What is an essential element of Know Your Customer (KYC) standards according to the Basel Committee'sCustomer Due Diligence for Banks paper?

The same KYC requirements must be applied in all cases

All completed KYC documents must be reviewed by a senior manager not involved in the account opening process

A foreign bank operating under an offshore license wants to open a correspondent account with a UnitedStates (U.S.) bank. The foreign bank plans to provide payable through account services to some of its customers.What must the foreign bank provide to the U.S. bank under the USA PATRIOT Act?

The person in the United States who can receive service of legal process for the correspondent bank

A list of politically exposed persons who are owners of the correspondent bank

A list of account holders at the financial institution who will use the payable through account

The person in the United States who can receive service of legal process for the correspondent bank

A list of anti-money laundering training records for the financial institution employees monitoring payable through account transactions

An institution has made the decision to exit a client relationship due to anti-money laundering concerns. Prior to starting the close out process, the institution receives a written request from a law enforcement agency to keep the account open. The client is the subject of an ongoing investigation and law enforcement wants the institution to continue to monitor the account and report any suspicious activity.What is primary consideration the institution should keep in mind when deciding whether to agree to this request?

Whether the institution can continue to meet its regulatory obligations with the accounts open

The anticipated cost of complying with the law enforcement request

The number of suspicious transaction reports previously filed on the client

The fact that the institution has a solid record in complying with law enforcement requests

Whether the institution can continue to meet its regulatory obligations with the accounts open

An immigrant residing in the United States opens a bank account that includes a debit card. Several months later, the transactional monitoring system identifies small deposits into the account followed by corresponding ATM withdrawals from a country bordering a conflict zone.How should the bank respond?

File a suspicious transaction report

Initiate an investigation into the activity

Contact the customer if the transaction activity continues

A customer living in a high-risk jurisdiction makes frequent, large cash deposits at a bank. The same customer sends small wire transfers to unrelated parties in other high-risk jurisdictions.What are two red flags that may indicate money laundering? (Choose two.)

Wire transfers are to high-risk jurisdiction

Large cash deposits are from a high-risk jurisdiction

The client resides in a high-risk jurisdiction

Wire transfers are to high-risk jurisdiction

Large cash deposits are from a high-risk jurisdiction

A retail bank has just acquired a credit card business. The bank's anti-money laundering policy requires that new employees are trained within 30 days of their hire date and refresher training is delivered to all employees on an annual basis.Is the bank's existing anti-money laundering training adequate to be delivered to employee of the newly acquired credit card business?

No, anti-money laundering training needs to be tailored and focused on the risks specific to the business.

Yes, the existing training covers the bank's policies, procedures, and processes.

No, anti-money laundering training needs to be delivered face-to-face for credit card businesses.

No, anti-money laundering training needs to be tailored and focused on the risks specific to the business.

Yes, the existing training covers the anti-money laundering regulations that the bank is required to follow.

Why do governments and multi-national bodies impose economic sanctions?

To enforce foreign policy objectives

To combat an imminent terrorist threat

To prevent fraudulent international trade transactions

In reviewing recent activity, a compliance officer for a money transmitter that several customers are each remitting the same amount of money but much more frequently.How should the institution respond?

Conduct further investigation to determine whether this is truly suspicious activity

File a suspicious transaction report

Instruct the tellers not to process remittances for these customers in the future

Conduct further investigation to determine whether this is truly suspicious activity

Immediately contact the customers and ask them why they are remitting money more often

In the summer, an institution identifies anti-money laundering concerns regarding a customer's account activity. The customer, an ice cream, has deposited a lot of checks drawn on banks in foreign countries, sent large number of high dollar international wires to different countries, made cash deposits of a few hundred dollars every few days and written multiple checks for a few hundred dollars to the same dozen payees every two weeks.Which two transaction types warrant investigation? (Choose two.)

Checks drawn on banks in foreign countries

Repeated checks to the same payees

Checks drawn on banks in foreign countries

Which three methods are commonly used by an accountant to launder money? (Choose three.)

