CAMS Exam Dumps - ACAMS AML Certification Questions and Answers

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

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.

Here is the exact information from the Financial Action Task Force (FATF) Guidance for a Risk-Based Approach for Trust and Company Service Providers:

"Understanding the management and ownership structure of a trust is crucial in assessing the ML/TF risk it poses. This includes the identity of all settlors, trustees and beneficiaries, and their respective roles and responsibilities, as well as the nature and purpose of the trust."

"TCSPs should obtain and maintain up-to-date information on the purpose and intended nature of the business relationship, the source of funds and wealth, and where relevant, the source of funds or wealth of the settlor and beneficiaries."

Based on this information, the correct answers are A and D. Trust and Company Service Providers must understand the responsibility and authority in the structure, as well as the general purpose behind the structure in order to assess the overall risk of the trust and ensure that any transactions with the trust are legitimate.

According to the ACAMS CAMS Certification Study Guide (6th edition), the bank should file a SAR if it knows, suspects, or has reason to suspect that a transaction involves funds derived from illegal activity, or is intended or conducted to hide or disguise funds or assets derived from illegal activity, or to evade any BSA regulation or federal law, or has no business or apparent lawful purpose, or is not the sort in which the customer would normally be expected to engage1. The scenario described in the question meets these criteria, as the small deposits and withdrawals from a high-risk country could indicate money laundering, terrorist financing, or other illicit activities. The bank should also document its decision to file or not file a SAR, and retain thesupporting documentation for five years1.

The other options are not correct because they either do not comply with the BSA requirements, or do not adequately address the potential risk of the activity. Blocking any further activity could alert the customer of the bank’s suspicion, and could also interfere with law enforcement investigations. Initiating an investigation into the activity could be part of the bank’s due diligence process, but it does not substitute the obligation to file a SAR if the activity is suspicious. Contacting the customer could also tip off the customer, or elicit false or misleading explanations that could hinder the bank’s assessment of the activity.

ACAMS CAMS Certification Study Guide (6th edition), page 82-83. 12345678 [9]

A multinational institution may face challenges in conducting a full investigation of unusual activity across its foreign operations, due to the different legal and regulatory frameworks that apply in each jurisdiction. One of the main obstacles is the local privacy and data protection laws that may restrict the access, transfer, or disclosure of customer information, especially personal or sensitive data, to other entities within the same group or to external parties, such as law enforcement or regulators. Therefore, the institution should be aware of the local laws and regulations that govern the collection, processing, and sharing of customer data, and ensure compliance with them12.

ACAMS Study Guide, 6th Edition, page 191

Which statement about a multinational institution’s ability to fully investigate unusual activity in all its foreign operations is correct? - Exam4Training

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A multinational institution may face challenges in conducting a full investigation of unusual activity across its foreign operations, due to the different legal and regulatory frameworks that apply in each jurisdiction. One of the main obstacles is the local privacy and data protection lawsthat may restrict the access, transfer, or disclosure of customer information, especially personal or sensitive data, to other entities within the same group or to external parties, such as law enforcement or regulators. Therefore, the institution should be aware of the local laws and regulations that govern the collection, processing, and sharing of customer data, and ensure compliance with them12.

Verified Answer: = A. Collect further customer reference data and determine what must be screened and at which frequency. and C. Deploy an independent risk-based test to ensure the screening on this customer is effective.

Comprehensive Detailed Explanation: = When an existing customer changes its business scope and jurisdictions, banks need to manage sanctions compliance risk effectively. Here are the steps they should take:

1. Collect Further Customer Reference Data: Obtain updated information about the customer’s new business activities, locations, and counterparties. Understand the nature of their transactions and assess the associated risks. Determine what specific data elements need to be screened (e.g., names, addresses, beneficial owners) and establish the appropriate screening frequency.

