ACAMS CAMS Certified Anti-Money Laundering Specialist (CAMS7 the 7th edition) Exam Practice Test

Information provided by a prospective customer

Photocopy of a copy of a government-issued identity document

Information obtained from an open-source database

Information obtained directly from a government-managed registry

The Bank Secrecy Act (BSA) extraterritorial reach requires that the Travel Rule be applied to all financial institutions globally, including all USD transactions

The Anti-Money Laundering Act of 2020 (AML Act) extraterritorial reach covers all USD transactions throughout the global economy

The Office of Foreign Assets Control's (OFAC's) economic and trade sanctions may pose extraterritorial risks for financial institutions and businesses outside of the US

Section 319(b) of the USA PATRIOT Act extraterritorial reach permits the seizure of funds from a correspondent bank account in the US that have been opened and maintained for the foreign bank

A client frequently submits financial statements much earlier than required appearing overly eager

A client insists on using a personal bank account for business transactions despite being advised otherwise

A new client shows a preference for minimal direct interaction and relies primarily on indirect communication methods, citing convenience or time constraints

The client is a publicly listed company but very diversified

The ultimate beneficial ownership is unclear

often do not understand and are not covered by money laundering laws and regulations, unwittingly allowing criminals to enter the legitimate economy.

are an entry point to the financial system and a first line of defense against the infiltration of illicit funds into the legitimate economy.

are required under money laundering laws and regulations in all jurisdictions to stop any criminals from being able to integrate illicit funds into the legitimate economy.

are high-risk actors who can deliberately allow criminals to enter the legitimate economy.

Allow beneficial owners to provide proxies lot voting on corporate decisions

Obscure beneficial ownership

Allow domicile in the nominee's jurisdiction

Derail investigations

Formal assessment

Regulatory overview

Technical analysis

Mutual evaluation

Keep an account open upon verbal request

Produce documents and testimony without a subpoena

Seize privileged documents upon written request

Freeze an account in terms of a court order

Establish policies and procedures to ensure due diligence activities are identical for all customers.

Establish policies and procedures to identify and verify customers, beneficial owners, and any individuals that can transact on behalf of their customers.

Establish policies and procedures for customer due diligence that vary based on risk.

Are prohibited from offering numbered accounts to customers, even if procedures are established to gather and maintain due diligence information.

Establish policies and procedures that encourage processing transactions while due diligence information is being established and verified.

A court order requests the bank to disclose the SAR subject to obtaining agreement from the legal team

A customer asks about potential reporting to the local Financial Intelligence Unit (Fill)

An external consultant inquires about the details of the SAR

A third-country police directly inquires about the customer.

Paying premium several years in advance and terminating early for a refund

Natural persons having more than one insurance policy

High-premium life insurances that provide high payouts

Regularly switching policies and accepting penalties

Beneficiary payouts to elderly people

Close the client's account by informing the client of the subpoena.

Perform a transaction review and respond fully to the subpoena.

File a suspicious activity report (SAR), including the receipt of the subpoena in the SAR narrative.

Adjust the client's risk score and close the case.

Challenge-response

Fingerprint

Security token

Passphrase

Low thresholds for transactions

Frequent use of cash

Cross-border transactions

Weak KYC policies and procedures

Work with the front-line to understand their strategic growth targets specifically aimed at increasing their market share around military technology and dual-use products

Review the organization's sanction risk assessment to better understand the potential for exposure to Russia and the Democratic People's Republic of Korea

Read and analyze the most recent National Proliferation Financing Risk Assessment produced by the relevant body of the organization's jurisdiction

Undertake a detailed review of all payment-related transactions to any clients identified as defense contractors, paying special attention to the beneficial owners of those clients

Allowing clients lo transact anonymity-enhanced tokens

Onboardlng of clients who are residents abroad. Including those with politically exposed person (PEP) status

Enabling transfer of tokens from one blockchain to another

Offering services to VASPs established in jurisdictions that are not FATF compliant

