CAMS Exam Dumps - ACAMS AML Certification Questions and Answers

 the correspondent bank has engaged in a high-risk activity that could expose the primary bank to sanctions violations, reputational damage, and regulatory scrutiny. The Office of Foreign Assets Control (OFAC) administers and enforces economic and tradesanctions against targeted foreign countries, regimes, terrorists, and other threats to the national security, foreign policy, or economy of the United States1. Opening branches in a country on the OFAC list indicates that the correspondent bank is not complying with the sanctions requirements, and could be facilitating transactions for sanctioned entities or individuals. This would pose a serious risk for the primary bank, which is responsible for conducting due diligence and monitoring of its correspondent banking relationships2. Therefore, the primary bank should terminate the relationship with the correspondent bank to avoid any potential liability or penalties.

The other options are not as compelling as A, because they do not necessarily indicate that the correspondent bank is violating any laws or regulations, or that the primary bank is exposed to significant risks. Option B could be a cause for concern, but it does not imply that the correspondent bank is involved in any wrongdoing, or that the compliance officer has any influence over the correspondent banking activities. Option C could suggest that the correspondent bank is engaging in unusual or suspicious transactions, but it does not mean that the primary bank should terminate the relationship immediately, as it could also be a result of changes in the correspondent bank’s business profile, customer base, or market conditions. Option D is a normal and expected part of the correspondent banking relationship, as the primary bank has the right and obligation to request transactional details from the correspondent bank to verify the legitimacy and source of funds, and to identify any red flags or anomalies3.

1: OFAC website

2: ACAMS Study Guide for the CAMS Certification Examination, 6th Edition, Chapter 5, page 178

3: ACAMS CAMS Certification Video Training Course, Module 5, Lesson 4

4: ACAMS CAMS Certification Practice Exam, Question 93

https://home.treasury.gov/policy-issues/office-of-foreign-assets-control-sanctions-programs-and-information

https://www.acams.org/en/cams-certification-package-6th-edition

https://www.exam-labs.com/video-training/acams-cams

https://vceplus.io/exam-cams/

 Correspondent banking is the product type that is subject to US extra-jurisdictional reach over non-US banks and non-US persons under the USA PATRIOT Act. This is because correspondent banking involves the provision of banking services by one bank (the correspondent) to anotherbank (the respondent) or to the respondent’s customers. Correspondent banking enables cross-border transactions and access to foreign financial systems, but also poses significant money laundering and terrorist financing risks due to the lack of transparency and accountability of the parties involved. The USA PATRIOT Act requires US financial institutions to apply enhanced due diligence measures to correspondent accounts for certain foreign banks, such as those operating under offshore banking licenses, those owned or controlled by foreign governments, or those of primary money laundering concern. These measures include obtaining information about the ownership, management, and anti-money laundering controls of the foreign bank, as well as the identity and activity of the customers using the correspondent account. The USA PATRIOT Act also authorizes the US Treasury to prohibit or impose conditions on the opening or maintaining of correspondent accounts for foreign banks that are involved in money laundering or terrorist financing activities.

According to the Financial Action Task Force (FATF) standards for suspicious activity reports (SARs) information sharing within a financial group, "Financial institutions should establish adequate procedures to ensure that confidentiality of information is maintained and that information is only used for purposes permitted under national law. Where the parent institution is located in a country that does not permit such sharing, financial institutions should take measures to address this limitation" (CAMS Manual, 6th Edition, page 476). Therefore, financial institutions must establish sufficient safeguards concerning the confidentiality of information shared for AML purposes.

TheUSA PATRIOT Actincludes provisions allowingthe U.S. government to seize assets linked to financial crime, even when held in foreign financial institutions.

Option A (Correct):Section 319(a) of the USA PATRIOT Actprovides U.S. regulators with the authority toseize funds deposited in U.S. correspondent accounts of foreign banks if linked to illicit activity.

Option B (Incorrect):Section 314(a)focuses oninformation sharing between law enforcement and financial institutions.

Option C (Incorrect):Section 319(b)enables U.S. authorities toseize funds linked to foreign correspondent banking accounts, but319(a) specifically deals with extraterritorial forfeiture.

Option D (Incorrect):Section 314(b)allowsfinancial institutions to voluntarily share AML-related information.

Why This Matters:

Foreign banks using U.S. correspondent accounts can be subject to U.S. jurisdiction.

Helps U.S. law enforcement disrupt global money laundering networks.

Encourages financial institutions to enhance correspondent banking due diligence.

RegularKYC reviewsensure that high-risk customersare monitored for potential changes in their risk profile.

Option D (Correct):TheKYC manager must determine why the required review was missed and implement corrective measures to prevent future failures.