2. Deploy an Independent Risk-Based Test: Conduct a comprehensive risk assessment tailored to the customer’s changes. This assessment should consider factors such as the customer’s industry, geographic exposure, and transaction volume. The risk assessment helps identify high-risk areas that require enhanced scrutiny.

3. Screen Directors and Ultimate Beneficial Owners: Perform sanctions screening not only on the customer but also on their directors and ultimate beneficial owners. This ensures that any potential risks associated with these individuals are identified and mitigated.

4. Perform Politically Exposed Person (PEP) and Negative Media Screenings: Continue to screen the customer and related parties against PEP lists and negative media sources. This helps detect any adverse information related to politically exposed individuals or entities.

By following these steps, banks can proactively manage sanctions compliance risk and safeguard their institution’s reputation while adhering to regulatory requirements12.

An anti-money laundering officer should coordinate with human resources when implementing a new hire screening program, because human resources is responsible for managing the recruitment, hiring, and training of employees, as well as ensuring compliance with labor laws and regulations. A new hire screening program is a key component of an effective anti-money laundering (AML) program, as it helps to prevent the hiring of individuals who may pose a risk of facilitating money laundering, terrorist financing, or other financial crimes, or who may have a criminal or disciplinary history that could compromise the integrity of the institution. A new hire screening program should include background checks, verification of credentials and references, and assessment of skills and competencies relevant to the AML function. An anti-money laundering officer should work closely with human resources to establish the criteria, procedures, and documentation for the screening program, as well as to monitor its implementation and effectiveness.

ACAMS CAMS Certification Video Training Course1, Module 4: Developing an AML Program, Lesson 4.2: Developing an AML Program

ACAMS CAMS Study Guide, 6th Edition2, Chapter 4: Developing an AML Program, Section 4.2: Developing an AML Program, pp. 81-82

ACAMS CAMS Examination Preparation Seminar, 6th Edition3, Chapter 4: Developing an AML Program, Section 4.2: Developing an AML Program, Slide 20

The potential client is attempting to commit the illegal activity of using insider information to trade securities. Insider information is any material, non-public information that could affect the price or value of a security, such as earnings reports, mergers, acquisitions, or regulatory actions. Insider trading is the act of buying or selling securities based on insider information, which gives the trader an unfair advantage over other investors who do not have access to such information. Insider trading violates the principles of market integrity, fairness, and transparency, and can undermine investor confidence and trust. Insider trading is also a form of market abuse and financial crime, and is subject to civil and criminal penalties.

ACAMS Study Guide for the CAMS Certification Examination - 6th Edition, Chapter 1: Risks and Methods of Money Laundering and Terrorism Financing, Section 1.3: Financial Crime, Subsection 1.3.3: Market Abuse, pp. 25-26

ACAMS CAMS Certification Video Training Course, Module 1: Risks and Methods of Money Laundering and Terrorism Financing, Lesson 1.3: Financial Crime, Sublesson 1.3.3: Market Abuse, Video Time: 2:00-3:30

Exam CAMS: Certified Anti-Money Laundering Specialist (the 6th edition), Question 12, Answer C

TheWolfsberg Group’s Principles on Private Bankingfocus onrisk management, transparency, and financial crime prevention.

Option C (Correct):Thecore principleis that banks shouldonly accept clients whose source of funds and beneficial ownership are well understoodto mitigateAML risks.

Option A (Incorrect):Whilemanaging reputational riskis important, thepriority is AML compliance, not just protecting client privacy.

Option B (Incorrect):The Wolfsberg Group encouragesenhanced due diligence (EDD) for PEPsbut doesnot establish specific rulesfor private bankers.

Option D (Incorrect):The focus is onAML compliance, not assisting banks innavigating high data privacy jurisdictions.

