A compliance officer identifies a potentially significant risk in a popular financial product. Further investigation reveals there is no mitigating control.Which course of action should the compliance officer take?

Implement a temporary mitigation that enables effective management of the risk until a permanent plan can be developed

Launch a long-term project to remediate the control deficiency

Note the risk and address it during the next round of policy and procedure review

Immediately cease providing the product and only offer it after effective permanent mitigation is implemented

Implement a temporary mitigation that enables effective management of the risk until a permanent plan can be developed

Which factor should a bank consider before sharing information about a customer with its broker-dealer affiliate in the case of an investigation?

Whether privacy and data protection rules permit the bank to share the information with the affiliate

Whether the broker-dealer affiliate can rely on the due diligence done by the bank

Whether there is a mutual legal assistance treaty in place between the two institutions

Whether privacy and data protection rules permit the bank to share the information with the affiliate

Whether both institutions have an account or are in the process of opening an account for the customer

In which situation can money laundering adversely affect a country's currencies and interest rates due to launderers investing dirty funds?

They invest in a way to hide funds rather than get a high rate of return

They invest in high risk ventures with high rates of return

They invest in legitimate companies as a way of making their funds appear to be legitimate

They invest in shell companies in secrecy havens that intentionally manipulate rates

They invest in a way to hide funds rather than get a high rate of return

What types of things should an institution incorporate in it AML policies and procedures? Choose 3 answers

On-going training, as well as initial training of new employees

Periodic audits, to be performed by independent staff at least once a year

Ability to incorporate relevant legislative and regulatory AML changes

On-going training, as well as initial training of new employees

Periodic audits, to be performed by independent staff at least once a year

Ability to incorporate relevant legislative and regulatory AML changes

Review of the AML policy by the Board of Directors

What three attributes do havens for money laundering and terrorist financing typically have? Choose 3 answers

Limited types of institutions and persons covered by money laundering laws and regulations

Little enforcement of the laws, weak penalties or provisions that make it difficult to confiscate or freeze assets related to money laundering

Limited types of institutions and persons covered by money laundering laws and regulations

Little enforcement of the laws, weak penalties or provisions that make it difficult to confiscate or freeze assets related to money laundering

A large number of predicate crimes for money laundering

In establishing procedures for the review of suspicious transactions and filling of STRs, what thing should an institution focus on?

The appropriateness of having a centralized review of suspicious transactions and recommendations to file an STR to ensure consistency

The need to have on-going training as to potential red flags that the institution might encounter

The appropriateness of having a centralized review of suspicious transactions and recommendations to file an STR to ensure consistency

A system for tracking STRs and ensuring that appropriate supporting documentation is segregated and maintained

The need not to ensure that the institution has a strong case of impropriety before filling an STR

Which function provided by lawyers can be useful to a potential money launderer as documented by FATF in its typology report 2000-2001? Choose 3 answers

Creating complex legal arrangements

Performing financial transactions on behalf of a client

Creating complex legal arrangements

Performing financial transactions on behalf of a client

When an institution receives a document request from law enforcement with regard to an STR that the institution has filed, what should institution do?

It should turn over the documents that were previously collected to support the STR

It should request a written subpoena or court order before turning over any documents

It should have its outside counsel review the request and the documents before doing anything

It should politely decline to provide the requested documents until the law enforcement agency can explain the nature and purpose of its inquiry

Which method is indicative of potential money laundering and terrorist financing activity?

An unknown client pays $1,000 in cash for an urgent transfer to a high risk country

Client converts 500 Euro in mixed denomination notes to small denomination U.S. bills in a single transaction

A commercial client in the export business regularly receives wire transfers from high risk countries

An unknown client purchases multiple monetary instruments for one person during the course of one day

An unknown client pays $1,000 in cash for an urgent transfer to a high risk country

Historically, which vehicle is most often used to hide beneficial ownership?

A limited liability partnership

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

The speed of electronic transaction enables execution of multiple complex transactions within short time frame

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

To what extent should senior management and the Board of Directors be involved in the filing of any STR?

They should be informed of all significant STRs and the numbers and trends of the filings

They should be given copies of all STRs filed by the institution

They should review and approve the filing of all STRs

They should be the only designated individuals to communicate with law enforcement

What is the most effective criterion for determining the beneficial ownership of funds?

Having control over such funds or entitlement to such funds

Having signature authority over the account

Being the person in whose name an account is opened with a financial institution

Having control over such funds or entitlement to such funds

Being a person who is the trusted party in a correspondent banking relationship

What indicates potential money laundering activity by a lawyer?

A lawyer's trust account regularly receives wire transfers from unknown remitters in a high risk country and immediately redirects the same funds to the same remitters account in a low risk country

A lawyer's trust account receives a large value wire transfer from a publicly listed life insurance company and then immediately transfers the same funds out to an unknown individual in a low risk country

A lawyer's account in a low risk country receives a bank draft from another lawyer firm in a high risk country

A lawyer's account in a high risk country receives a cash deposit of an amount that is considerable below the reporting threshold

When a bank performs a risk assessment, what areas should an institution focus on?

The type and location of the institution's clients

The nature and breadth of the services and products the institution provides

The geographic locations where the institution does business

The type and location of the institution's clients

The nature and breadth of the services and products the institution provides

The geographic locations where the institution does business

The amount of the money the institution earns prior to taxes

Which three actions should employees be instructed to do during an internal investigation?