Option A (Incorrect):A missed reviewdoes not necessarily indicate suspicious activity, so filing a SAR at this stage isnot appropriate.

Option B (Incorrect):Removing a customer from the high-risk list without reassessment is a compliance violation.

Option C (Incorrect):Suspending account access without due processmay belegally questionable.

Best Practices for KYC Compliance Management:

Ensure automated KYC review tracking to avoid missed reviews.

Conduct risk-based periodic reviews on high-risk customers.

Implement escalation protocols for overdue KYC reviews.

Financial Intelligence Units (FIUs) are national agencies that collect, analyze, and disseminate information on suspicious or unusual financial activity, such as money laundering and terrorist financing, to relevant authorities. One of their main functions is to disseminate the results of their analysis to law enforcement agencies in a timely manner, so that they can initiate investigations or prosecutions. This is also one of the standards set by the Financial Action Task Force (FATF), the global body that sets the anti-money laundering and counter-terrorist financing (AML/CFT) policies and recommendations. The other options are not the primary responsibilities of FIUs, although they may perform them as part of their mandate or in cooperation with other agencies.

What are Financial Intelligence Units (FIUs)? | Dow Jones

Financial Intelligence Units: An Overview - IMF

Financial Intelligence Units - Egmont Group

FATF Recommendation 29 - Financial Intelligence Units (page 17)

Company ownership is held in bearer share form. Bearer share ownership can make it difficult to identify the actual owners of a company and is therefore considered a high risk for money laundering or terrorist financing. Enhanced due diligence measures may include obtaining additional identification and ownership information, conducting more frequent reviews of the account, and monitoring transactions more closely.

Real estate transactions are vulnerable to ML/TF risks, particularly when there is limited transparency or unusual payment methods:

Cross-border purchases (A):“Purchases by foreign buyers, especially from high-risk jurisdictions, are a red flag for money laundering in the real estate sector.”(CAMS 6th Edition, Real Estate Money Laundering Risks; FATF, Money Laundering and Terrorist Financing through the Real Estate Sector, 2007)

Non-financed purchases (D):“Non-financed (all-cash) purchases can indicate the introduction of illicit funds into the financial system, bypassing the controls of mortgage lenders.”(CAMS 6th Edition, Real Estate ML/TF Risks)

Incorrect Options:

B: Purchasing in the name of a natural person is standard and not inherently risky.

C: Paying the true market price does not raise ML/TF risk.

A customer who is nervous, uneasy, or in a hurry to cash a large cashier’s check may be trying to launder money or evade reporting requirements. The teller should complete the transaction as normal, but also flag the customer’s account for further monitoring and review. The teller should look for any unusual or suspicious patterns of activity, such as frequent large cash transactions, transfers to or from high-risk jurisdictions, or transactions that do not match the customer’s profile or expected behavior. The teller should also document the transaction and the customer’s demeanor, and report any findings or concerns to the appropriate authority within the bank.

The teller should not confer with the bank’s account going forward, as this may alert the customer to the bank’s suspicion or compromise the investigation. The teller should not file a SAR on the customer, unless there are other grounds to suspect money laundering or terrorist financing, as this may be premature or unnecessary. The teller should not file a CTR on the customer by the end of the day, unless the transaction exceeds the threshold of $10,000, as this is a legal requirement for cash transactions in the US.

[ACAMS Study Guide for the CAMS Certification Examination, 6th Edition], Chapter 4: Conducting or Supporting the Investigation Process, pp. 103-104, 107-108.

Suspicious Activity Reporting - Overview, Federal Financial Institutions Examination Council, April 2018, pp. 1-2, 4-5.

Currency Transaction Reporting - Overview, Federal Financial Institutions Examination Council, April 2018, pp. 1-2, 4-5.

17 AML Analyst Interview Questions and Answers, CLIMB, July 15, 2022.

The two red flags indicating potential engagement of a bank employee in money laundering are A. Lavish lifestyle that cannot be supported by an employee's salary, and E. Maintaining friendships with customers and going to restaurants, games, and other events. A bank employee who has a lifestyle that cannot be supported by their salary could be receiving money from illicit activities. Similarly, if the employee is maintaining friendships and going to social events with customers, they could be receiving money in exchange for providing special services. These behaviors should be monitored closely to ensure that the employee is not engaging in activities that could be linked to money laundering.

The United Nations Security Council (UNSC) is the only body with the legal authority under international law to impose binding sanctions on countries, entities, or individuals.

“The Security Council’s primary function in imposing sanctions is to maintain or restore international peace and security. These sanctions are legally binding on all UN member states.”

(CAMS 6th Edition, Chapter: International Sanctions and Proliferation Financing; United Nations Charter, Article 41)

Incorrect Options:

B: Sanctions may address AML/CFT failings, but the core mandate is international peace/security.