A Mutual Legal Assistance Treaty (MLAT) is an agreement between two or more countries for the purpose of gathering andexchanging information in an effort to enforce public or criminal laws1. MLATs provide a legal basis for transmitting evidence that can be used for prosecution and judicial proceedings, such as witness statements, bank records, search and seizure orders, and asset forfeiture2. MLATs also facilitate the cooperation and coordination between law enforcement authorities of different jurisdictions in investigating and prosecuting transnational crimes, such as money laundering, terrorist financing, corruption, and cybercrime3. The other options are incorrect because:

B. MLATs do not receive reports of suspicious transactions from financial institutions, but rather request specific information or evidence from foreign authorities. Financial institutions report suspicious transactions to their domestic Financial Intelligence Units (FIUs), which may then share the information with foreign FIUs through other mechanisms, such as the Egmont Group or bilateral agreements4.

C. MLATs do not obtain intelligence that might lead to evidence, but rather request evidence that is already available or can be obtained by foreign authorities. Intelligence is a broader term that refers to any information that is relevant to the security or interests of a country, and may not be admissible as evidence in a court of law5. Intelligence may be obtained through other means, such as covert operations, surveillance, or informants6.

D. MLATs do not issue the Principles of Information Exchange Between Financial Intelligence Units (FIUs), but rather follow them. The Principles of Information Exchange are a set of guidelines that were adopted by the Egmont Group of FIUs in 2001, and aim to enhance the cooperation and communication among FIUs in exchanging financial information and intelligence7. The Principles of Information Exchange are not legally binding, but rather reflect the best practices and standards of the FIU community.

1: Mutual legal assistance treaty - Wikipedia

2: FREQUENTLY ASKED QUESTIONS REGARDING LEGAL ASSISTANCE IN CRIMINAL MATTERS, page 1

3: The Mutual Legal Assistance Problem explained | wilmap

4: ACAMS, CAMS Certification Package - 6th Edition, Chapter 4, page 125

5: Intelligence - Wikipedia

6: Intelligence cycle - Wikipedia

7: Egmont Group of Financial Intelligence Units - Wikipedia

Principles for Information Exchange Between Financial Intelligence Units for Money Laundering and Terrorism Financing Cases

The USA PATRIOT Act, enacted in 2001, is a comprehensive legislation that aims to enhance the US government’s ability to combat terrorism, money laundering, and other criminal activities. One of the aspects of the Act that has extraterritorial reach is the requirement for US financial institutions (FIs) to apply certain due diligence and reporting obligations to their correspondent accounts and private banking accounts for foreign FIs and non-US persons, respectively12. These obligations are intended to prevent foreign FIs and individuals from using the US financial system to facilitate money laundering, terrorist financing, or other illicit activities. The Act also authorizes the Secretary of the Treasury to impose special measures, such as recordkeeping, reporting, or prohibitions, on certain foreign jurisdictions, FIs, or transactions that are found to be of primary money laundering concern34. These special measures can have significant impact on the access and operations of foreign FIs and persons in the US financial market.

1: USA PATRIOT Act, Title III, Subtitle A, Section 3121

2: 31 CFR 1010.610 - Due diligence programs for correspondent accounts for foreign financial institutions2

3: USA PATRIOT Act, Title III, Subtitle A, Section 3113

4: 31 CFR 1010.651 - Imposition of special measure against foreign jurisdictions, foreign financial institutions, classes of international transactions, or types of accounts of primary money laundering concern4

 According to the CAMS Study Guide, the most commonly used risk criteria for assessing the money laundering and terrorist financing risks are country risk, customer risk, and product and service risk. These criteria are based on the FATF Recommendations and the Basel Committee’s guidance on sound management of risks related to money laundering and financing of terrorism.

Country risk refers to the level of exposure to potential money laundering and terrorist financing activities in a specific jurisdiction, based on factors such as the quality of its AML/CFT regime, its level of corruption, its political and economic stability, its involvement in illicit activities, and its cooperation with international bodies.

Customer risk refers to the level of exposure to potential money laundering and terrorist financing activities associated with a specific customer or customer segment, based on factors such as the nature and purpose of the business relationship, the source and destination of funds, the type and volume of transactions, the customer’s profile and behavior, and the customer’s geographic location.

