A close relative of a privately-owned bank's senior manager requests to open an account. Because of this relationship, the staff expedites the opening of the account without following established account-opening procedures. Applying the Basel Committee on Banking Supervision principles, which of the following poses the highest operational risk?

Failure to conduct proper due diligence.

The possibility of lawsuits that adversely affect the operations of a bank.

The bank's exposure to politically exposed persons.

Not having appropriate information to share with Financial Intelligence Units.

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

ensure that prospective new customers can be properly identified.

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.

During an ongoing investigation into a client's activities by a competent authority, a compliance officer should

Communicate with regulatory and law enforcement authorities in line with applicable local laws.

Ensure communication with regulatory and law enforcement authorities is conducted only through senior management.

Communicate only in writing with regulatory and law enforcement authorities in line with applicable local laws.

Communicate with regulatory and law enforcement authorities in line with applicable local laws.

Limit communication with regulatory and law enforcement authorities to the absolute minimum.

Which of the following represents the first Financial Action Task Force initiative?

The 40 Recommendations on Money Laundering

The Report on Non-Cooperative Countries and Territories

The Report on Money Laundering Typologies

The Special Recommendations on Terrorist Financing

Transfers of money over the last 6 months to a corporation in a jurisdiction with strict secrecy laws triggered an alert. Which of the following should cause the most suspicion of money laundering?

The jurisdiction is a known tax haven.

The corporation director is a European citizen.

No financial statements have been filed for 3 years.

The anti-money laundering specialist of a small bank has identified suspicious activity at a branch located in an area of town where drug dealers are known to operate. An investigation of this activity discloses that the suspicious transactions occurred within the last 3 months and were processed by the same teller (cashier). The teller (cashier) did not file an internal report of unusual activity on these transactions. When checking personnel files, the specialist finds that the teller (cashier) has been a trusted employee for over 15 years, has an impeccable work record, and has participated in several anti-money laundering training sessions. The specialist recently became aware that the employee's daughter has contracted a rare disease and is undergoing a very expensive treatment program. Regarding the teller's (cashier's) failure to report the unusual activity to the institution, the specialist should recommend

Directing the teller (cashier) to file a suspicious transaction report.

Continuing to monitor the accounts.

Refreshing anti-money laundering training for the teller (cashier).

Directing the teller (cashier) to file a suspicious transaction report.

Suspending the teller's (cashier's) employment.

An anti-money laundering specialist is concerned that several suspicious transaction reports will discuss potential illegal activity of bank employees. In this situation, which of the following is the immediate concern for the institution?

Ensuring no delay in informing the Board.

Prohibiting distribution of suspicious transaction report copies to the Board.

The timing of the presentation of suspicious transaction reports to the competent authority.

The type of form to be used when reporting to the Board.

Ensuring no delay in informing the Board.

A charity has unaudited accounts. Which of the following represents the highest risk factor for terrorist financing?

Disbursement of funds to entities unrelated to the purpose of the charity.

An international board composed of politically exposed persons.

Frequent deposits from third parties into the charity's bank account.

Frequent changes to the senior management of the charity.

An anti-money laundering specialist notes a significant reduction in suspicious transaction report filings at a particular branch. Which of the following actions is most appropriate?

Review branch exception reports to determine changes in activity in accordance with customer profiles.

Place the branch on the watchlist to assure a review during the next quarter.

Analyze the branch activity reports to determine whether there has been a decrease in branch activity.

Review branch exception reports to determine changes in activity in accordance with customer profiles.

Review staff records to see whether inexperienced personnel are in critical positions without appropriate training.

An audit completed the previous week revealed that a private banking customer submitted incomplete documents when establishing an account earlier in the year. The customer received weekly electronic fund transfers from a narcotic-producing jurisdiction.While the Relationship Manager who opened the account is on leave for 5 weeks, the customer requests that the institution remit a substantial sum to a country that represents a high risk of money laundering.The Relationship Manager is a friend of the anti-money laundering specialist. Which of the following should the anti-money laundering officer do first?

Postpone the follow-up on the audit finding.

File a suspicious transaction report with the competent authority.

Investigate the transfer of funds.

Suspend the transfer until the relationship manager returns.

Postpone the follow-up on the audit finding.

Which of the following customer transactions with a securities dealer would indicate the highest suspicion of money laundering?

Recurring transfers of money into a brokerage account subsequently invested in short-term securities.

