An individual opened an account with a minimal cash deposit at a financial institution. He presented a foreign passport and stated he would be working locally for a few months. He also requested information about making electronic fund transfers. The institution was subsequently unable to verify the employment or residence information provided by the individual. Soon after this, a large transfer was sent to the customer's account. Which of the following is the course of action recommended by the Basel Committee on Banking Supervision's Customer Due Diligence for Banks?

Implement enhanced due diligence procedures to monitor the account for suspicious activity.

Post the deposit to the account and notify the customer that the deposit has been made.

Implement enhanced due diligence procedures to monitor the account for suspicious activity.

Close the account and return the funds to the source from which they were received.

End the relationship by sending a check (cheque) to the customer for the full amount in the account.

The most effective tool used to detect structured transactions is

A software program that can link apparently unrelated transactions.

Verification of the source of funds.

A comprehensive account-opening procedure.

An employee training program to detect suspicious transactions.

A software program that can link apparently unrelated transactions.

An anti-money laundering specialist at a large institution is responsible for informing senior management about the status of the anti-money laundering program across the organization. The global institution handles retail banking, commercial banking, global markets, private banking and has an affiliated securities dealer. The specialist and the team provide corporate strategic direction to these areas on anti-money laundering related subjects. The following information is reported to executive management on a regular basis:* Total number of suspicious transactions identified and reported* Suspicious transaction trends* Training that has occurred for the various units* Status report on the anti-money laundering regulatory environment* Summary of exception reportsWhich of the following additional elements is the most useful?

Results of related audits and examinations.

The total credit exposure for non-cooperative countries and territories.

Results of related audits and examinations.

Details on inquiries received from law enforcement.

Notification of management changes in the different major divisions.

Historically, which of the following vehicles is most often used to hide beneficial ownership?

a limited liability partnership

According to the Financial Action Task Force 40 Recommendations, to fulfill identification requirements concerning legal entities, financial institutions should take measures to verify

the legal existence and ownership structure of the legal entity.

the financial status of the legal entity through documented proof of the entity's other banking relations.

a person purporting to act on behalf of the legal entity who is a resident in a country with strict secrecy laws.

the legal existence and ownership structure of the legal entity.

funds or trusts maintained by terrorists.

According to Basel Committee on Banking Supervision guidelines, which of the following statements best describes the relationship between the internal audit function and compliance?

The internal audit methodology should include an assessment of compliance risk.

An internal audit program of adequacy of the bank's compliance function should be es-tablished, but should not include review of transactions.

The compliance function and internal audit function should be combined.

The auditors should not discuss internal audit findings with compliance management to maintain independence.

A financial institution recently purchased anti-money laundering software. The software routinely generates more alerts than the anti-money laundering staff can properly analyze as a result of limited staffing. These alerts are generated by default software rules. Which of the following should the individual responsible for setting the anti-money laundering software parameters recommend?

Ensure alert parameters are based on risk.

Reset software parameters to reduce risk sensitivity.

Disable the software until more staff are trained to process alerts.

Ensure alert parameters are based on risk.

Adjust software parameters so the number of alerts decrease gradually.

An internal review of anti-money laundering training documentation revealed only new agents employed by a financial institution that sells life insurance products were trained. Additionally, it typically took the institution 8 months to begin training for new actuaries. The compliance officer explained training was limited to actuaries because they perform the only high-risk function. The institution relied on e-learning techniques without follow-up assessment.Which of the following issues would the internal review most likely recommend?

Pro duct-specific anti-money laundering training should be provided company-wide.

All staff, apart from the Board of Directors, must be trained.

Pro duct-specific anti-money laundering training should be provided company-wide.

The institution must provide anti-money laundering training to actuaries within 6 months.

Continue using e-learning to emphasize anti-money laundering content during training.

A financial institution accepts new on-line customers. After customers have provided acceptable identification, the institution should next

Confirm the validity of the customer information.

Obtain an electronic picture of each customer.

Closely monitor the account for 30 days.

Establish the account based on the information provided.

An alert has been triggered by a monitoring system and an investigation has been opened. The activity involves significant and multiple cash deposits into a personal account and transferring funds to an offshore bank on the same day. Further investigation reveals this personal account had experienced low levels of activity for the past 6 months and funds are transferred to the account of a charitable organization. Which of the following is the next step that the Compliance Officer should take?

File a suspicious transaction report with the competent authority.

Prohibit further transactions with the charitable organization.

Conduct enhanced due diligence on the charity's trustees.

Place the charitable organization on the bank's internal 'watchlist.'

File a suspicious transaction report with the competent authority.