Product and service risk refers to the level of exposure to potential money laundering and terrorist financing activities associated with a specific product or service offered by a financial institution, based on factors such as the complexity, transparency, anonymity, and accessibility of the product or service, the delivery channels and payment methods used, and the degree of oversight and monitoring applied.

Reputation risk is not a risk criterion for assessing the money laundering and terrorist financing risks, but rather a potential consequence of failing to manage those risks effectively. Reputation risk refers to the potential damage to the public trust and confidence in a financial institution due to its involvement or association with money laundering and terrorist financing activities, whether directly or indirectly.

CAMS Study Guide, 6th Edition, Chapter 2: Risk Assessments, pp. 41-461

FATF Recommendations, Recommendation 1: Assessing Risks and Applying a Risk-Based Approach2

Basel Committee on Banking Supervision, Sound management of risks related to money laundering and financing of terrorism, June 2017, pp. 9-143

The customer purchased property insurance that is twice the value of the business indicates potential money laundering. This could be a sign of insurance fraud, which is one of the predicate offenses for money laundering. Insurance fraud involves making false or exaggerated claims to obtain illegitimate financial benefits from an insurance company. The customer may have purchased an excessive amount of insurance to cover the value of the property and then intentionally damage or destroy it to claim the insurance payout. The customer may then use the insurance money to launder the proceeds of other criminal activities.

CAMS Study Guide, 6th Edition, Chapter 1, Section 1.21

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

ACAMS Chapter 1 Exam Questions, Question 682

6th Anti-Money Laundering Directive (6AMLD): Biggest Changes, Section 23

The bank’s internal investigation is aimed at understanding the activities and legitimacy of the client who wants to open multiple accounts for their swimming pool company, with each account assigned to a debit card for the company’s technicians. The purpose of these accounts, as stated by the client, is to facilitate the purchase of pool chemicals. To conduct a thorough investigation, the bank can consider several available sources of information. Let’s analyze each option:

A. Client’s credit bureau report: The client’s credit bureau report primarily contains information related to the individual’s credit history, including loans, credit cards, payment patterns, and any financial obligations. While this information may be useful in assessing the client’s creditworthiness, it may not provide substantial insight into the specific activities and legitimacy of the swimming pool company or the need for multiple accounts.

B. Local law enforcement investigation report: The local law enforcement investigation report may contain information about any criminal or suspicious activities involving the client or the swimming pool company, such as fraud, money laundering, tax evasion, or other offenses. However, this source may not be readily available to the bank, as it may require a formal request or a subpoena to access. Moreover, the report may not be comprehensive or up-to-date, as it may depend on the scope and progress of the law enforcement investigation.

C. Interview swimming pool technicians and chemical suppliers: The interview with the swimming pool technicians and chemical suppliers may provide some information about the nature and frequency of the transactions involving the pool chemicals, such as the amount, the price, the payment method, and the delivery mode. However, this source may not be reliable or verifiable, as the technicians and suppliers may be biased or influenced by the client. Moreover, the interview may not be feasible or practical, as it may require the bank to contact and arrange meetings with multiple parties, which may be time-consuming and costly.

D. Internet search showing how such business are typically operated: The internet search showing how such business are typically operated may provide some information about the industry standards and best practices for running a swimming pool company, such as the average number of technicians, the typical expenses, the common suppliers, and the expected revenue. This source may be useful in comparing and contrasting the client’s business model and operations with the industry norms and identifying any red flags or anomalies. Moreover, this source may be easily accessible and inexpensive, as it may only require the bank to use a web browser and a search engine.

Therefore, the best available source for the bank’s internal investigation on this client’s activities is option D.

