CAMS Practice Exam Questions with Answers Certified Anti-Money Laundering Specialist (CAMS7 the 7th edition) Certification

executing cross-border transactions for their own business which is not commensurate to the PEP's wealth.

in a position to provide more information regarding the PEP's whereabouts and hidden properties.

travelling to offshore jurisdictions often on holiday which exposes them to higher risks for AML.

used as intermediaries to facilitate bribery or corruption or to conceal the illicit wealth of the PEP.

Reporting entities are prohibited from disclosing to clients or third parties that a suspicious activity report (SAR) has been filed or that an investigation is ongoing

Reporting entities can share general information about suspicious activities internally within the organization without compromising confidentiality

Reporting entities must inform their clients if a suspicious activity report (SAR) has been filed, as part of maintaining transparency in customer relations

Reporting entities are allowed to discuss suspicious activities with clients if it helps clarify a situation before submitting a suspicious activity report

mutual legal assistance treaty.

memorandum of understanding.

request for urgent information.

declaration of understanding.

memorandum of agreement.

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

The account activity includes deposit activity into both savings and checking accounts

The account activity includes incoming funds transfers at irregular intervals from small businesses located in New York

The account activity includes deposits made in multiple branches around New York City into the same account.

The account activity includes frequent purchases of tickets to industry conferences and other events.

Whether the vendor has documented appropriate internal controls for designing system and data integration schema

Whether the permissions and user access settings for reviewing, investigating, and reporting details of alerts generated by the system are commensurate with those in use at other banks

Whether the monitoring system is adequate with respect to the bank's size, activities, complexity, and risks

Whether the monitoring system can be configured to enable the bank to execute trend analysis of transaction activity and to identify unusual business relationships and transactions

Open source information

Customer profile

Adverse media search

Account activity

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

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.

Percentage of regulatory reports for high-risk customers not completed within the required regulatory deadlines

Percentage change of transaction monitoring alerts escalated for investigation compared to the previous quarter

Percentage of customers for whom onboarding verification was not completed within KYC policy service-level agreement (SLA) requirements

Number and percentage of senior politically exposed persons (PEPs) who were onboarded in the past quarter compared to all active customers

The EU AMLD and local AML regulations are separate and unrelated legal frameworks.

The EU AMLD and local AML regulations must have identical requirements.

Local AML regulations may impose additional or more stringent requirements than the EU AMLD.

The EU AMLD take precedence over local AML regulations.

Local AML laws and regulations override the requirements of the EU AMLD.

The EU AMLD provide a framework that member countries must implement through local AML regulations.

waste management sector companies based in high-risk jurisdictions with payments or trade invoices tor types of waste aligned with those they are authorized to process.

frequent payments from companies in the logging. milling, or waste trade sectors to individuals or beneficiaries unrelated to the legal parson activity or business.

unexplained wealth and cash transfers involving senior officials or politically exposed persons for their family members) with a position of responsibility related to the management or preservation of natural resources.

small cash transfers from cash-Intensive businesses to beneficiaries in areas known as a source of gold mining, illegal logging, and Illegal land clearing.

The ratio of true positives to false positives generated by the automated monitoring system

The number of money laundering alerts generated by the watchlist screening system

The number of high-risk customers onboarded each month

The number of clients exited for commercial reasons

Section 319(b)

Section 314(b)

Section 314(a)

Section 319(a)

Trade-based

Check Kiting

Microstructuring

Structuring

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

Securely share sensitive information in the fight against money laundering and the financing of terrorism

Establish an environment to foster trust amongst countries

Sign memoranda of cooperation that recognize and allow room for case-by-case solutions to specific problems

Improve global cooperation between FIUs

Propose legislation to combat financial crime, including money laundering and the financing of terrorism

Memorandum of Agreement.

Declaration of Understanding.

Memorandum of Understanding.

Mutual Legal Assistance Treaty.

Request for Urgent Information.

FATF Evaluation Committee

Series of internal audits followed by reporting to FATF

Basel Committee

Mutual evaluation

Vishing

Pharming

SMSishing

Spear phishing

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.