Operating a network of crypto ATMs charging high fees

Lack of adequate IP address tracking capabilities

Ensure the jurisdiction risks and other relevant factors have been taken into consideration in the EWRA and the residual risks are within the corporation's risk appetite

Partnering with established local businesses to leverage their knowledge and connections while sharing risks

Ensuring the company has strong ties with local government officials to influence policy and avoid negative scrutiny

Committing to open communication, ethical practices, and community engagement to build trust with stakeholders

Minimizing the company's direct presence in the country to reduce exposure to potential risks

account activity that is not consistent with the purpose of the account

bills of lading matching the description of goods, quantities, and values with transshipment details justified

transaction structures that appear unnecessarily complex

trade documents, such as invoices and letters of credit, that are not clearly worded or are in foreign languages

invoices with prices that are much higher than market price

fluctuations in the pricing of standard goods and services

certain contractors may receive preferential treatment, allowing them opportunities to inflate margins during the tender process

unsuccessful bidders are informed of decisions and provided detailed justifications for awarding the contracts

procurement and contracting processes involve the management of the tender process, which may lack sufficient oversight

bids are solicited and disseminated to a wide audience through advertising and other channels.

The agent requested a disposal of assets at a lower price than recently acquired.

The assets acquired through an auction were put in the name of an offshore company

The agent acted on behalf of an individual residing in a country which is on the EU's list of high-risk jurisdictions

The power of attorney was issued by a law firm in a different EU country from where the transaction took place.

Money laundering typologies applicable to monetary instrument reporting

Applicable AML laws and regulations

Regulatory exam best practices

Money laundering typologies applicable to corporate loans

Digital identification on mobile devices

Different applications to connect and communicate

Authentication via artificial intelligence (AI) and biometrics

Quick CDD and client traits analysis during onboarding

Enterprise-wide risk assessments and the employee handbook for any limitations on sharing commercially sensitive customer data

The risk rating of the customers to avoid sharing data relating to higher risk customers

The organization's AML compliance policies to ensure that customer data can be easily shared internally and internationally

Applicable data privacy laws in relevant jurisdictions and the organization's data security and privacy policies for any limitations

imposes economic sanctions on jurisdictions with lax AML controls to force them to strengthen their controls.

conducts on-site inspections of financial institutions in jurisdictions with lax AML controls to identify deficiencies and recommend improvements.

publishes annual reports ranking all member jurisdictions based on their self-assessment of AML controls.

conducts a peer review process whereby member countries assess the AML controls of other jurisdictions and provide recommendations for improvement.

E-commerce platforms exploited to move criminal proceeds

Use of stolen bank cards for online purchases

E-commerce platforms susceptible to fraud schemes

E-commerce platforms used as a front for illicit transactions

E-commerce platforms encouraging unregulated peer-to-peer lending

Use of foreign currency to mask criminal proceeds

Surrendering a policy early to liquidate funds

Focusing excessively on the investment performance of an insurance product

Using a credit card to purchase an insurance policy

Using cryptocurrencies or other non-fiat currencies to fund an insurance policy

Cash-intensive businesses risks

Unknown third-party risks

Geographic risks

Anonymous transactions risks

the operational burden of dealing with potential matches.

the value of fines for non-compliance.

the experience of the team dealing with potential matches.

whether the data to be screened is reliable and verified.

A customer deposits a large number of consecutively numbered money orders.

A customer requests loans made to local companies or secured by obligations of local banks.

A customer has regular deposits and withdrawals primarily in wire transfers.

A customer receives wire transfers from different unknown accounts which are immediately wired onwards to a third party.

A customer withdraws cash in amounts just under the reporting threshold.