Overstating income to hide excess cash

Acting as a conduit for transferring cash between accounts

Acting as a designee for someone who wishes to hide their identity

Understanding income to take a tax loss

Overstating income to hide excess cash

Acting as a conduit for transferring cash between accounts

Acting as a designee for someone who wishes to hide their identity

A bank located in Arizona is considering a loan application for a new client. The collateral for the loan is a property in Florida.The loan will be in the name of a limited company (LLC) whose ownership is not disclosed to the bank. TheLLC was established by a New York-based attorney.The loan will be repaid by the LLC in monthly wire transfers of $9,000 which is more than the required monthly payment.Which aspect indicates potential for money laundering?

The LLC's ownership is not disclosed to the bank

The repayment in the amount of $9,000 indicates potential structuring

The LLC's ownership is not disclosed to the bank

The collateral, a property in Florida, is not located in Arizona

The repayment in the amount of $9,000 indicates potential structuring

The attorney associated with the account is outside the bank's lending area

What is a key risk associated with Correspondent Accounts according to the Basel Customer Due Diligence paper?

The respondent bank's customer acceptance and know your customer policies are ineffective

It is not used on a daily basis

The service fees are insufficient to cover the cost of managing the account

The respondent bank's customer acceptance and know your customer policies are ineffective

The volume and value of transactions passing through the account may not be in line with the original correspondent agreement

A law enforcement agency is reviewing a suspicious transaction report (STR) filed by a financial institution for suspicious activity on a client's account. Subsequently, the agency requests further information.Which supporting documentation might the law enforcement agency request from the institution to facilitate its investigation?

Account opening documents and account statements

Previously filed STRs on the same customer

Account opening documents and account statements

Copies of promotional materials sent to the customer

A copy of the institution's STR policy and procedures

A new compliance officer is reviewing the bank's anti-money laundering program and notices that the risk assessment was completed six months ago. Since that time, the bank acquired another financial institution, renamed the internal records group, and streamlined cash handling procedures.Which factor causes the compliance officer to update the bank's risk assessment?

The bank acquired another institution

The internal records group has been re-named

The cash handling procedures were streamlined

The risk assessment was completed six months ago

The Wolfsberg Anti-Money Laundering Principles for Private Banking require new clients to be approved by whom?

At least one person other than the private banker

The private banker's supervisor

At least one person other than the private banker

Which two factors should increase the risk of a correspondent bank customer and require additional due diligence according to the Wolfsberg Anti-Money Laundering Principles for Correspondent Banking? (Choose two.)

The customer is located in a Financial Action Task Force member country and provides services primarily to a local individual customer.

The customer is located in a Financial Action Task Force member country and the bank's head of information security is a politically exposed person.

The customer is located in a Financial Action Task Force member country and provides services to other correspondent banks in neighboring countries.

The customer is located in a non-Financial Action Task Force member country and services mostly commercial customers who engage in international trade.

In which two ways does a government Financial Intelligence Unit interact with public and private sectors?(Choose two.)

It receives and analyzes disclosures filed by financial and non-bank institutions

It disseminates information and the results of its analysis to competent authorities

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

What do Financial Action Task Force (FATF)-style regional bodies do for their members to help combat money laundering and terrorist financing?

They provide technical assistance to members in implementing FATF recommendations

They assist member countries in penalizing entities that violate FATF standards and recommendations

They work with members on areas of concern outside of anti-money laundering and terrorist financing

They supervise member country financial institutions relating to anti-money laundering and terrorist financing

What are the regulatory risks to a bank employee who willfully violates anti-money laundering laws?

Criminal investigation and imprisonment

Investigation and reputational damage

Fines and suspension from the industry

Criminal investigation and imprisonment

Enforcement actions including fines against the financial institution

What are two requirements with respect to supporting documentation that is used to identify potentially suspicious activity, according to Financial Action Task Force? (Choose two.)

It must be retained for at least five years

It must be kept in a manner so that it can be provided promptly

It must be retained for at least five years

It must be retained for at least seven years

It must be kept in a manner so that it can be provided promptly

It must only be released to the government through a subpoena process

What are two reasons physical certificates present a money laundering risk to broker-dealers? (Choose two.)

