ACAMS CAMS - Questions & Answers
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Which three statements are true about on-line banking offering a significant money laundering risk to a financial institution?
The nature of on-line banking can make it difficult to establish who is controlling the account
The ease of access through the internet enables cross border movement of funds
Due to client confidentiality, information collected on-line cannot be shared with law enforcement agencies on mere suspicion
The speed of electronic transaction enables execution of multiple complex transactions within short time frame
On-line banking offers a significant money laundering risk to a financial institution because: The nature of on-line banking can make it difficult to establish who is controlling the account. On-line banking allows customers to access their accounts remotely, without face-to-face contact with the financial institution. This can pose challenges for verifying the identity and legitimacy of the account holder, especially if the account is opened on-line or through a third-party intermediary. On-line banking can also facilitate the use of anonymous or fictitious identities, or the use of proxies or nominees to hide the true beneficial owner of the account.
The ease of access through the internet enables cross border movement of funds. On-line banking allows customers to transfer funds quickly and easily across different jurisdictions, without physical movement of cash or other instruments. This can increase the risk of money laundering, as funds can be moved to or from high-risk countries or regions, or through multiple accounts or financial institutions, to obscure the origin, destination, or purpose of the funds. On-line banking can also enable customers to access or use alternative payment systems or virtual currencies, which may have lower regulatory oversight or transparency standards than traditional banking systems. The speed of electronic transaction enables execution of multiple complex transactions within short time frame. On-line banking allows customers to conduct transactions in real time, with minimal or no human intervention or verification. This can increase the risk of money laundering, as customers can execute multiple transactions in a short period of time, or use complex transaction structures or patterns, to avoid detection or reporting thresholds, or to conceal the source, nature, or ownership of the funds. On-line banking can also enable customers to use automated or algorithmic trading systems, which may generate large volumes of transactions that are difficult to monitor or analyze.
References:
CAMS Study Guide - 6th Edition, Chapter 5, pages 139-140
CAMS Certification Exam Outline, Domain 2, Task 2.1, Skill 2.1.1
Online Banking and Money Laundering, ACAMS Today, September 2012
In which two ways does a government Financial Intelligence Unit interact with public and private sectors? (Choose two.)
It governs the methods of investigation used by competent authorities
It mediates disputes between financial institutions and investigative authorities
It receives and analyzes disclosures filed by financial and non-bank institutions
It disseminates information and the results of its analysis to competent authorities
A government Financial Intelligence Unit (FIU) is a national body or agency that collects, analyzes, and disseminates information on suspicious or unusual financial activity related to money laundering, terrorist financing, or other financial crimes 12. One of the main functions of an FIU is to receive and analyze disclosures or reports filed by financial and non-bank institutions, such as banks, casinos, money service businesses, lawyers, accountants, etc., that are obliged to report transactions or activities that may indicate money laundering or terrorist financing 34. Another key function of an FIU is to disseminate the information and the results of its analysis to competent authorities, such as law enforcement, prosecutors, regulators, or other FIUs, for further investigation, prosecution, or preventive action 56. These two ways of interaction enable the FIU to act as a bridge between the public and private sectors in the fight against financial crimes.
References:
1: What are Financial Intelligence Units (FIUs)?, Dow Jones, 3; 2: Financial Intelligence Unit, Wikipedia, 2; 3: The Role of Financial Intelligence Units in Fighting Money Laundering and Terrorist Financing, IMF, 8; 4: What is an FIU?, Egmont Group of Financial Intelligence Units, [9]; 5: FIU Functions, FATF, [10]; 6: FIU.NET, Europol, [11]. Reference: (http://pubdocs.worldbank.org/en/834721427730119379/AML-Module-2.pdf)
What is the intentional evasion of a reporting or recordkeeping requirement?
