Free Practice Questions for ACAMS CAMS Exam

Financing terrorism generally refers to providing money or other support, such as personnel or technology, to terrorist activities. This can include providing funds to terrorist networks, providing services to support terrorist operations, and providing resources to support terrorist activities. In this case, paying producers and reporters for television and web messaging would be considered financing of terrorism, as it is providing support for terrorist activities.

According to the ACAMS CAMS Study Guide, one of the most common methods of placement is to deposit cash into a bank account, either directly or through intermediaries. This allows the money launderer to introduce the illicit funds into the legitimate financial system, and to create a paper trail that can be used to justify the source of the funds. However, this method also exposes the money launderer to the risk of detection by the bank’s anti-money laundering (AML) policies and procedures, such as customer identification, transaction monitoring, and reporting of suspicious activities1.

ACAMS CAMS Study Guide, 6th Edition, page 271

Higher-risk customer profilesoften include businesses that:

Regularly handle large volumes of cash

Operate in sectors withhistorical vulnerabilities to money laundering

Are involved invirtual assets or unregulated financial activities

Option C – A local used car sale lot that allows cash payments:

This business type is consideredcash-intensive, and accepting monthly payments in cash raises concerns about the source of funds, potential structuring, or placement of illicit proceeds.

Option D – A Virtual Asset Service Provider (VASP):

VASPs involved inpeer-to-peer crypto transactionspresent elevated AML risks due to theanonymity, speed, and borderless natureof virtual assets. These institutions are often subject toenhanced due diligence requirements.

Option Ais incorrect: A large multinational with documented transactions and transparency typically poseslower inherent risk, though still subject to review.

Option Bmay be reviewed, buton-site ATM replenishment using store cashis not automatically a red flag without other risk indicators.

Effective oversight of transaction monitoring includes:

Periodic review of client profiles to ensure up-to-date information for high-risk clients (B):“Reviewing and updating customer profiles is essential to ensure that monitoring scenarios are based on current risk data.”(CAMS 6th Edition, Transaction Monitoring and Customer Due Diligence)

Periodic review of transaction monitoring scenarios and productivity to ensure appropriate AML typologies are reflected (D):“Firms should periodically review the parameters and output of transaction monitoring systems to ensure they continue to identify relevant ML/TF risks and typologies.”(CAMS 6th Edition, Monitoring and Surveillance)

Incorrect Options:

A: Cooperation with the legal team is important, but not a core strategy for monitoring governance.

C: SARs filed with FinCEN should not be withdrawn unless new evidence requires it; review should focus on process, not withdrawal.

The first thing the anti-money laundering specialist should do is to conduct a risk assessment of the bank’s international electronic fund transfer activity. This is to identify and measure the potential money laundering and terrorist financing risks associated with the bank’s products, services, customers, and geographic locations. A risk assessment can help the anti-money laundering specialist to:

Understand the nature and extent of the bank’s exposure to money laundering and terrorist financing threats and vulnerabilities.

Establish a risk-based approach to the design and implementation of the anti-money laundering compliance program, including policies, procedures, controls, monitoring, reporting, and training.

Allocate appropriate resources and prioritize actions to mitigate the identified risks and enhance the effectiveness of the anti-money laundering compliance program.

Demonstrate to the regulators and auditors that the bank has a sound and comprehensive anti-money laundering compliance program that is commensurate with its risk profile and business activities.

CAMS Study Guide - 6th Edition, Chapter 6, pages 167-168

CAMS Certification Exam Outline, Domain 3, Task 3.1, Skill 3.1.1

Anti-Money Laundering Bulletin November 2021 - Central Bank of Ireland, pages 4-5

Money Laundering through Money Remittance and Currency Exchange Providers, FATF, June 2010, pages 7-8

REGULATIONS - FIU, Part III, Regulation 9, pages 9-10

According to the Wolfsberg Financial Crime Principles for Correspondent Banking1, a shell bank is defined as a bank that has no physical presence in the jurisdiction in which it is incorporated and licensed, and which is unaffiliated with a regulated financial group that is subject to effective consolidated supervision. Physical presence means meaningful mind and management located within a country. The existence simply of a local agent or low level staff does not constitute physical presence. Therefore, a shell bank meets the criteria A, B, and D, as it does not conduct business at a fixed address, does not employ one or more individuals or maintain operating records at that address, and is not subject to inspection by the banking authority that licensed it. Criterion C is not specific to shell banks, as any bank, whether shell or not, may or may not be subject to AML laws that require it to implement an AML program, depending on the jurisdiction.

Wolfsberg Financial Crime Principles for Correspondent Banking1, Section: Definitions, pp. 3-4.

 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.

Red flags in connection with a company involved in illegal logging include: D. Expeditious shipment of wood to far away jurisdictions, E. Use of heavy machinery in non-protected areas, and F. Executive's association with politically exposed persons. These red flags could be indicative of attempts to conceal the origin of illegally harvested wood and to avoid detection by government authorities.

The General Data Protection Regulation (GDPR) is a regulation issued by the European Union (EU) that sets out requirements for the processing and protection of personal data. It applies to any company that processes personal data of individuals in the EU, and requires organizations to take appropriate measures to protect the personal data of individuals, such as implementing appropriate security measures, limiting the amount of data collected and stored, and providing clear explanations of how the data will be used. In the context of financial crime investigations, the GDPR requires organizations to ensure the security and confidentiality of personal data that they collect and process, and to take measures to ensure that the data is used only for the purpose of the investigation and not for any other purpose.

Money launderers usehigh-value goods(e.g., jewelry, art, and precious metals) todisguise illicit funds.