C: The UNSC does not primarily conduct research or impact analysis.

D: The purpose is international peace/security, not only domestic financial stability.

The Basel Committee on Banking Supervision’s Customer Due Diligence for Banks Paper recommends that banks should verify the bank has a physical presence in the country where it is incorporated and confirm the bank is subject to regulatory supervision with adequate anti-money laundering laws before opening a correspondent account. These steps are intended to prevent the establishment of relationships with shell banks, which are banks that have no physical presence in any country and are not affiliated with a regulated financial group. Shell banks pose a high risk of money laundering and terrorist financing, as they can be used to hide the identity and source of funds, evade regulatory oversight, and facilitate illicit transactions. Therefore, banks should conduct enhanced due diligence on correspondent banks that operate in offshore jurisdictions, where the regulatory standards and transparency may be lower or insufficient.

ACAMS CAMS Certification Study Guide, 6th Edition, Chapter 4, Section 4.3.1, p. 1091

ACAMS CAMS Certification Exam Outline, 6th Edition, Domain 2, Task 2.2, p. 52

Basel Committee on Banking Supervision, Customer Due Diligence for Banks, October 2001, p. 13-143

According to the FATF Recommendations (2012), page 111, the FATF calls on its members and urges all jurisdictions to apply enhanced due diligence and, in the most serious cases, countermeasures to protect the international financial system from the money laundering, terrorist financing, and proliferation financing risks emanating from countries with significant strategic AML/CFT deficiencies. Countermeasures are proportionate and effective actions that can be applied by countries individually or collectively to protect their financial systems from these risks. Examples of countermeasures include restricting or prohibiting financial transactions with the high-risk country, requiring financial institutions to review and terminate correspondent relationships with the high-risk country, or applying enhanced reporting mechanisms or systematic reporting of financial transactions with the high-risk country.

 it describes the organization that a national Financial Intelligence Unit (FIU) should consider becoming a member of, which is the Egmont Group. The Egmont Group is an international network of FIUs that was established in 1995 to facilitate the exchange of financial intelligence and information among its members, and to promote cooperation and coordination in the fight against money laundering and terrorist financing. The Egmont Group currently has 166 member FIUs from different jurisdictions, and provides them with various benefits, such as access to secure communication channels, bestpractices, training, and technical assistance. The Egmont Group also works closely with other international organizations, such as the Financial Action Task Force (FATF), the United Nations, and the World Bank, to enhance the global anti-money laundering and counter-terrorist financing (AML/CTF) framework.

The other options are not necessarily organizations that a national FIU should consider becoming a member of, although they may have some relevance or influence on the AML/CTF field. Option B describes the Wolfsberg Group, which is an association of 13 global banks that was formed in 2000 to develop standards and guidance for the financial industry on AML/CTF and other financial crime issues. The Wolfsberg Group is not an organization for FIUs, but rather for financial institutions. Option C describes the Financial Action Task Force (FATF), which is an inter-governmental body that was established in 1989 to set the international standards and recommendations for AML/CTF and to monitor the compliance and effectiveness of its members and other jurisdictions. The FATF is not an organization for FIUs, but rather for governments and policy-makers. Option D describes the Basel Committee, which is a forum of central bank governors and heads of banking supervision authorities from 28 jurisdictions that was established in 1974 to enhance the quality and consistency of banking supervision and regulation. The Basel Committee is not an organization for FIUs, but rather for banking regulators and supervisors.

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 5, pages 108-109

https://www.acams.org/wp-content/uploads/2019/09/ACAMS-CAMS-Study-Guide-6th-Edition-Chapter-5.pdf

The FATF Regional Style Bodies (FSRBs) are autonomous regional organizations that help the FATFimplement its global AML/CFT policy, which revolves around its 40 Recommendations, in over 200 affiliated countries1. One of the key characteristics of the FSRBs is that they emphasize regional co-operation between member countries, as stated in the High-Level Principles and Objectives approved by the FATF Plenary in October 20122. This means that the FSRBs facilitate information exchange, technical assistance, training, and mutual support among their members to enhance their AML/CFT capacities and compliance. The FSRBs also promote regional perspectives and specificities in the FATF policy-making process and foster dialogue and collaboration with other regional and international bodies2.

1: What are the 9 FATF-Style Regional Bodies (FSRBs)? - Sygna

2: FATF-Style Regional Bodies (FSRBs) - Asia/Pacific Group on Money Laundering

Real estate ML/TF risk is highest where transparency is low or the origin of funds is obscured:

Use of cash to purchase property (A):“All-cash transactions in real estate present a high ML risk, as they bypass traditional financial scrutiny and facilitate the placement of illicit funds.”(CAMS 6th Edition, Real Estate Money Laundering Risks)

Use of a company for the purchase of property (D):“Purchasing property through companies, especially shell companies, can conceal the beneficial owner and the true source of funds.”(CAMS 6th Edition, Real Estate ML/TF Risks; FATF, Real Estate Sector)

Incorrect Options:

B: Unlicensed agents may be risky, but the core risks are A and D.