Frequent trades in unlisted securities throughout the day on a regular basis.

Recurring transfers of money into a brokerage account subsequently invested in short-term securities.

An unexplained high level of account activity with very low levels of securities transactions

Investment in securities with a significantly lower risk than the customer's expressed risk tolerance.

The Board of Directors for a small private bank has asked the management to no longer apply the identity requirements for high net worth individuals to protect their privacy. Which of the following Financial Action Task =once 40 Recommendations should cause an anti-money laundering specialist the most concern?

Financial institutions should maintain all necessary suspicious transaction report records on transactions, both domestic are international, for at least 5 years.

Financial institutions should not warn their customers when information relating to them is being reported to the competent authorities.

Financial institutions should not keep anonymous accounts.

Financial institutions should maintain all necessary suspicious transaction report records on transactions, both domestic are international, for at least 5 years.

If financial institutions suspect that funds stem from criminal activity, they should be required to close the account.

Which of the following customers require the most enhanced due diligence?

A resident of a non-cooperative jurisdiction.

An international business corporation.

Outgoing foreign transactions of similar amounts trigger a monitoring alert for a customer's accounts. During the evaluation of the accounts, the bank discovers the wire transfers were very small amounts and occurred within the last 3 months following a long period of inactivity. The wire transfers appear to originate from legal sources. To assess the potential of terrorist financing, the institution must ensure the

beneficiaries of transfers are not on a terrorist watch list.

account holder presents proof the funds are legal.

beneficiaries of transfers are not on a terrorist watch list.

beneficiaries of transfers are not included on the Transparency International List.

account holder does not reside in a country included on the U.S. State Department State Sponsors of Terrorism List.

Under requirements for correspondent accounts in the USA PATRIOT Act, the word 'certification' refers to a written representation by a

respondent bank, certifying that they do not do business with shell banks.

federal receiver' certifying that he is not the beneficial owner of the correspondent account.

respondent bank, certifying that they do not do business with politically exposed persons.

correspondent bank, certifying that they do not open correspondent accounts for alternative remittance companies.

respondent bank, certifying that they do not do business with shell banks.

According to the European Union Money Laundering Directives, 'knowledge, intent or purpose'' required as an element for money laundering may be inferred from

Objective factual circumstances.

Subjective factual circumstances.

Objective non-factual circumstances.

Subjective non-factual circumstances.

A bank customer operates a fuel station as a sole proprietorship. The customer places deposits and other credits in a business account. The customer routinely transfers money from the business account to a brokerage account where he invests in money market securities. The customer also routinely makes monthly transfers to a credit card and line of credit to pay off balances. The volume of activity flowing through the business account has doubled in the past 3 months. An internal investigator reviews business account statements and credit card activity for the past 3 months, scans media articles about the customer, and interviews the account officer about the customer and account activity. This internal investigation did not provide an explanation for the increased activity1. Which of the following should the anti-money laundering specialist recommend to the internal investigator?

Concentrate on trades made in the brokerage account.

Review activity in all related customer accounts in the past year.

Analyze account activity for selected accounts since the accounts were opened.

No additional steps are necessary because this was a thorough review of the activity.

The Basel Committee on Banking Supervision issued a paper in October 2001 in which it presented a Know Your Customer framework and recommended standards applicable to

European Financial Institutions.

Upon filing a suspicious transaction report, which of th following elements should be the highest anti-money laundering priority in making the decision to keep the account open?

Procedures to ascertain the potential risk to the organization.

Financial impact on the institution if the account is closed.

Procedures to ascertain the potential risk to the organization.

Additional Administrative costs of monitoring the account.

Total number of accounts the institution closed in the last month.

What describes the Black Market Peso Exchange money laundering method?

A method primarily used by narcotics traffickers to transfer value back to the source country

The best known money laundering method used by known terrorists

An undercover technique to identify politically exposed persons who may assist money launderers

A method primarily used by narcotics traffickers to transfer value back to the source country

A method used to smuggle dollars or pesos across that border from the U.S. to Mexico, and vice versa

Which three circumstances are indicators for defining a customer as required additional diligence according to the Wolfsberg Principles on Private Banking? Choose 3 answers

Persons residing in a having funds from countries with inadequate AML standards

Persons engaged in business activities known to be susceptible to money laundering

Persons determined to be Politically Exposed Persons (PEPs)

Persons residing in a having funds from countries with inadequate AML standards

Persons engaged in business activities known to be susceptible to money laundering

Persons who receive funds from a correspondent banking relationship

Persons determined to be Politically Exposed Persons (PEPs)

In many jurisdictions, financial institutions are prohibited from hiring a person who has been convicted of what type of offense?