Money laundering
Layering
Placement
Structuring
Structuring is the intentional evasion of a reporting or recordkeeping requirement by breaking down a large transaction into smaller ones, or by using multiple accounts, institutions, or persons to avoid triggering the threshold for reporting or recordkeeping. Structuring is also known as smurfing, and it is a common technique used by money launderers to conceal the source, ownership, or control of illicit funds.
Which three should real estate agents include in the criteria to assess their company's potential money laundering and terrorist financing risks when implementing a reasonable risk-based approach?
Credit Risk
Customer Risk
Transaction Risk
Geographic Risk
According to the Wolfsberg Principles on Correspondent Banking1, an institution should consider the following three elements in its enhanced due diligence process for higher risk respondent bank customers: The quality of the respondent's AML and client identification controls: The correspondent should assess the adequacy and effectiveness of the respondent's AML policies, procedures, and systems, as well as its compliance with applicable AML laws and regulations. The correspondent should also verify that the respondent has implemented appropriate customer identification and verification measures, and that it maintains sufficient records of its customers and transactions. A risk-based determination as to whether or not the respondent is a shell bank: The correspondent should ensure that the respondent is not a shell bank, which is defined as a bank that has no physical presence in any country and is not affiliated with a regulated financial group. The correspondent should also avoid establishing or maintaining relationships with banks that are known to allow their accounts to be used by shell banks. Whether a Politically Exposed Person (PEP) has an interest or management role in the respondent: The correspondent should identify and assess the potential risks associated with any PEPs who have an ownership or management interest in the respondent, or who are customers of the respondent. The correspondent should apply enhanced scrutiny and monitoring to such relationships, and obtain senior management approval before establishing or continuing them.
References:
Wolfsberg Correspondent Banking Principles 2022 by the Wolfsberg Group, October 2022. Reference: (http://www.fatf-gafi.org/media/fatf/documents/reports/RBA%20Guidance%20for%20Real%20Estate%20Agents.pdf(page20,secondparagraph)
A junior account manager within an international private bank in Country A was asked by one of his valued customers, who has held an account for several years in the institution, about depositing a large sum of cash into her account. The junior account manager informed his customer that his bank does not accept cash. The junior account manager later reviewed a customer activity report and noticed a number of smaller dollar wires from banks in neighboring Country B, which has lax currency controls, that totaled about as much as the customer intended to deposit.
What should the junior account manager do?
Close the account
File a suspicious transaction report with the Financial Intelligence Unit
Notify the anti-money laundering specialist of his bank, but do not call the customer
Offer the customer a more secure method of depositing in the hope of learning something more during the conversation
The junior account manager should file a suspicious transaction report (STR) with the Financial Intelligence Unit (FIU) of Country A, as he has reasonable grounds to suspect that the customer is involved in money laundering or terrorist financing. The customer's attempt to deposit a large sum of cash, followed by a series of smaller wire transfers from a high-risk jurisdiction, indicates a possible case of structuring or smurfing, which are techniques used by criminals to avoid detection and reporting thresholds. The junior account manager should not close the account, as this could alert the customer and disrupt the investigation by the FIU or law enforcement. The junior account manager should also not notify the anti-money laundering specialist of his bank, as this could create a conflict of interest or breach of confidentiality, unless the bank's policy requires such notification. The junior account manager should also not offer the customer a more secure method of depositing, as this could be seen as facilitating or condoning the customer's illicit activities, or exposing the bank to legal or reputational risks.
References:
CAMS Study Guide, pages 97-98, 103-104, 107-108.
An anti-money laundering expert is hired by a new Internet bank to assess the money laundering threat to the bank. Because it is an o line bank the most important recommendation for the expert to make is that the bank.
limit the amount which can be processed per transaction.
ensure that prospective new customers can be properly identified.
set up automated programs to analyze transaction for money laundering activity.
ensure that a firewall is set up to protect the transactions.