The trade information on a physical certificate can be easily altered

Physical certificates may be provided to nominees for deposit or settled in off-market transactions

The trade information on a physical certificate can be easily altered

Physical certificates do not expire and may be held by the owner for perpetuity

There is little information readily available to the broker confirming the source of the funds

Physical certificates may be provided to nominees for deposit or settled in off-market transactions

An automotive parts company in South America sends multiple $500,000 wire transfers per week to ABCHoldings Ltd. in Asia referencing payment for silk flower shipments. Research reveals Sunrise Holdings, Ltd is registered in the British Virgin Islands with no available ownership information.What are two red flags that indicate how trade-based money laundering could be occurring in this instance?(Choose two.)

The transaction involves the use of front (or shell) companies

The type of commodity being shipped appears inconsistent with the exporter or importer's regular business activities

The transaction involves the use of front (or shell) companies

The packaging is inconsistent with the commodity or shipping method

Significant discrepancies appear between the description of the commodity on the bill of lading and the invoice

The type of commodity being shipped appears inconsistent with the exporter or importer's regular business activities

To ensure the independence of an audit for an AML program those involved in the audit would best be described as being:

not Involved in the organizations AML compliance program and having a reporting line to the board of directors or committee thereof

not involved in the organizations AML compliance program and having a reporting line to the organization's Chief Executive Officer

not involved in the organization's suspicious activity report filing process and having a reporting line to the board of directors or committee thereof.

not involved in the organization's suspicious activity report filing process and having a reporting line to the organization's Chief Executive Officer

The branch manager calls the compliance officer and informs her that a law enforcement officer has just left the branch and was asking a lot of QUESTIO N N O:s and left a business card.What should the compliance officer do?What should the compliance officer do?

Verify that the reported officer was an actual authorized representative

File a suspicious transaction report

Follow up to verify that the officer received all necessary information

Verify that the reported officer was an actual authorized representative

Require the branch manager to write a detailed memo about the request

What is a major economic consequence of money laundering through the use of front companies?

Weakening of the legitimate private sector

Placing more emphasis on manufacturing

Weakening of the legitimate private sector

Creating a more competitive pricing environment

Aligning management principles between criminal enterprises and legitimate businesses

An institution is about to release a new peer to peer (P2P) funds transfer product to provide much needed remittance services to an under-banked population segment in the country.The service allows customers to transfer funds through a mobile banking application to individuals worldwide entering only a name and mobile number. The new service charges less than comparable market solutions and offers real time transfer of funds. The customer onboarding process is conducted at branch locations with identity verification.Which three present the highest anti-money laundering or sanctions risk and will require controls prior to launch? (Choose three.)

Limited access to counterparty information

Servicing the under-banked population

Limited access to counterparty information

What is true regarding disclosure to a law enforcement agency by a financial institution of the supporting documentation for a suspicious transaction report?

Confirm that the request originated from a representative of the law enforcement agency

Documentation must be provided as quickly as possible using email

The financial institution may notify the account holder of the request

Confirm that the request originated from a representative of the law enforcement agency

A copy of all the documentation released must also be provided to the account holder's attorney

As a result of an audit, a policy exception was identified that had been approved by the compliance officer.The auditor determined that the policy exception is a violation of a regulatory requirement.What should the auditor do?

Include the regulatory violation in the audit report and report it to the board of directors.

Advise the compliance officer on how to appropriately respond to policy exceptions.

Include the regulatory violation in the audit report and report it to the board of directors.

Consult with legal counsel to determine if the approval of the policy exception was acceptable.

Include the regulatory violation in the audit report and recommend the compliance officer be subject to disciplinary action by the board of directors.

A foreign politically exposed person (PEP) requests to add a beneficiary to a file insurance policy.How should the request be processed to mitigate risk?

Perform due diligence on the beneficiary

Determine the source of wealth and source of funds

Decline the request if the beneficiary is a foreign PEP

Decline the request to add a beneficiary due to increased risk

Which requirement is included in the Fourth European Union Directive on money laundering?

