked to money laundering, it does not directly affect the decision to implement tax incentives.

Option C (Incorrect):Unemployment may result from economic instability, but money laundering does not directly cause job losses.

Option E (Incorrect):Money laundering often increases volatility in financial markets, not reduces it.

According to the FATF Recommendations, the international standard for anti-money laundering and counter-terrorist financing, beneficial owners are the natural persons who ultimately own or control a customer or the natural persons on whose behalf a transaction is being conducted1 The beneficial ownership criterion is not based on the legal title or the nominal ownership of the funds, but on the effective control or the ultimate entitlement to the funds. Therefore, having signature authority over the account, being the person in whose name an account is opened, or being a trusted party in a correspondent banking relationship are not sufficient to determine the beneficial ownership of funds. These may be indicators of legal ownership or nominee arrangements, but they do not necessarily reflect the true ownership or control of the funds. The most effective criterion for determining the beneficial ownership of funds is having control over such funds or entitlement to such funds, either directly or indirectly, through ownership, voting rights, contractual agreements, trusts, or other means2345

1: FATF Recommendations, 2012, Recommendation 10 and Interpretive Note

2: Beneficial Ownership Meaning and Regulation, Investopedia, 2022

3: Ultimate Beneficial Ownership: Understanding Where The Money Comes From, ComplyAdvantage, 2022

4: Beneficial ownership and Irish investment funds, A&L Goodbody, 2021

5: Asset Management and Investment Funds Legal and Regulatory Update, Arthur Cox, 2020

 According to the ACAMS CAMS Certification Study Guide (6th edition), a financial institution (FI) should update its ML/TF risk assessment when there are changes in its business activities, customer base, or operating environment that may affect its exposure to ML/TF risks1 Some examples of such changes are:

When new products, services or customer types are introduced: New products, services or customer types may introduce new or increased ML/TF risks that the FI may not have previously considered or addressed. For example, offering online banking, prepaid cards, or cross-border remittances may create new opportunities for money launderers or terrorist financiers to exploit the FI’s systems and processes. Therefore, the FI should assess the ML/TF risks associated with the new products, services or customer types and implement appropriate controls to mitigate them12

When the institution faces a merger or acquisition: A merger or acquisition may result in the FI inheriting the ML/TF risks of the other entity, as well as the potential liabilities and reputational damage that may arise from any ML/TF issues or violations. Therefore, the FI should conduct a due diligence on the other entity’s ML/TF risk assessment, policies, procedures, and controls, and identify any gaps or weaknesses that need to be addressed. The FI should also integrate and harmonize the ML/TF risk assessment and compliance programs of the merged or acquired entity with its own13

 1: ACAMS CAMS Certification Study Guide (6th edition), page 32. 2: Money laundering/terrorism financing risk assessment | AUSTRAC4 3: MONEY LAUNDERING & TERRORIST FINANCING (ML/TF) RISK ASSESSMENT METHODOLOGY5, page 4.

When investigating apotentially suspicious cross-border payment, a financial institution should followrisk-based due diligence procedures.

Option B (Correct):Sanctions screeningis critical to ensure theoriginator or beneficiaryisnot listed on OFAC, EU, UN, or other sanctions lists.

Option C (Correct):Requestingsupporting documents(e.g., invoices, contracts) helps determine whether the transaction isconsistent with the customer’s profile.

Option D (Correct):Conductingnegative news (adverse media) checkshelps identifyfinancial crime risks, such as fraud or money laundering.

Option A (Incorrect):Banksdo not directly calltransaction recipients unless there is a clear suspicion requiring customer verification.

Option E (Incorrect):314(b) requestsunder theUSA PATRIOT Actallow information sharing among U.S. financial institutions butcannot be used for foreign banks.

Money laundering has a significant negative impact on the financial sector by undermining the integrity of financial markets. It distorts asset and commodity prices and leads to the misallocation of resources, which can dampen economic growth. The process also erodes public trust in the financial system and can deter foreign investment.

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.