One of the main challenges and risks for online banks is the verification of customer identity and the prevention of identity fraud. Online banks are more vulnerable to money laundering and terrorist financing because they do not have face-toface contact with their customers and may rely on third-party sources or digital methods to verify customer information. Therefore, the most important recommendation for the anti-money laundering expert to make is that the online bank ensures that prospective new customers can be properly identified and that their identity documents and information are verified using reliable and independent sources. This is also in line with the international standards and best practices for anti-money laundering and counter-terrorist financing, such as the FATF Recommendations, the Basel Committee on Banking Supervision principles, and the EU's Fifth Anti-Money Laundering Directive.
The other options are less important or less effective than ensuring customer identification. Limiting the amount that can be processed per transaction may reduce the exposure to large-scale money laundering, but it does not prevent the use of multiple transactions or accounts to launder smaller amounts. Setting up automated programs to analyze transactions for money laundering activity may enhance the detection and reporting of suspicious transactions, but it does not address the root cause of money laundering, which is the concealment of the source and ownership of illicit funds. Ensuring that a firewall is set up to protect the transactions may improve the security and confidentiality of the online banking system, but it does not prevent the misuse of the system by money launderers who have legitimate access to the system
References:
1: Anti-Money Laundering Guide for Digital Banks by sanctions.io, 2022
2: The fight against money laundering: Machine learning is a game changer by McKinsey, 2021
3: FATF Guidance on Digital Identity, 2020
What are two sources for maintaining up-to-date sanctions information? (Choose two.)
U.S. Federal Bureau of Investigation's National Security Letters
U.S. Department of the Treasury Office of Foreign Assets Control
U.S. Department of the Treasury ?Section 311 ?Special Measures
Financial Action Task Force's list of High Risk and Non-Cooperative Jurisdictions
The U.S. Department of the Treasury Office of Foreign Assets Control (OFAC) administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals. OFAC publishes lists of individuals and entities that are subject to various sanctions programs, such as the Specially Designated Nationals and Blocked Persons List (SDN List), the Sectoral Sanctions Identifications List (SSI List), and the Foreign Sanctions Evaders List (FSE List). These lists are updated frequently and can be accessed through OFAC's website or other sources 12.
The Financial Action Task Force (FATF) is an inter-governmental body that sets standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. FATF publishes lists of jurisdictions that have strategic deficiencies in their anti-money laundering and counter-terrorist financing (AML/CTF) regimes, and calls on its members and other countries to apply enhanced due diligence or counter-measures to protect themselves from the risks emanating from these jurisdictions.
These lists are updated periodically and can be accessed through FATF's website or other sources 34.
References:
1: CAMS Certification Package - 6th Edition | ACAMS, Chapter 3: Sanctions, p. 63-64 2: U.S. Department of the Treasury Office of Foreign Assets Control, (https://home.treasury.gov/policy-issues/financial-sanctions)
3: CAMS Certification Package - 6th Edition | ACAMS, Chapter 4: FATF Recommendations, p. 77-78 4:Financial Action Task Force, (http://www.fatf-gafi.org/countries/#high-risk)
https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_lists.aspx#search
Which method do terrorist financiers use to move funds without leaving an audit trail?
Extortion
Cash couriers
Casa de cambio
Virtual currency
Cash couriers are individuals who physically transport cash or other monetary instruments across borders or within a country, often to avoid detection by authorities or reporting obligations. Cash couriers are a common method used by terrorist financiers to move funds without leaving an audit trail, as cash is anonymous, portable, and widely accepted 12.
References:
1: ACAMS CAMS Certification Video Training Course, Module 4: Terrorist Financing, Section 4. 2: Methods of Terrorist Financing, Slide 9 2: ACAMS CAMS Certification Study Guide, 6th Edition, Chapter 4: Terrorist Financing, Page 97 Reference: (https://www.fatf-gafi.org/media/fatf/documents/reports/FATF%20Terrorist%20Financing%20Typologies%20Report.pdf(24)
Trusts established in certain offshore jurisdictions make good vehicles to lay under money for which ofthe following reasons?