A client has retained a lawyer to create a financial holding company. The lawyer resides in Europe. The client provides all requested documentation to the lawyer. However, the lawyer becomes suspicious that the customer is engaged in criminal activity and intends to use the financial holding company for money laundering purposes. Which of the following should an anti-money laundering specialist recommend according to the European Union Money Laundering Directives?

Report the activity as suspicious to the competent authority because the lawyer is covered by these directives.

There is no need to file a suspicious transaction report, as this activity is covered by attor-ney-client privilege.

Freeze the client's assets so that all records can be turned over to the competent authori-ties.

Report the activity as suspicious to the competent authority because the lawyer is covered by these directives.

Consult with the competent authority to receive advice on how to handle the transaction.

Can trading in antiques be useful for money laundering?

Yes, because cash is often physically hidden within the antiques themselves.

No, because the antiques market is rather small and unusual transactions would draw at-tention.

No, because antique sales and purchases are highly regulated worldwide.

Yes, because cash is often physically hidden within the antiques themselves.

Yes, because antiques can be of high value and often easily transported.

A relationship manager in a bank has had a private banking customer for 10 years. The customer has business accounts and investments and seeks advice on the creation of a company overseas. The relationship manager refers the customer to the commercial banking manager and vouches for the customer. Which of the following risk factors is the most important?

The proposed offshore jurisdiction is known for its strong privacy laws limiting access to customer information by law enforcement.

The customer does not want to provide more information than when the first account was opened.

The company wants to transfer funds in large, even amounts.

Entities that are to receive funds from this company are located in the same country.

Suspicious activity triggered a suspicious transaction report filing on a company that holds an account at a large commercial bank. Investigations revealed that a member of the bank's Board of Directors is the major shareholder of the company. Further review revealed the bank had no reasonable explanation for the activity, but could not confirm if criminal activity occurred. Which of the following is the next best course of action for the compliance officer?

Include a detailed presentation of this case in the Board report.

Prevent the suspicious transaction report from government filing.

Ask the Board member to explain the transaction.

Maintain standard summary statistical reporting to the Board.

A financial institution opens a mortgage loan for a customer. During a subsequent internal review of the loan, it was noted that the appraisal used to support the loan was performed by an appraiser who was not on the institution's approved appraiser list. This exception was approved by the senior loan underwriter. The reviewer, who had examined other loans from the same general area, noted that the value on the loan appeared significantly higher than on other comparable properties. Which of the following should the anti-money laundering specialist recommend next?

Document the underwriter's actions prior to filing a suspicious transaction report.

Determine whether the loan underwriter reviewed the appraiser's license for validity.

Alert local law enforcement regarding a potential collusive relationship between the un-derwriter and appraiser.

Document the underwriter's actions prior to filing a suspicious transaction report.

Train the appraiser on anti-money laundering compliance for high-end real estate loans.

A school teacher recently opened a private banking account with a major bank. The customer indicated annual income of EUR 45,000 and listed her source of wealth as a EUR 1.5 million inheritance from relatives. The customer plans to invest EUR 12,000 to 15,000 earned annually from bearer bonds. The relationship manager verified the client's identity and documented all of the above information in the account file before opening the account. During a routine review of the account, several electronic fund transfers in excess of EUR 5 million each were made from a diamond distributor. The relationship manager also noticed that in each instance, the customer immediately transferred the funds to bank accounts in Hong Kong. Which of the following is appropriate for the anti-money laundering specialist to recommend?

Contact the competent authority and local law enforcement.

Arrange a meeting between the customer and legal department.

Contact the competent authority and local law enforcement.

Suspend further customer transactions through the bank.

Investigate the source and purpose of the transactions.

Which of the following poses the greatest money laundering risk for a financial institution offering on-line services to customers?

There is greater difficulty in matching the customer with the provided identification doc-umentation.

There is no human scrutinizing the customer's transactions, thus increasing the potential for large transactions.

Institutions offering on-line services have no possibility to properly verify the identity of their customers.

Customers can directly access their accounts without being detected.

Which of the following activities is most likely associated with a lawyer participating in a money laundering scheme?

Creates corporate entities to disguise true beneficial ownership of clients.

Frequently travels to countries considered tax havens.

Engages clients with high-net worth in foreign countries.

Represents persons accused of crimes against financial institutions.

Creates corporate entities to disguise true beneficial ownership of clients.

Which of the following is the main reason Internet gambling is an ideal web-based money laundering method?

Ability to transfer value across jurisdictions.

Ease of connection and low subscription rate with major Internet service providers.

High credibility of gambling websites.

Ability to transfer value across jurisdictions.

Large number of offshore websites located in known high-crime areas.

When a regulatory body requires international assistance in a money laundering inquiry, such assistance is typically obtained by

Filing a request under Egmont guidelines.

Submitting a request for overseas assistance to the corresponding supervisory body.