Exchange operational information between public authorities and obliged entities

Exchange strategic information between FIUs and obliged entities

Exchange strategic information between financial institutions

Create a common database of key information and share analysis of suspicious activities with FATF

The employee was originally from a high-risk jurisdiction

The employee had friends in high-risk industries

The employee had a lavish lifestyle for her income

The employee was constantly evasive about the reasons for leaving her previous corporate finance job

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.

Ensuring sanctions coy on international bodies like the UN because there is no requirement to adhere to local laws.

Ensuring group policies and procedures prioritize adherence to US regulations because they are the most influential worldwide.

Applying global AFC and sanctions policies to ensure consistency without the need to adapt to local regulations.

Ensuring group policies cater to compliance with each country's specific AML and sanctions regulations.

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

integrates seamlessly with existing systems and processes.

meets budget and cost requirements.

automates all regulatory reporting requirements.

replaces manual compliance training for employees.

Address control of payments in EU countries to reduce money laundering.

Build a network of financial institutions that work together to prevent money laundering across the EU.

Establish a consistent regulatory environment across the EU to prevent money laundering.

Allow member states to discuss the draft legislation with the cooperation of the EU financial intelligence units.

Adverse media databases

Publicly available information on non-government data repositories

Credit reference agencies

Beneficial ownership registers available in country of incorporation of entity

Information security office (ISO)

Marketing and sales

Human resources (HR)

Data privacy office (DPO)

Consistency of approach

Periodic training of the function

Qualification of the team

Independent testing

Short position

Reverse flip

Bid-ask spread

Wash trading

Sanctions can only be placed on certain individuals in foreign countries as designated by OFAC

Blocked funds must be placed into an interest-bearing account on a financial institution's books

Sanctions can be either comprehensive or selective using the blocking of assets and trade restrictions to accomplish foreign policy and national security goals

OFAC sanctions automatically expire after five years unless renewed by Congress

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.

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

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

Criminal history searches

Personal resume

Internet and public media searches

Past employment records

Personal references from close associates

Formal assessment

Regulatory overview

Technical analysis

Mutual evaluation

Types of payment messages

Customers

Third-party service providers

Customer spouses

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

Challenge-response

Fingerprint

Security token

Passphrase

Low thresholds for transactions

Frequent use of cash

Cross-border transactions

Weak KYC policies and procedures

Information security, data privacy, and cybersecurity

Foreign exchange control, and precious gemstone and metal dealing

Ombudsman and anti-competition authority

Electronic contract and biological signature acceptance

Consumer protection, financial inclusion, and environmental, social and governance

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.

have informal business arrangements between persons or entities.

are located in geographies that are not accountable to US laws.

include trusts, investment funds, and insurance companies.

have limited organizational disclosure and recordkeeping requirements for establishing these business entities.

ensure that all adverse media sources are comprehensively analyzed without the need for human review.

significantly reduce human errors arising from repetitive tasks by delivering consistent and highly accurate analysis.

instantly identify intent behind media articles, allowing for more effective risk scoring.

automate the process of identifying new information and distinguishing it from previously encountered data.

cover multiple languages and scripts, surpassing the limitations of human linguistics.

protect the rights of the citizens of the state target against their own government and improve financial stability in the region.

indicate that the use of military force is likely unless the state or non-state target complies with the government's

interests encourage non-governmental organizations to increase the provision of humanitarian and charitable aid to the target

alter the behavior of the state or non-state target that threatens the interests of that government or violates international norms

Purpose and intended use

Liquidity

Age of the beneficiary

Customer anonymity or third-party transactions

Length of waiting period

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.

Appointing individuals to serve in official capacities of the company

Annual maintenance services

Provision of a local business address

Company incorporation services

Reviewing the enterprise-wide risk assessment methodology

Enhancing staff training on the documentation of justification on closed alerts

Revisiting the post-transaction monitoring system parameters and thresholds

Reviewing the fuzzy logic currently adopted in the screening system

The payment of company secretarial retainer fees to a foreign company in a tax-efficient jurisdiction

The payment of virtual offices services overseas

Inter-company loans from the holding company to the subsidiary company to finance the shipment of machinery

The payment of consultancy fees to unrelated companies and service providers established in a foreign jurisdiction

Past employment records.