US anti-money laundering regulations are stricter than the EU AML Directives, making it easier for the global bank to be compliant in the EU

US and EU regulations require the bank to build separate compliance teams, making it necessary to establish completely separate systems for US and EU operations

The EU's sanctions regime is stricter than that of the US Office of Foreign Assets Control (OFAC), so the bank must prioritize compliance with EU regulations over US laws and train the staff in Europe accordingly

Balancing compliance with the US BSA and OFAC sanctions while ensuring adherence to EU AML directives and the GDPR, which complicates cross-border data sharing

Money services business (MSB)

Multinational corporations

Individual foreign customers

Non-profit organizations with international operations

evaluate and monitor compliance with the FATF standards and provide recommendations for improvement.

assist countries in implementing EU, UN, and regional sanctions regimes.

develop and promote international standards to prevent money laundering and terrorist financing.

conduct investigations on countries legislations and laws to prevent them from being used for money laundering and terrorist financing.

ensure that countries follow its laws to maintain financial stability.

collaborating with law enforcement agencies, financial institutions, and other stakeholders to detect and prevent Illicit financial activities.

conducting examinations of financial institutions to ensure compliance with anti-money laundering regulations.

engaging in providing financial services, including banking and investment activities, to the public and private sectors

facilitating the exchange of information between the public and private sectors.

enacting legislation regarding the operations of financial institutions.

Ensuring an effective export control and treaty compliance system

Administering and enforcing economic and trade sanctions

Designating jurisdictions as primary money laundering concerns

Managing trade agreements between the US and foreign countries

helping to identify high-risk sectors that require enhanced due diligence (EDO),

eliminating the need for sectoral risk assessments within the organization

guiding the allocation of resources for mitigating financial crime risks

requiring all organizations to apply standardized measures

automatically reducing the organization's responsibility for conducting its own risk assessment

identification of the customer's occupation.

identification and verification of the customer's identity.

identification of the customer's work address.

identification of the beneficial owner.

verification of the customer's credit history.

[verification of the customer's income sources.

Introduction of new products or services

Mergers or acquisitions

Restructuring of the FI's risk and compliance functions

Use of new technologies for delivering existing products

Changes in the individuals overseeing the FI's product lines and sales strategies

Utilizing a flexible communication style that adapts to different customer situations during the termination process

Implementing a standardized procedure for customer termination that includes risk assessments and necessary documentation

Performing a final review of a customer's transaction history and records to address any unresolved issues prior to termination

Keeping records of the termination process, including the justification for the decision and any correspondence with the customer

Notifying the customer of the termination decision only after completing the termination process to prevent possible disputes

impose sanctions to maintain or restore international peace and security.

impose sanctions on countries that lack AML/CFT controls.

conduct research on and analyze the impacts of sanctions to improve the effectiveness of sanctions regimes.

impose sanctions on economic targets to maintain or restore financial stability within a country.

List-based

Secondary

Country-based

Sectoral

Inquiring about the source of wealth and source of funds

Asking to provide a list of immediate family members

Verifying the financial crime awareness of the client

Collecting necessary documents to verify the veracity of information

Analyzing customer sentiment through feedback and surveys

Identifying individuals or entities linked to criminal activities or sanctions

Periodically monitoring regulatory updates and enforcement actions for associated entities

Scanning publicly available news articles and regulatory alerts

Monitoring changes in credit scores of individuals or entities

Short position

Reverse flip

Bid-ask spread

Wash trading

Cryptoassets can be transferred across borders quickly, but the volatility of their value still makes them less attractive for money laundering compared to traditional assets

Mandatory reporting requirements have been implemented for certain types of crypto transactions, but gaps in regulation and enforcement still leave room for money laundering activities.

The transparency of blockchain technology helps law enforcement trace transactions, but it can also provide criminals with ways to obscure their financial activities through complex layering techniques.

The pseudonymous nature of transactions allows criminals to hide their identities while transferring large sums of money globally, making it difficult to trace the ultimate beneficial owner.

The Organisation for Economic Co-operation and Development (OECD)

The Egmont Group

The Wolfsberg Group

The International Monetary Fund (IMF)

The board of directors should be responsible for overseeing the management of the bank's compliance risk but not involved in establishing a compliance policy that explains the processes by which compliance risks are to be identified and managed throughout the organization.

The board of directors should establish a compliance function and approve the bank's policies for identifying, assessing, monitoring, reporting, and advising on compliance risk.

The compliance function must have sufficient authority, stature, independence, and resources to be effective on its own and should not have access to the board of directors.