It requires member countries to maintain registries of the beneficial owners of legal entities

It requires obliged entities to consider politically exposed persons as high risk for life

It requires obliged entities to conduct enhanced due diligence on all prepaid card holders

It requires member countries to maintain registries of the beneficial owners of legal entities

It requires member states to enact economic sanctions against countries that do not cooperate with Financial Action Task Force recommendations

A bank maintains a relationship with a customer who owns a small bakery business.Which customer action indicates potential money laundering?

The customer purchased property insurance that is twice the value of the business

The customer continually makes regular cash deposits

The customer has multiple bank accounts at several locations

The customer purchased property insurance that is twice the value of the business

The customer recently wired a large amount to a foreign jurisdiction where family is located

A U.K. real estate agent has three foreign clients interested in purchasing an apartment building, valued at 30million, in the outskirts of London as an investment property. The clients are not willing to have their names provided to the bank. The clients want to purchase to be made in the names of three private companies for privacy reasons. The plan is to wire the funds into an account held in the name of another private company at a bank in London.Which red flag should stop the agent from discussing this potential purchase further?

The clients are not willing to have their names provided to the bank

The clients have the funds necessary to fund a 30 million purchase

The clients are not willing to have their names provided to the bank

The clients want to purchase to be made in the names of the private companies

What is a key objective of the Egmont Group?

To find ways to promote the development of Financial Intelligence Units and the sharing of expertise.

To safeguard the financial system from illicit use and combat money laundering and promote national security.

To issue binding standards that establish consistently operated Financial Intelligence Units in member jurisdictions.

To provide best practices for financial institutions on how to report suspicious activity to best share the information with law enforcement.

The compliance officer for a bank is reviewing on-boarding documents for a new business account for a domestic corporation. The officer is unable to verify the identity of the beneficial owners of the company. Only information on the nominee owners was provided, and none of the listed addresses are local. The purpose of the business and future expected activity were disclosed to include cash letters, money orders and international remittance transfers.Which red flag identifies a heightened money laundering risk?

The names provided at account opening are identified as the corporation's representative nominees

Expected activity was advised to include cash letter and money orders

The nature and purpose of the business include international remittance transfers

The names provided at account opening are identified as the corporation's representative nominees

Account signer's government issued identification lists addresses outside of where the branch account was opened

Law enforcement submitted a request to a bank for information regarding one of its customers.How should the bank respond according to Financial Action Task Force Guidance?

Ensure that the request will not violate any local privacy regulations or legislation

Provide all information requested to support the investigation

Ensure that the request will not violate any local privacy regulations or legislation

Ensure the information is necessary to the investigation before responding to the request

Contact the customer informing the person of the investigation to ensure the bank provides correct information

How should a financial institution respond to a verbal request from a law enforcement agency to keep an account open to assist in an investigation?

Request a letter on the agency's letterhead

Request a subpoena to maintain the account

Request a letter on the agency's letterhead

Request a search warrant from the local court

A bank operates in multiple countries and offers a variety of products and services. The compliance officer recently joined the bank and wants to better understand the inherent level of anti-money laundering risk across the entire organization.Which two factors should be considered? (Choose two.)

Countries that the bank operates in

Products and services offered by the bank

The Transaction Monitoring program

The Customer Due Diligence program

Countries that the bank operates in

Products and services offered by the bank

A bank is preparing for its anti-money laundering independent review, which is performed every two years under the direction of the compliance officer. The bank's corporate audit department will conduct the review.The compliance officer will review the final report before it is released to the Board of Directors.What is the issue with this situation?

The final report must be presented directly to the board of directors

Independent reviews must be performed annually

The review must be performed by a group outside of the bank

The final report must be presented directly to the board of directors

There is a conflict of interest with the management of the review process

ACAMS CAMS Practice Test 2 - Free Online Exam Prep & Questions

Question 1 / 40

Which insurance product is particularly vulnerable to money laundering?

Annuity

Casualty

Collateral

Regulated pension

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