Option C (Correct):Requesting ahandwritten receipt for a cash purchasesuggests anattempt to avoid record-keeping, a knownmoney laundering technique.

Option A (Incorrect):Buying gold bars withcash and cryptocurrencyisunusualbut notinherently illegalunless the amounts are suspicious.

Option B (Incorrect):Credit card payments are traceableanddo not raise immediate red flags.

Option D (Incorrect):Kimberly Process-certified diamondsare legally sourced, and requesting themdoes not indicate suspicious intent.

This is stated in the Certified Anti-Money Laundering Specialist (the 6th edition) manual on page 595, which states: “Potential indicators of money laundering associated with Trust and Company Service Providers include the use of legal persons in jurisdictions with strict secrecy laws, structuring cash deposits into third party accounts, multi-jurisdictional wire transfers with no legal purpose, and frequent deposits to or withdrawals from bank accounts.”

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.

U.S. law requires that assets and accounts of an OFAC-specified country, entity, or individual be blocked when such property is located in the United States, is held by U.S. individuals or entities, or comes into the possession or control of U.S. individuals or entities.

For example, if a funds transfer comes from offshore and is being routed through a U.S. bank to an offshore bank, and there is an OFAC-designated party to the transaction, it must be blocked. The definition of assets and property is broad and is specifically defined within each sanction program. Assets and property includes anything of direct, indirect, present, future, or contingent value (including all types of bank transactions). Banks must block transactions that:

• Are by or on behalf of a blocked individual or entity;

• Are to or go through a blocked entity; or

• Are in connection with a transaction in which a blocked individual or entity has an interest.

Economic sanctions are measures imposed by countries or international bodies to exert pressure on individuals, entities, or nations that engage in undesirable behavior or actions. Sanctions aim to restrict or prohibit certain economic activities with the targeted parties, such as trade, investments, or financial transactions. They serve various purposes, including achieving foreign policy and national security objectives and deterring undesired actions by countries or entities. Sanctions can be comprehensive (affecting an entire country) or targeted (specific businesses, groups, or individuals), with a recent trend toward minimizing harm to innocent civilians12.

When an existing customer becomes a politically exposed person (PEP), the KYC analyst should perform enhanced due diligence (EDD) for that customer. EDD involves gathering additional information about the customer, assessing the risk associated with their PEP status, and updating the KYC profile accordingly. The goal is to ensure compliance with regulations, verify customer identities, and mitigate the higher risk posed by PEPs. Regular monitoring and updates during the review/refresh period are essential to stay informed about any changes in the customer’s status or risk profile1.

According to the Bank Secrecy Act (BSA), a financial institution or business must establish an anti-money laundering (AML) program that includes at least four elements: (a) a system of internal policies, procedures and controls to prevent, detect and report money laundering and other illicit activities; (b) a designated compliance officer who is responsible for overseeing the implementation and effectiveness of the AML program; © an ongoing employee training program that covers the legal and regulatory obligations, the risks and red flags of money laundering, and the roles and responsibilities of the staff in the AML program; and (d) an independent audit function that tests and evaluates the adequacy and compliance of the AML program12.

While the Office of Foreign Assets Control (OFAC) is a key agency that enforces economic and trade sanctions against targeted foreign countries, entities and individuals, it is not part of the BSA or the AML program requirements. However, financial institutions and businesses are expected to comply with OFAC regulations and screen their customers and transactions against the OFAC lists of sanctioned parties. Failure to do so may result in civil or criminal penalties34. Therefore, it is advisable for financial institutions and businesses to have an OFAC program that is integrated with their AML program, but it is not a mandatory element that they have to specifically address in their AML program.

1: Financial Crimes Enforcement Network (2020). Anti-Money Laundering Programs

2: ACAMS (2020). CAMS Certification Package (6th Edition)

3: Office of Foreign Assets Control (2023). Sanctions Programs and Country Information

4: Moses & Singer LLP (2023). Anti-Money Laundering, Bank Secrecy and OFAC Regulations

According to the Anti-Money Laundering Specialist (the 6th edition) study guide, when a financial institution receives a law enforcement request to keep an account open that may be associated with suspicious or criminal activity, it should take the following two steps:

Maintain account records for at least five years after the request expires. This is to ensure that the financial institution can provide evidence of its compliance with the law enforcement request and the applicable anti-money laundering regulations. The five-year retention period isbased on the international standard set by the Financial Action Task Force (FATF) and adopted by many jurisdictions12.

Ask for a written request from the law enforcement agency that defines the duration. This is to protect the financial institution from potential liability and to clarify the scope and purpose of the law enforcement request. The written request should specify the time period for which the account should remain open, the reason for the request, the contact information of the law enforcement officer, and the legal authority for the request34.

Anti-Money Laundering Specialist (the 6th edition) study guide, page 57

FATF Recommendation 11, paragraph 2

Anti-Money Laundering Specialist (the 6th edition) study guide, page 58

Money Laundering website, article on “Law Enforcement Requests to Keep Accounts Open”

https://www.fincen.gov/resources/statutes-regulations/guidance/requests-law-enforcement-financial-institutions-maintain

https://www.bis.org/publ/bcbs85.pdf - page 12

Banks should gather sufficient information about their respondent banks to understand fully the nature of the respondent’s business. Factors to consider include: information about the respondent bank’s management, major business activities, where they are located and its money-laundering prevention and detection efforts; the purpose of the account; the identity of any third party entities that will use the correspondent banking services; and the condition of bank regulation and supervision in the respondent’s country. Banks should only establish correspondent relationships with foreign banks that are effectively supervised by the relevant authorities. For their part, respondent banks should have effective customer acceptance and KYC policies.