The compliance function should report directly to the CEO concerning the bank's compliance with applicable laws, rules, and standards and only update the board of directors on the bank's efforts in managing compliance risk when required.

buy in-game items with virtual in-game currencies.

exchange in-game items with other players.

trade in-game items with other players that can be exchanged for fiat currency

obtain in-game materials by performing in-game activities.

Policies are detailed instructions for specific processes. Procedures are an overarching framework. Neither policies nor procedures are mandatory for knowledge and adherence

Policies are broad guidelines. Procedures are detailed Instructions for specific processes. Only procedures are mandatory for knowledge and adherence.

Policies are detailed instructions for specific processes Procedures are an overarching framework Both policies and procedures are mandatory for knowledge and adherence.

Policies define the principles of an organization and influence the drafting of procedures. Procedures are detailed instructions for specific processes.

Use of wire transfers

Loitering

Instructions or involvement from third parties

Amended letters of credit without reasonable justification

Non-standard settlement arrangements

private banks agree that transparency of client beneficial ownership Is necessary and appropriate.

due diligence requirements tor private banking customers are necessary to prevent predicate offenses.

risk based approaches are insufficient to address the heightened risk presented through private banking

private banks need to better coordinate and align their global AML control environment strategies.

collecting complete customer information.

ongoing screening of customers.

suspicious activity and sanctions reporting.

evaluating the effectiveness of compliance controls.

Change the risk profile to "high-risk" if an existing customer becomes a sanctioned entity and continue monitoring further transactions.

Adopt automatic screening systems to detect designated persons and entities.

Conduct enhanced due diligence for prohibited entities on the sanctions list.

Freeze the funds or assets of designated persons and entities once this decision is approved by the board.

Receiving securities into an existing brokerage account following the death of a spouse

Allowing fixed income securities to mature

Using brokerage accounts like deposit accounts

Engaging in transactions involving nominees or third parties

Inviting prospective customers for an onboarding interview

Rejecting any politically exposed persons (PEPs) as customers

Understanding the source and origin of assets

Performing negative news checks of prospective customers

Producing financial stability reports on interesting customers

The European Commission and the High Representative issue a joint proposal for an import ban on refined oil products.

The European Commission and the High Representative issue a joint proposal for an import ban on oil extraction equipment

The Council of the European Union adopts a new export control regime for electronic equipment

The Council of the European Union adopts a new import restriction regime for goods coming from countries that do not respect human rights

Information security office (ISO)

Marketing and sales

Human resources (HR)

Data privacy office (DPO)

Account opening staff

Middle management

Senior management

First-level management

All US citizens and permanent residents while located in the US, all US incorporated entities and their foreign branches, and all individuals within the United States

All US citizens and permanent residents regardless of where they are located, all US incorporated entities excluding their foreign branches, and all individuals and entities within the United States

All US citizens except those with dual nationality, US permanent residents, all US incorporated entities, and all individuals within the United States

All US citizens and permanent residents regardless of where they are located, all US incorporated entities and their foreign branches, and all individuals and entities within the United States

Blockchain to ensure traceability and security in shared data transactions

Data encryption to protect sensitive information from unauthorized access

Privacy-enhancing technologies (PETs) to enable secure and privacy-compliant data sharing

Artificial intelligence (AI) to automating compliance processes like data anonymization and secure sharing

Cloud storage solutions for efficient data handling and management

The principal activities of the proposed company are importing and exporting new furniture

The prospective client presents confusing details about the proposed business and has very little knowledge about the proposed business activity

The prospective client is unable to provide information about the beneficial owners

The prospective client exhibits confidence when speaking to the accountant when providing personal details

The prospective client is able to provide source of funds and source of wealth documents

how an organization defines Its risk-based approach.

how an organization determines its key risk and performance indicators.

the level and type of risk the organization is willing to take to meet its objectives

the purpose of an organization's financial crimes compliance program.

reputational risk.

the customers personal relationships.

the frequency of account activity

the Fl's policies and procedures.

the seriousness of the underlying conduct.

correspondence with law enforcement

the legal basis for closing the account.