Driving while under the influence

In general, what is an element that a financial institution or business does not have to specifically address in an anti-money laundering program?

A description of its OFAC program to address government watch list screening

A system of internal policies, procedures and controls

A designated compliance officer with day-to-day oversight over the AML program

An ongoing employee training program

A description of its OFAC program to address government watch list screening

Which three procedures should a compliance officer looking to revise an institution's CTF efforts include in accordance with the Wolfsberg Group's Statement on the Suppression of the Financing of Terrorism?

Consulting applicable lists and taking appropriate actions to determine if customers appear on such lists

Reporting matches from lists of known or suspected terrorists to relevant authorities

Maintaining customer information to facilitate timely retrieval of such information

Consulting applicable lists and taking appropriate actions to determine if customers appear on such lists

Reporting matches from lists of known or suspected terrorists to relevant authorities

Maintaining customer information to facilitate timely retrieval of such information

Reviewing only original identification documents when verifying customers

An AML compliance officer receives notice of government update including the names of the latest terrorists sanctioned by the United Nations Security Council. Which would be the most appropriate step to take?

Update the monitoring software containing sanctioned persons

Inform the customers that their funds will be frozen

Update training information to include the latest names

An account officer who maintains an excellent relationship with the finance manager for a correspondent bank customer learns that many records for the correspondent bank have been requested by law enforcement. In the interest of maintaining a good relationship with the customer, the account officer sets up a meeting to discuss the legal request with the customer. The account officer intends to discuss points related to the investigation during the meeting.What should an anti-money laundering specialist recommend?

Limit discussions about the investigation with the customer and by satisfied that the account manager has provided proper notice to the customer

Discuss all the points being investigated by law enforcement to ensure the correspondent bank is well prepared when approached

Let the account manager's manager know what conversations have taken place with the customer and document the account file accordingly

Limit discussions about the investigation with the customer and by satisfied that the account manager has provided proper notice to the customer

Cancelled the meeting as he has already behaved inappropriately by alerting to the investigation

A customer comes into a financial institution and deposits a large amount of cash. He has never done that before. When asked about the deposit, he indicates he recently sold a used car and received cash.He does not trust forms of payment and is wary of counterfeit money orders. What should the bank do?

While the explanation appears plausible, the institution should, for a period of time, monitor the account for cash transactions and suspicious activity

The bank has received a plausible explanation, so it should do nothing

While the explanation appears plausible, the institution should, for a period of time, monitor the account for cash transactions and suspicious activity

While the explanation may be plausible, the institute should nonetheless file a Suspicious Transaction Report to protect itself

The institution should close the account before another issues arise

How can a financial institution verify the nature and purpose of a business and its legitimacy?

By using an independent information verification process, such as by accessing public and private databases

By reviewing a copy of the corporation's latest audited reports and accounts

By undertaking a company search or other commercial inquires to see that the institution has not been, or is not in the process of being dissolved of terminated

By reviewing the company's website

By using an independent information verification process, such as by accessing public and private databases

Which three criteria does a shell bank meet according to the Wolfsberg Principles on Correspondent Banking? Choose 3 answers.

It does not conduct business at a fixed address in a jurisdiction in which it is authorized to conduct business.

It does not employ one or more individuals at its fixed address where it is authorized to conduct business or maintain operating records at that address

It is not subject to inspection by the banking authority that licensed it to conduct banking activities

It does not conduct business at a fixed address in a jurisdiction in which it is authorized to conduct business.

It does not employ one or more individuals at its fixed address where it is authorized to conduct business or maintain operating records at that address

It is not subject to AML laws that require it to implement an AML program

It is not subject to inspection by the banking authority that licensed it to conduct banking activities

ACAMS CAMS Practice Test 5 - Free Online Exam Questions 161-200

A division anti-money laundering officer for a financial institution has been conducting a monthly self-assessment.

The officer reviews the accounts opened for compliance with a long standing Know Your Customer policy.

The self-assessment for the latest month shows a significant increase in compliance deficiencies for the first time in more than a year.

Which of the following is the next course of action for the anti-money laundering officer to take?

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