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 & Compliance, June 2020

A: The main objective of anti-bribery and corruption regulations is to prohibit bribes to government officials or employees of state-owned enterprises for the purpose of obtaining or retaining business or securing improper advantages.

“Anti-bribery and corruption regulations, such as the FCPA and UK Bribery Act, prohibit offering anything of value to public officials to gain a business advantage.”(CAMS 6th Edition, Anti-Bribery and Corruption)

The branch manager should conduct further investigation before taking any other action, as this activity may indicate possible money laundering or fraud. The branch manager should review the transaction records of the customers and the teller, and look for any unusual or suspicious patterns, such as large or frequent cash deposits, round amounts, structured transactions, or inconsistent information. The branch manager should also interview the teller and the customers, and ask them about the nature and purpose of their relationship, the source and use of funds, and the reason for choosing the same teller. The branch manager should document the findings and report any suspicious activity to the appropriate authorities, if necessary.

CAMS Study Guide, 6th Edition, Chapter 3, Section 3.21

CAMS Study Guide, 6th Edition, Chapter 4, Section 4.21

CAMS Exam Questions and Free Practice Test, Question 322

The FATF’s core role is to enhance international cooperation against money laundering and terrorist financing through setting global standards (“Recommendations”) and issuing guidance.

“The FATF is an intergovernmental body whose purpose is the development and promotion of national and international policies to combat money laundering and terrorist financing.”

The FATF does not have authority to oversee FIUs, nor does it regulate financial markets directly.

 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.

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

According to the BSA/AML Manual1, a financial institution is required to file a SAR for any transaction conducted or attempted by, at, or through the institution that involves or aggregates at least $5,000 in funds or other assets, and the institution knows, suspects, or has reason to suspect that the transaction (or a pattern of transactions of which the transaction is a part): (a) involves funds derived from illegal activity or is intended or conducted in order to hide or disguise funds or assets derived from illegal activity; (b) is designed to evade any requirements of the BSA or its implementing regulations; © has no business or apparent lawful purpose or is not the sort in which the particular customer would normally be expected to engage, and the institution knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction; or (d) involves use of the institution to facilitate criminal activity. In this case, Bank A is the institution that processes the wire transfer and deems it suspicious, based on its own assessment of the transaction and the customer. Therefore, Bank A is responsible for filing a SAR for the transaction in Country A, where it is located and where the transaction takes place. Bank A does not need to file a SAR for the transaction in Country B or Country C, as it does not have jurisdiction or authority over those countries or the other banks involved. However, Bank A may share information about the suspicious transaction with Bank B or Bank C, subject to certain conditions and limitations, as described in the BSA/AML Manual1.

BSA/AML Manual1

Suspicious Activity Reporting - Overview2

Suspicious Activity Report (SAR) Basics3

From Microsoft Start Partners

Another simpler way of looking at the problem is by seeing this case as a Correspondent Banking relationship:

-A is the primary correspondent bank.

-B is the respondent bank.

-C is the receiving bank (of the wire transfer).

Since A is conducting the transaction on behalf of B's customer via the correspondent relationship deemed suspicious, it is the transaction in Country A by the correspondent bank that files the STR. Also, per the regular process, it is on the transaction, not the bank, that the STR is filed against.

According to the Basel Committee's principles on customer due diligence, banks must obtain the necessary information to establish the identity of their customers, beneficial owners, and any persons acting on behalf of their customers. This includes verifying the identity of the customer and the beneficial owners and assessing the customer's risk profile. Additionally, banks must conduct ongoing due diligence to ensure that the customer does not give rise to suspicions of money laundering or terrorist financing [1].

Adverse media screening seeks to identify reputational or financial crime risk by:

B: Identifying links to criminal activity or sanctions.

C: Monitoring regulatory actions and updates for risk associations.

D: Regularly scanning news and public records for negative information.

“Adverse media screening involves collecting and reviewing publicly available information, news, and regulatory actions to detect links to criminal activity or reputational risks.”