Setting tone from the top

Mandatory participation in all regulatory inspections

Mandatory attendance and review of all financial crime trainings

Setting clear criteria for escalations to senior management

Send a 314(b) request to the corporation's bank in Hong Kong

Call the receiving individual to review identity verification documents

Confirm that neither the beneficiary nor the originator are sanctioned parties

Request supporting documents, including invoices and contracts to confirm the purpose of the payment

Check for negative news in public sources on the sender and receiver

The 40 Recommendations have not been updated to reflect the impact of new technology

Each jurisdiction can reach out to the FATF for private access to the interpretive notes to the 40 Recommendations

The 11 Immediate Outcomes are recommendations specific to high-risk jurisdictions requiring enhanced monitoring.

The cornerstone of the 40 Recommendations is the adoption of a risk-based approach by each jurisdiction

to force developing nations to adopt liberal or substantive democracies.

to support governments and regimes in the peaceful resolution of conflict.

to punish governments for having weak financial crime controls.

to deter non-democratic and non-constitutional changes within countries.

to support the protection of human rights.

Memorandum of Agreement.

Declaration of Understanding.

Memorandum of Understanding.

Mutual Legal Assistance Treaty.

Request for Urgent Information.

Conduct an open-source intelligence investigation using artificial intelligence tools to gain more information on the activities of the suspected employee

Use the FI's whistleblowing channel to report the suspected employee

Question their co-worker to determine if their suspicions are correct before reporting to the FI's Human Resources department

Warn colleagues and customers of the FI that the employee's suspicious financial investment proposals could be a scam

Report the suspected employee to the line manager of the FI to take the required action

applying uniform controls to all customers, regardless of their risk profile

allocating resources and implementing controls based on the level of identified risks

prioritizing regulatory compliance over customer experience and operational efficiency

relying on automated systems to detect and mitigate AFC risks

Defining a common communication approach and language between all involved parties.

Delays in the investigation due to a foreign FIU awaiting the results of queries performed by third parties.

Conducting an investigation in all countries through which ML funds were transferred when one or more of the countries do not have an FIU.

Investigations which involve high-ranking politicians, who often have influence over the local FIU.

Providing basic AML training to all employees

An AML officer being appointed to the board as a working member of management with increased authority

Auditors providing prescriptive guidance and support to the program following a less than satisfactory audit

Providing effective challenge with AML staff and continuous cross-training

Section 319(b)

Section 314(b)

Section 314(a)

Section 319(a)

wire transfers in different currencies between accounts held at different banks for the same client.

an incoming third-party wire transfer followed by the purchase of real estate in the client's name.

an incoming wire transfer followed by the loan payment to a third party that is a business associate of the client.

multiple wire transfers sent to counterparties associated with the client as per KYC documentation.

To avoid sanctions breach related to payments

To avoid onboarding customers previously exited due to true match

To meet international regulatory requirements and identify risks across jurisdictions

To be in line with the risk appetite statement

Submit a referral to file a suspicious activity report (SAR)

Evaluate the KYC review process to understand why the review did not occur as required and take corrective action as necessary

Contact the customer's relationship manager to suspend account access until the periodic KYC review is completed

Remove the customer from the bank's high-risk list

Be consistent with the head office audits

Be tailored to the higher of standards between the jurisdictions.

Conform to the foreign jurisdiction policies to align with the head office policies.

Provide all foreign jurisdiction reports to the head office for approval.

Buying property allows for the movement of large amounts of funds in a single transaction

Criminal networks could purchase real estate for use as supply houses or locations to grow, manufacture, or distribute illicit narcotics

Markets can be volatile, and buyers may not achieve a strong return on their investment

Beneficial ownership information might be opaque, and criminals may abuse arrangements like shell companies and trusts

Real estate transactions often involve financial institutions and other professional gatekeepers

The high value of properties may require multiple types of financing, which can make it more difficult to identify the source of funds

The first line

The second line

Senior management

The third line

fraudulent identities involving stolen or manufactured identification.

suspicious behavior involving a transaction that occurs at an unusual time of day.

hidden beneficial owners.

transaction patterns involving transactions that exceed a certain dollar amount.

anomalies involving a transaction that occurs in a location far away from the customer's usual spending patterns.