Contacting the Financial Action Task Force, Organization for Economic Co-operation and Development, or other international organizations and seeking their intervention.

Communicating with the Head of Compliance for the financial institution.

Which of the following customer activities poses the highest risk of money laundering?

Making multiple cash deposits slightly below a required reporting limit.

Transferring funds to pay for flight training lessons.

Paying a supplier of precious metals at regular quarterly intervals.

Making multiple cash deposits slightly below a required reporting limit.

Conducting business in a country that represents a high risk of money laundering.

a personal banking customer who simultaneously opens several accounts will most likely cause further inquiry in which of the following scenarios?

Accounts with almost identical names.

A personal account and a corporate account.

An individual account and a joint spousal account.

Accounts with almost identical names.

A checking and a savings account.

Which of the following activities conducted at a financial institution is the strongest example of avoiding reporting thresholds?

Conducting small cash transactions at multiple locations during the same day.

Making small cash deposits over the course of a week.

Performing transactions by check (cheque) or other payment instrument.

Conducting small cash transactions at multiple locations during the same day.

Establishing both a personal and business account and depositing cash in both.

Which of the following is considered a shell bank as defined by the USA PATRIOT Act?

A bank incorporated in an offshore jurisdiction without a physical presence or employees.

An Internet bank operating in the U.S. providing services worldwide.

A local bank with offices in a non-cooperative jurisdiction which is subject to minimal regulatory supervision.

A bank run by a foreign holding company with offices and staff in an offshore jurisdic-tion.

Which of the following is among the Financial Action Task Force criteria defining non-cooperative countries and territories?

inadequate rules for the licensing and creation of financial institutions, including assessing backgrounds of managers and beneficial owners

effective laws regarding multiple sources of beneficial owner identification by a financial institution

the presence of bank secrecy provisions reasonably balanced against the government's need for information

the establishment of a system for reporting 'unusual' transactions, instead of 'suspicious', as mentioned in the Financial Action Task force 40 Recommendations

Which of the following facilitates law enforcement agents obtaining evidence from authorities in a foreign country relating to criminal activity?

Mutual Legal Assistance Treaties

USA PATRIOT Act Communications System

The World Wide Network of Information Sharing

The International Agreement for Mutual Assistance

A customer runs an export business for agricultural products. There has been steady growth over the years from sales to the Caribbean region. A sudden increase is noted in this customer's account balances during the last month.On what grounds should an anti-money laundering specialist prepare a suspicious transaction report?

Travelers checks (cheques) were purchased for trips to a Non-Cooperative Countries and Territories.

The increased activity is due to money order deposits.

Wire transfers are coming from a Financial Action Task Force member country.

The client changed his address without advising the institution.

Travelers checks (cheques) were purchased for trips to a Non-Cooperative Countries and Territories.

Which activity is most likely to facilitate money laundering through on-line banking systems with inadequate controls?

Conducting anonymous transactions

Conducting a large volume of transactions

Providing continuous worldwide access

Conducting anonymous transactions

Conducting large value transactions

A financial institution in a jurisdiction with currency reporting thresholds is undergoing a branch office compliance review. A large number of currency transactions in amounts exceeding a reporting threshold were discovered without a currency transaction report (CTR) being filed. The transactions were handled by the same teller (cashier). This teller (cashier) was recently hired and had not received anti-money laundering training yet. The branch manager received daily exception reports of all large currency transactions as well as a report of all CTR filings. Which of the following should the compliance officer recommend as the initial action?

An audit should be conducted for cash transactions since the last compliance review.

Terminate the teller's (cashier's) employment prior to the expiration of the probation peri-od.

An audit should be conducted for cash transactions since the last compliance review.

The branch manager should be formally reprimanded for failing to ensure proper instruc-tion was given.

The teller's (cashier's) employment should be suspended with pay pending appropriate training.

On-line financial technologies are susceptible to money laundering risk because

The identity of the people who conduct transactions may be unknown.

Viruses significantly damage communications and commerce.

The risk of identity theft is greatly increased.

The identity of the people who conduct transactions may be unknown.

Baring staff are familiar with how this technology can be abused.

A financial institution's monitoring system triggers an alert and an internal investigation has confirmed the activity as suspicious. Which of the following should an anti-money laundering specialist do before submitting the suspicious transaction report?

Secure documents related to the suspicious circumstances and the decision to report.

Check with other financial institutions in accordance with the relevant law.

Add information related to the suspicious activity to the customer's account-opening file.

Contact the customer for further information without disclosing the suspicion.

ACAMS CAMS Practice Test 14 - Free Online Exam Prep & Questions

Which of the following is the most likely reason for the Financial Action Task Force to remove a jurisdiction from the Non-Cooperative Countries and Territories list?

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