(CAMS 6th Edition, Adverse Media Screening; FATF Guidance)

Incorrect:

A and E: Customer sentiment and credit scores are not core to adverse media screening.

Compare customer and transaction records against periodically updated sanctions lists provided by governmental bodies. This is stated in the Certified Anti-Money Laundering Specialist (the 6th edition) manual on page 595, which states: “Sanctions screening requirements include that a financial institution should compare customer and transaction records against periodically updated sanctions lists provided by governmental bodies.”

Economic sanctions are penalties imposed by a country or a group of countries on another country, entity, or individual for foreign policy or security purposes. There are different types of economic sanctions, depending on the scope, objective, and mechanism of the sanctions. Some of the common types are:

Targeted sanctions: These are sanctions that aim to minimize the adverse effects on the general population and the environment, and focus on specific individuals, entities, sectors, or activities that are responsible for or involved in the undesirable behavior or conduct. Targeted sanctions can include travel bans, asset freezes, arms embargoes, and trade restrictions on certain goods or services. For example, the United States and the European Union have imposed targeted sanctions on various officials, entities, and sectors in Russia, Iran, Syria, Venezuela, and other countries for human rights violations, nuclear proliferation, terrorism, corruption, and other reasons.

Sectoral sanctions: These are sanctions that target a specific sector or industry of the economy of the sanctioned country, such as energy, finance, defense, or transportation. Sectoral sanctions aim to disrupt the economic activity and revenue of the targeted sector, and to create pressure on the government or regime to change its policies or behavior. For example, the United States has imposed sectoral sanctions on Iran’s oil, gas, petrochemical, and automotive industries, as well as its central bank and other financial institutions, to curb its nuclear program and support for regional proxies.

Comprehensive sanction: These are sanctions that impose a total or near-total ban on trade, investment, and other economic relations with the sanctioned country. Comprehensive sanctions are the most severe and broadest form of economic sanctions, and they aim to isolate the country from the global market and cause severe economic hardship and social unrest. Comprehensive sanctions are often accompanied by diplomatic isolation and military intervention. For example, the United States has maintained a comprehensive embargo on Cuba since 1962, prohibiting most trade, travel, and financial transactions with the island nation, as well as supporting its political opposition and dissidents.

What Are Economic Sanctions?, Council on Foreign Relations

Types of Economic Sanctions, Profolus

Economic sanctions, Wikipedia

How Economic Sanctions Work, Investopedia

CAMS Certification Package - 6th Edition, ACAMS

CAMS Certifications: How to Get CAMS Certified, ACAMS

TheBoard of Directorsholdsultimate responsibilityforAML/CFT compliance and governance.

Option B (Correct):TheBoardmustoversee, approve, and ensure AML programs are effective.

Option A (Incorrect):TheCOO manages operations, butdoes not hold ultimate accountability.

Option C (Incorrect):While theAML officer executes compliance programs, theBoard provides oversight.

Option D (Incorrect):TheCEO is responsible for strategy, butAML failures fall under Board accountability.

According to the Anti-Money Laundering Specialist (the 6th edition) resources, one of the red flags for money laundering in real estate transactions is the use of an appraiser who is not on the approved list of the financial institution. This could indicate a possible collusion between the appraiser and the borrower or the underwriter to inflate the value of the property and obtain a higher loan amount. The anti-money laundering specialist should document the underwriter’s actions and the reasons for approving the exception, as well as the discrepancy between the appraised value and the market value of theproperty. The specialist should then file a suspicious transaction report (STR) to the relevant authorities, as required by the local regulations .

ACAMS Study Guide for the Certified Anti-Money Laundering Specialist (the 6th edition), Chapter 7: Money Laundering Risks and Methods, page 201.

ACAMS Study Guide for the Certified Anti-Money Laundering Specialist (the 6th edition), Chapter 8: Anti-Money Laundering Programs, page 227.

ACAMS Study Guide for the Certified Anti-Money Laundering Specialist (the 6th edition), Chapter 9: Conducting or Supporting the Investigation Process, page 255.