A long-term client wants a change to a policy that is already in force

The payment was made via a company that appears to be owned and controlled by the client being insured

The additional premium payable appears to be within the client's means based on the KYC information collected

The payment was made via a company in a jurisdiction known to have lax AML controls

Accounting

Model risk management

Technology solutions and IT security

Marketing

Fraud risk management

Reputational risk

Operational risk

Sanctions risk

Compliance risk

Lending risk

Permanent US resident aliens regardless of location

Merchants that offer US-origin goods for sale regardless of location

Non-US financial institutions that offer accounts in USD regardless of location

US citizens regardless of location

US incorporated entities and their foreign branches

The buyer is using high-value real estate transactions to obscure the origin of the funds.

The buyer is quickly diversifying their investment portfolio through structuring payments in order to take advantage of the liquidity of cash transactions in real estate.

The buyer is capitalizing on favorable market conditions and using cash purchases to outbid competitors in a competitive real estate market using insider information.

The buyer is a real estate developer acquiring multiple properties for a potential redevelopment project with a business partner located in a high-risk jurisdiction.

When using network analysis data to fight money laundering and financial crime, data protection and privacy can be disregarded because fighting crime takes precedent

Network analysis tools are an efficient means of generating relevant results because they only need a limited amount of data and computation power and artificial intelligence (Al) allows less-skilled people to quickly learn to use these systems

When using artificial intelligence (Al) with network analysis tools, it must be ensured that the algorithms used are not biased towards social criteria, such as race, gender, or religion

Network analysis allows for the identification of individuals or entities in a network by analyzing connections or links between them and can be used to study a wide range of systems, such as social or transportation networks

Analyzing relationships between individuals in a social network allows for the identification of hierarchies, the detection of behaviors and geographical movements, or an understanding of how groups are organized

Providing clear procedures to ensure compliance with local tax regulations

Using trusts to obscure the identity of beneficial owners

Promoting the use of complex corporate structures

Maintaining accurate and updated beneficial ownership details for all customers registered for their services

Establishing shell companies for holding financial assets

Policies are broad guidelines. Procedures are detailed instructions for specific processes. Only procedures are mandatory for knowledge and adherence.

Policies define the principles of an organization and influence the drafting of procedures. Procedures are detailed instructions for specific processes.

Policies are detailed instructions for specific processes. Procedures are an overarching framework. Neither policies nor procedures are mandatory for knowledge and adherence.

Policies are detailed instructions for specific processes. Procedures are an overarching framework. Both policies and procedures are mandatory for knowledge and adherence.

The Financial Action Task Force (FATF)

The AUSTRAC Fintel Alliance

The Egmont Group

The Wolfsberg Group

Understanding why a customer has selected a particular financial institution for banking

Verifying the identity of a customer with reputable online source documentation

Limiting the online activities of a new customer during the first two months

Understanding the nature and purpose behind a new business opening an account at the bank

mutual legal assistance treaty.

memorandum of understanding.

request for urgent information.

declaration of understanding.

memorandum of agreement.

Eliminating spontaneous information sharing between FIUs to reduce the burden of excess investigative work

FIU cooperation should always be channeled through designated intermediaries

Information exchange should take place informally, without too many formal prerequisites

Formal Egmont Group membership requirements ensure a high commitment of the eligible FIUs

It is within an FIU's authority to sign Memorandums of Understanding independently

The customer is the object of a civil subpoena.

The customer uses a shipping company dealing with specially designated nationals.

The account shows periodic fixed amount remittances for tuition fees.

The account has transactions that triggered multiple suspicious activity reports.

Vishing

Pharming

SMSishing

Spear phishing

Suggest the FI needs to implement a risk-based approach for EDD.

Suggest the management team select the clients that are chosen for EDD.

Suggest the management team ask the regulator for advice on EDD measures.

Suggest EDD for 50% of the clients is appropriate.