Personal references from close associates.

Personal resume.

Internet and public media searches.

Criminal history searches.

The beneficiary of the wire transfers is a foreign company whose shareholders and director are other companies

The wire transfers are for different amounts but with the same beneficiary

The beneficiary of the wire transfer is a resident of a grey-list country

The beneficiary of the wire transfers is a resident of a foreign country bearing the same family name as the business owner

Collect donations from various sources, and their primary objective is philanthropy and social wellbeing

Are usually legitimate establishments and will not use the funds collected through donation for the profit of individuals or entities

Have a global presence that provides a framework for national and international operations and financial transactions that are often in or near areas most exposed to terrorist activity

Enjoy the public trust and have access to considerable sources of funds, and their activities are often cash intensive

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

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

Guaranteeing 100% accuracy in regulatory compliance across all jurisdictions

Improving customer satisfaction by offering personalized recommendations

Reducing identity theft effectively

Providing reliable customer authentication to enhance trust

Decreasing the time required for customer authentication

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.

The Financial Action Task Force (FATF)

The AUSTRAC Fintel Alliance

The Egmont Group

The Wolfsberg Group

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

The Egmont Group

The Wolfsberg Group

The International Monetary Fund (IMF)

Extended AML oversight to crowdfunding platforms and professional football clubs

Eliminated the requirement for the European Commission to conduct a risk assessment

Created a central EU watchdog to combat money laundering

Strengthened provisions relating to the accuracy of data submitted to central beneficial ownership registries

The institution has observed an increase in customer demand for large-denomination banknotes.

The institution maintains a sequentially numbered log of the monetary instruments it sells.

The institution has observed a reduced settlement time in the transaction services that support the rapid movement or remittance of funds.

The institution has observed an increase in the adoption of its digital products and services.

National Risk Assessment

Regulatory guidance or publications

Government or state-run newspapers

Guidance issued by international bodies

Policies and procedures developed by other banks

To prohibit the payment of anything of value by persons or entities to government officials or employees of state-owned enterprises to obtain an improper business advantage

To prohibit the conversion of illegally obtained money into legal money by senior government figures

To protect against election interference by corrupt foreign adversaries facilitated by illicit funds

To protect against the use of illegal means by senior political figures to avoid paying taxes

simultaneous encryption and decryption for underlying data.

full access to underlying data with full and uninterrupted calculations made on the data.

secure processing of data while it remains encrypted.

transfer, decryption and storage of data by the data processor.

Customer loyalty program tracking

Product usage analysis

Customer satisfaction surveys

Customer support ticket tracking

Credit risk assessment

The preference of upper management regarding which teams should participate in the data-sharing initiative

The cost of the data-sharing system and whether it its within the existing IT budget

The potential return on investment (ROI) from the data shared versus the financial crime prevention effort

Ensuring that the shared data complies with applicable data protection regulations while maintaining the integrity and accuracy of the information

Concealing sources of funds

Allowing for third-party custody safekeeping of funds

Adding a layer of anonymity to transactions

Concealing true legal and beneficial owners

Establishing escrow accounts for real estate transactions

Drafting detailed action plans for the audit team to execute to close the findings

Reperforming the testing for the controls mentioned in the findings to confirm the results of the audit

Defining remedial actions based on the findings' root cause analysis

Assigning responsibility for reviewing the action plan to the board of directors

These businesses are all cash intensive, increasing the risk of financial crime

KYC challenges arise because e-commerce platforms face global customers making customer due diligence complex and resource intensive

These businesses are highly regulated and therefore have no reason to be non-compliant as this would put them at risk of sanctions and fines

Criminals can make use of identify fraud to fulfill KYC processes for layering purposes

The settlement systems of these businesses are not sophisticated enough to cope with the high transaction volume

Receiving electronic transfers for US$10,000 amounts from other financial institutions

Using cash to buy multiple cashier's checks over a period of time

Performing operations with real estate investment companies

Using cashier's checks in the transactions with the real estate investment company's account

All the financial institutions where the new customer currently banks or banked previously

The type of business the corporate customer is engaged in

The employment profiles and information of all employees of the new customer

The country or location where the customer is from or conducts business

The identity of senior managing officials and all individuals authorized to operate the account

A customer changes multiple high-denomination notes to low-denomination notes.