Names of the settlor and beneficiaries are into publicly available.
Trusts are typically set up to minimize taxes.
Offshore jurisdictions are unfamiliar with trust.
Trusts may hold assets of significant size.
it describes a reason why trusts established in certain offshore jurisdictions make good vehicles to layer money, which is names of the settlor and beneficiaries are not publicly available. This means that the true owners and controllers of the funds or assets held by the trust are hidden from the public and the authorities, and can only be accessed by the trustee or the protector, who may be complicit or unaware of the money laundering scheme. This creates a high level of anonymity and secrecy for the money launderers, who can use the trust to move, disguise, or conceal the origin and destination of their illicit funds. The other options are not necessarily reasons why trusts established in certain offshore jurisdictions make good vehicles to layer money, although they may have some advantages or disadvantages depending on the circumstances and the risk profile of the customers and countries involved.
Option B describes a possible motive for setting up a trust in an offshore jurisdiction, which is to minimize taxes, but this does not imply that the trust is used to layer money, as there may be legitimate tax planning or optimization purposes.
Option C describes a possible challenge or obstacle for setting up a trust in an offshore jurisdiction, which is offshore jurisdictions are unfamiliar with trust, but this does not imply that the trust is used to layer money, as there may be other legal or financial vehicles available in those jurisdictions.
Option D describes a possible characteristic or feature of a trust, which is trusts may hold assets of significant size, but this does not imply that the trust is used to layer money, as there may be valid reasons or sources for the large assets.
References:
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 4, pages 86-87 (https://www.acams.org/wp-content/uploads/2019/09/ACAMS-CAMS-Study-Guide-6th-Edition-Chapter-4.pdf)
An anti-money laundering specialist has been asked to establish a compliance program to detect and prevent money laundering and terrorist financing. Which of the following should the anti-money laundering specialist consider in developing the program?
1. Funds for money laundering and terrorist financing are derived from illegal sources.
2. Related practices are used to conceal the nature of the funds.
3. The source and disposition of funds are similar.
4. Similar techniques are used to move funds.
1 and 2 only
1 and 3 only
2 and 4 only
3 and 4 only
Money laundering and terrorist financing are both forms of financial crime that involve the movement of illicit funds. However, they differ in the source and purpose of the funds. Money laundering is the process of disguising the origin, ownership, or destination of funds that are derived from illegal activities, such as drug trafficking, fraud, or tax evasion. Terrorist financing is the provision or collection of funds, by legitimate or illegitimate means, for the purpose of carrying out terrorist acts. Therefore, the anti-money laundering specialist should consider the following factors in developing a compliance program: Related practices are used to conceal the nature of the funds. Both money launderers and terrorist financiers use similar methods to hide the true identity, source, or destination of the funds, such as using shell companies, front organizations, complex transactions, cash couriers, or cryptoassets. A compliance program should include measures to identify and verify the customers, beneficial owners, and counterparties involved in the transactions, as well as to monitor and report any suspicious or unusual activities.
Similar techniques are used to move funds. Both money launderers and terrorist financiers use the same stages of placement, layering, and integration to move funds through the financial system. Placement is the introduction of illicit funds into the legitimate financial system, such as by depositing cash, purchasing assets, or transferring funds electronically. Layering is the separation of the funds from their source, such as by using multiple accounts, jurisdictions, or intermediaries. Integration is the re-entry of the funds into the legitimate economy, such as by investing in businesses, real estate, or securities. A compliance program should include measures to detect and prevent the movement of illicit funds through the financial system, such as by applying risk-based due diligence, record-keeping, and transaction limits.
References:
CAMS Certification Package - 6th Edition | ACAMS
CAMS Certifications: How to Get CAMS Certified | ACAMS
Exam CAMS: Certified Anti-Money Laundering Specialist (the 6th edition)
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