Inform counsel of all request for documentation

Make copies of all documents provided to law enforcement

Keep a log of the documents requested

Provide corporate documents directly to law enforcement

Inform counsel of all request for documentation

Make copies of all documents provided to law enforcement

Keep a log of the documents requested

Why are Money Services Business (MSBs) frequently accused of being high risk for money laundering?

MSBs are subject to regulatory scrutiny which varies greatly from country to country

A MSB should be used to hide money from a regulated entity

MSBs generally charge lower commission rates than banks charge making them attractive to criminals

MSBs can route funds to more high risk countries than banks

MSBs are subject to regulatory scrutiny which varies greatly from country to country

A national Financial Intelligence Unit, which is responsible for receiving, analyzing and disseminating disclosure of financial information, should consider becoming a member of what organization?

The Financial Action Task Force

Which practices are dealers in antiques, precious metals, precious stones, jewelry, and art advised to follow to reduce the element of money laundering risk? Choose 3 answers

Verify the identities of all new vendors and customers and conduct due diligence on them

Avoid accepting cash payment from the buyers

Insist all vendors submit an appropriate license issued by enforcement agencies authorizing the sale

Insist on all vendors signing a declaration that the item placed by them for sale was not stolen or acquired through illegitimate means

Verify the identities of all new vendors and customers and conduct due diligence on them

Avoid accepting cash payment from the buyers

Insist all vendors submit an appropriate license issued by enforcement agencies authorizing the sale

Which three conduits for moving terrorist-related funds do terrorist financing generally favor? Choose 3 answers

Banks and/or other formal financial systems

A suspicious transaction report has been filed on an account owned by the wife of the bank's ChiefExecutive Officer. Which of the following is the most important consideration when deciding whether to recommend closing the account?

The institution's anti-money laundering policy

Requests from the competent authority

Chief Executive's reputational risk

An internal investigation log is primarily intended to:

Track the status of investigations into unusual activity.

Provide training on investigations to the anti-money laundering officer and Financial IntelligenceUnit.

Track the status of investigations into unusual activity.

Report status of investigations to the Board of Directors.

Detect and monitor possible suspicious activity.

With which of the following should an anti-money laundering officer coordinate when implementing anew hire screening program?

Local Financial Intelligence Unit

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.

A customer has held an account at a local credit institution for 10 years. The account has received deposits twice weekly for the same amount and has never shown signs of suspect behavior. Monitoring software indicated that in the past few months the account has received several large deposits that were not in line with the account history.When asked, the customer states she recently sold a piece of property, which is supported with a proof of sale.Which of the following should the compliance officer do next?

Document reasons for not filing a suspicious transaction report.

Investigate these unusual transactions further.

Contact the local Financial Intelligence Unit for advice.

File a suspicious transaction report with the competent authorities.

Document reasons for not filing a suspicious transaction report.

A businessman requests a European private bank to open a numbered or alternate name account. According to the Basel Committee on Banking Supervision principles, which of the following is the most important question the banker should ask?

Who will inherit the proceeds in the event of the businessman's death?

How much money will be deposited into the account?

What account-opening date should I record'!'

An offshore company is owned by four equal partners that reside in separate jurisdictions. One partner presents an authenticated power of attorney apparently executed by the remaining three partners in his favor and requests that a bank account be opened on behalf of all partners. He needs this done quickly because there is a large deposit pending. The account-opening officer contacts the bank's anti-money laundering officer for advice. Which of the following should the anti-money laundering officer advise as an initial step?

Verify the identity of all the partners.

Verify the source of the deposit.

File a suspicious transaction report with the appropriate Financial Intelligence Unit.

File a suspicious transaction report with the Egmont Group.

A European Union (EU) bank has a correspondent banking relationship with a U.S. bank. Under USA PATRIOT Act Section 311, the U.S. government has enacted special measures against a designated entity that has a payable-through account with the EU bank. Which of the following actions might the U.S. bank be required to take regarding the EU bank's services for the designated entity?

Obtain additional information about customers permitted to use this account.

Ensure the designated entity's confidential information is not shared with other entities.

Obtain additional information about customers permitted to use this account.

Verify that the EU bank serves the designated entity.

Perform enhanced due diligence on the EU bank.

Which of the following is the best action to take regarding a particular account once suspicious activity is reported by the institution?

Secure all supporting documentation.

Notify the client that the transaction has been reported.

Freeze the funds pending notification from the competent authority.

Secure all supporting documentation.

A suspicious transaction report filed on a car dealer structuring deposits initiates a criminal investigation. The dealer changes branches and begins placing transactions with a frontline employee to whom the dealer has given numerous gifts.This employee handles all of the dealer's structured deposits and does not report the suspicious activity internally.The competent authority has advised the anti-money laundering specialist to avoid tipping off the employee until the investigation is finalized.What action should the specialist take next?

Consult with senior management and the legal advisor.

Recommend the immediate termination of the employee.

Advise that the dealer's accounts should be closed.

Consult with senior management and the legal advisor.

Inform the institution's regulatory agency of the situation.

ACAMS CAMS Practice Test 4 - Free Online Exam Prep & Questions

Question 1 / 40

A high-volume dealer of precious metals and stones in a high-risk jurisdiction is approached by a new customer interested in selling gold worth $200,000. The customer was referred by a longtime family friend of the dealer and provides no indication of background or business purpose for the sale. The dealer agrees to make the purchase based solely on the reference.

What is the money laundering red flag?

The customer was referred by a longtime friend of the dealer

The precious metals dealer is operating in a high-risk jurisdiction

A new customer is selling gold worth $200,000 to a high volume dealer

The customer provides no background information or business purpose for the transaction

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