A customer conducts cash transactions using multiple branches of the MSB on the same day.

A customer has a family link to the destination of a money transfer

A customer sends and receives money transfers in equal amounts at or about the same time.

A customer only wants to deal with a particular employee in the MSB.

The foreign bank must always request approval by its national anti-financial crime authority to share any information cross-border.

The bank should report this to the Financial Crimes Enforcement Network (FinCEN) and receive formal guidance before sharing the information.

The bank should consider jurisdictional privacy requirements and its own policies and procedures to determine what information to share.

The information should only be shared on a need-to-know basis.

Use of cash to purchase property

Unlicensed real estate agents acting as front companies

Use of a registered trust for the purchase of property

Use of a company for the purchase of property

Manipulation of the value of a property

Restrict the client's access to the account

Request information from the relationship manager assigned to the account that caused the alert

Perform below-the-line testing to ensure the automated monitoring system is operating effectively

Send a request for information to the counterparty bank involved in the transaction that caused the alert

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

maintain compliance with the AFC and sanctions requirements of all countries where the F1 operates or has business relationships and to avoid penalties for violations in foreign jurisdictions.

ensure that sanctions regimes are applied selectively based on the regulatory standards of the countries where business activities occur, focusing primarily on aligned jurisdictions

compensate for the limited applicability of AFC and sanctions regulations on cross-border transactions and their reduced relevance for domestic operations in other jurisdictions.

ensure the F1 can manage business relationships in jurisdictions with stricter or more lenient regulations than their home country, allowing for operational flexibility

Cash access from a pre-paid card increases the potential that the card will be used for money laundering purposes.

Transaction monitoring examines the relationship between due diligence information and account closings.

Account and transactional activity are monitored after the proper identification and verification of customers.

Numbered or alternate name accounts will only be accepted if the bank has established the identity of the client and beneficial owner.

Conduct AML audits no less often than every 12 months for consistency in annual reporting.

Remain independent from expressing opinions on the sufficiency of remediation or action plans to address findings and recommendations.

Be involved in the day-to-day operations of the AML program to immediately prevent control failures.

Report to the audit committee of the board of directors to maintain independence.

Implementation of a blacklist of correspondent customers with previously detected and investigated suspicious activity

Enhancement of a customer acceptance policy to more clearly identify high-risk customers

Increased frequency of training provided to front office employees

Enhancement of customer identification procedures to appropriately identify trust, nominee, and fiduciary accounts

European Commissions

Financial Action Task Forces

Wolfsberg Groups

Financial Intelligence Units

Without the expectation of reciprocity on how the information will be used.

Only if the status of the foreign FIU is related to law enforcement.

Freely, spontaneously, and upon request, on the basis of reciprocity.

With set limits on the amount of financial and administrative information provided.

Fully rely on central beneficial owner registry records in the high-risk third country to determine the ultimate beneficial owners of all customers

Apply tailored due diligence measures, based on the level of risk posed by each customer following risk assessment

Monitor every cross-border transaction in real time, flagging all for enhanced scrutiny due to the country risk level

Automatically apply enhanced customer due diligence measures to all customers in the high-risk third-country branch regardless of risk level

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.

It is against international laws on data protection to access information from foreign countries

Sovereignty of nations means that information cannot be accessed from foreign countries

Any information related to money laundering can be received from any organization at any time regardless of jurisdiction

Countries that are members of the Egmont Group can request assistance for information from each other

Ensuring the structure is reviewed by an outside auditor or consultant

Establishing a system of internal controls commensurate with the institution’s size and complexity

Designating a qualified board of directors to monitor day-to-day compliance

Establishing clear roles and responsibilities for AFC risk escalations and issues