1: CAMS Certification Package - 6th Edition | ACAMS 2: CAMS Certifications: How to Get CAMS Certified | ACAMS 3: ACAMS CAMS Certification Video Training Course - Exam-Labs 4: Exam CAMS: Certified Anti-Money Laundering Specialist (the 6th edition) 5: Bank’s Internal Investigation on Client’s Activities | CAMS Exam Prep 6: South Florida: Couple arrested for more than $2 million fraud 7: Answers to Frequently Asked Questions Regarding Suspicious Activity Reporting and Other Anti-Money Laundering Considerations

FIs mustcooperate with law enforcement requestswhile ensuringlegal compliance.

Option C (Correct):Adesignated compliance officershould handledocument preparation and internal review.

Option A (Incorrect):There isno requirementto wait for theCEO’s approval.

Option B (Incorrect):Privacy policies should already align withAML laws, delaying compliance isnot recommended.

Option D (Incorrect):Blocking a lawful requestcould lead tolegal and regulatory action.

 The compliance officer should provide a high level summary of the activity and the interactions with law enforcement to the board of directors, as this would be the most appropriate way to escalate the information without compromising the confidentiality of the STR or the ongoing investigation. Providing a copy of the STR or the letter from law enforcement could expose the bank to legal risks or jeopardize the investigation. Informing the regulator to bring it up with the board would not be sufficient, as the compliance officer has the responsibility to report directly to the board on significant compliance issues.

ACAMS CAMS Certification Video Training Course, Module 5: Risk Management, Lesson 5.3: Reporting to Senior Management and the Board1

ACAMS CAMS Certification Study Guide, 6th Edition, Chapter 5: Risk Management, Section 5.3:Reporting to Senior Management and the Board2

FIUsexchange information through secure platformsto investigate financial crime cases.

Option B (Correct):TheEgmont Secure Webis theprimary communication platformforFIUs globally.

Option A (Incorrect):MLATsallow forformal legal cooperationbut arenot an FIU-to-FIU communication tool.

Option C (Incorrect):INTERPOL databasestrackcriminal records, not financial intelligence data.

Option D (Incorrect):TheUN Sanctions Listprovidesentity restrictions, not an FIU data-sharing mechanism.

The Office of Foreign Assets Control (OFAC) sanctions are extraterritorial in nature, meaning that they apply beyond the national borders of the United States. OFAC sanctions are intended to restrict transactions and the movement of assets between the U.S. and designated persons and organizations. These sanctions are imposed to disrupt the economic and financial relations between foreign countries and designated persons, organizations, or countries. These sanctionsinclude prohibiting transactions, requiring the blocking of assets, and implementing targeted measures such as arms embargoes, travel bans, and financial or commodity restrictions.

https://egmontgroup.org/en/content/about

"The Egmont Group is a united body of 165 Financial Intelligence Units (FIUs). The Egmont Group provides a platform for the secure exchange of expertise and financial intelligence to combat money laundering and terrorist financing (ML/TF). This is especially relevant as FIUs are uniquely positioned to cooperate and support national and international efforts to counter terrorist financing and are the trusted gateway for sharing financial information domestically and internationally in accordance with global Anti Money Laundering and Counter Financing of Terrorism (AML/CFT) standards.

 The investigator should escalate these concerns to the bank anti-money laundering officer, who is responsible for overseeing the implementation and effectiveness of the bank’s AML/CFT policies and procedures, as well as ensuring compliance with relevant laws and regulations. The bank anti-money laundering officer can then decide on the appropriate course of action, such as conducting further investigation, reporting to the regulators, or terminating the relationship with the customer. The other options are not suitable for escalating these concerns, as they may not have the authority, expertise, or responsibility to handle such matters.

ACAMS, CAMS Examination Study Guide, 6th Edition, Chapter 4, pp. 113-114

FATF Guidance: The Role of Hawala and Other Similar Service Providers in Money Laundering and Terrorist Financing, October 20131, p. 19

Basel Committee on Banking Supervision, Sound management of risks related to money laundering and financing of terrorism, June 20172, p. 10