C: Trusts may add complexity but are less common/high-risk than company structures.

E: Value manipulation is risky but less so than the above.

According to the Financial Action Task Force (FATF) Special Recommendation IV, if financial institutions, or other businesses or entities subject to anti-money laundering obligations, suspect or have reasonable grounds to suspect that funds are linked or related to, or are to be used for terrorism, terrorist acts or by terrorist organisations, they should be required to report promptly their suspicions to the competent authorities1. This is consistent with the FATF Recommendation 20, which requires the same reporting obligation for money laundering and the financing of proliferation of weapons of mass destruction2. Reporting suspicious transactions related to terrorism is a key measure to detect, prevent and suppress the financing of terrorism and terrorist acts, and to facilitate international cooperation and information exchange.

1: The FATF Recommendations - Financial Action Task Force

2: IX Special Recommendations - Financial Action Task Force

The Egmont Group is a united body of 174 Financial Intelligence Units (FIUs) that uniquely support national and international efforts to counter terrorist financing and share financial information per global anti-money laundering and counter-financing of terrorism (AML/CFT) standards. Its primary objective is to enhance international cooperation in the investigation and prosecution of money laundering and financing of terrorism. The Egmont Group facilitates the exchange of expertise and financial intelligence among FIUs to combat money laundering, terrorist financing, and associated predicate offenses. While it does not conduct financial investigationsitself, it plays a crucial role in improving stakeholders’ understanding of ML/TF risks and informing policy considerations related to AML/CFT implementation and reforms12.

A financial intelligence unit (FIU) is a national body or government agency that collects, analyzes, and disseminates financial information related to potential financial crimes, such as money laundering and terrorist financing. One of the core functions of an FIU is to receive disclosures filed by reporting entities, such as banks, money service businesses, casinos, and other obliged entities, that are required to report suspicious or unusual financial activity. These disclosures, also known as suspicious activity reports (SARs) or suspicious transaction reports (STRs), provide valuable intelligence for the FIU and other competent authorities to identify and investigate financial crimes and trace illicit funds. The other statements do not describe the duties of an FIU, but rather the roles of other agencies or bodies, such as the Office of Foreign Assets Control (OFAC) in the US, which administers and enforces economic and trade sanctions, or the Financial Action Task Force (FATF), which sets international standards for anti-money laundering and counter-terrorist financing (AML/CFT) supervision and regulation.

ACAMS CAMS Certification Video Training Course, Module 1: Risks and Methods of Money Laundering and Terrorist Financing, Lesson 1: The Financial Intelligence Unit

The Financial Intelligence Unit: Role of the FIU and International Cooperation, Financial Crime Academy

What We Do, Financial Crimes Enforcement Network (FinCEN)

A compliance officer should consider the following three factors as part of the approach to implement an enterprise-wide anti-money laundering program for a bank that operates in multiple countries:

The types of customers serviced by the bank: Different types of customers may pose different levels of money laundering risk, depending on their nature, source of funds, geographic location, transaction patterns, and other factors. A compliance officer should identify and assess the money laundering risk associated with each customer type and segment, and apply appropriate due diligence measures, monitoring systems, and risk mitigation strategies accordingly12.

The extent of anti-money laundering regulations in the various countries: A compliance officer should be aware of the legal and regulatory requirements and expectations for anti-money laundering compliance in each country where the bank operates, and ensure that the bank’s policies and procedures are consistent with them. A compliance officer should also monitor any changes or updates in the anti-money laundering laws and regulations in the various countries, and adjust the bank’s program accordingly34.

The anti-money laundering risk posed by the products and services offered by the bank: Different products and services may have different features and functionalities that could be exploited by money launderers, such as anonymity, cross-border transfers, cash transactions,complex structures, or new technologies. A compliance officer should evaluate the money laundering risk associated with each product and service offered by the bank, and implement appropriate controls, safeguards, and oversight mechanisms to prevent and detect money laundering activities5 .

1: ACAMS, CAMS Study Guide, 6th Edition, Chapter 2: Risk Assessments

2: FATF, Guidance for a Risk-Based Approach: The Banking Sector

3: ACAMS, CAMS Study Guide, 6th Edition, Chapter 3: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT)

4: Deloitte, AML Program Effectiveness Reform

5: ACAMS, CAMS Study Guide, 6th Edition, Chapter 4: AML Program Design

[6]: OCC, Money Laundering: A Banker’s Guide to Avoiding Problems