How can a 'free-look provision' as part of a life insurance policy help criminals to launder money?

A policy owner is able to terminate the contract without penalties such as surrender charges.

A policy owner can decide how to pay the premium within a pre-defined period.

A policy owner is able to terminate the contract without penalties such as surrender charges.

A policy owner has freedom to decide who the beneficiary of the policy will be and can in this way move money to a related third party.

A policy owner has freedom to decide who the beneficiary of the policy will be and can in this way move money to an unrelated third party.

Since its last regulatory examination, a financial institution has aggressively grown by adding profitable new products and services. The institution has not historically received regulatory criticism regarding its anti-money laundering compliance program. However, a recent regulatory examination cited significant deficiencies in the anti-money laundering program that were attributed primarily to the lack of oversight by the institution's leadership in implementing adequate controls over the new products and services.Which area of international control should leadership first address to correct the weaknesses in the program?

Money laundering risk assessment

Anti-money laundering compliance staff

An auction house dealing in fine art and antiques sells a well-known painting at a price of $12 million to an agent bidding for a group of local investors. The same painting sold ten years prior at auction for $5 million. The auction house receives payment for the painting via wire transfer from an account maintained in an offshore jurisdiction by the investor group. No beneficial ownership information is available for the account.What are the two money laundering red flags? (Choose two.)

Payment is received from an account in an offshore jurisdiction.

Lack of beneficial ownership details for the originating account.

The payment is received via wire transfer.

An agent bids on the painting for a group of investors.

The painting has more than doubled its value in ten years.

Payment is received from an account in an offshore jurisdiction.

Lack of beneficial ownership details for the originating account.

How can violations of anti-money laundering laws be a risk to individuals?

Violations can result in civil and criminal fines and penalties against the individuals.

Violations can result in additional legislation that the individuals have to comply with.

Violations can result in enforcement actions that damage the reputation of the individual's employer.

Violations can result in additional and more stringent anti-money laundering training for individuals.

A director of a financial institution was convicted of laundering money as part of a Ponzi scheme and terminated. As a result of an internal investigation evidence proved that an employee assisted in the illegal activity.Which action should the institution take?

Discipline the employee and inform local authorities

Discipline the employee with no further action

Discipline the employee and inform local authorities

Since the employee was not charged, no further action is required

Require all employees to complete additional anti-money laundering training

The new compliance officer has reviewed the bank's anti-money laundering training program. The program consists of online training for all new employees within 30 days of hire date and annual refresher training to all employees. In addition, there is specialized training for areas that deal with higher risk products and customers.Over the last year, there have been no regulatory changes and no new products or services have been introduced. The compliance officer wants to propose to the board of directors that the annual refresher training is still current and can be delivered unchanged to all employees.Which two critical pieces of information could be missed by taking this approach? (Choose two.)

Any new trends, developments, or risks

Links to enforcement actions identifying violations in other financial institutions

Any new trends, developments, or risks

Results of the previous year's risk assessment

Changes to internal policies, procedures, and processes

Links to enforcement actions identifying violations in other financial institutions

An institution receives a request for credit from a local company that has been a client for many years. The information provided by the company indicates that its assets have increased substantially with the addition of several new subsidiaries. Further research performed by the institution indicates the new subsidiaries are recently created shell companies.Could this indicate potential money laundering?

Yes, the shell companies could have been created to hide beneficial ownership.

No, the company has been a client for many years.

Yes, shell companies are typically created to manage tax liabilities.

No, it is normal for a business to diversify by creating shell companies.

Yes, the shell companies could have been created to hide beneficial ownership.

Bank A is a non-United States (U.S.) bank that has $5 million in a correspondent account at a bank in New York City. The Worldwide Terrorist Syndicate (WTS) has $1 million in its account at a non-US branch of Bank A. The U.S. government has initiated forfeiture action against the WTS.Which potential action can the U.S. take under the USA PATRIOT ACT pursuant to the issuance seizure warrant?

Seize $1 million from Bank A's correspondent account in the U.S.

Seize Bank A's $5 million correspondent account in the U.S.

Seize WTS' $1 million account at the non-U.S. branch of Bank A.

Seize $1 million from Bank A's correspondent account in the U.S.

Seize $5 million from the non-U.S. branch of Bank A where the WTS' account is located.

A money transmitter's nation-wide agent network remits funds to a country in Africa on behalf of an immigrant community based in the United States. A terrorist group is known to operate openly in this African country. In reviewing transaction records, the compliance officer detects a pattern where two customers together visit the same agent each week and remit the same amount of funds, $2,500, to the same recipient in the country in Africa.What should alert the compliance officer to possible money laundering or terrorist financing activity by the two customers?

The dollar amount of each transaction is just below the record keeping threshold.

The customers always visit together.

The customers always visit the same agent.

The funds are being sent to the same recipient each week.

The dollar amount of each transaction is just below the record keeping threshold.

A compliance officer is tasked with implementing an enterprise-wide anti-money laundering program for a bank, which operates in multiple countries. Not all the bank products and services are available in all countries.Which three factors should be considered as part of the approach? (Choose three.)

The types of customers serviced by the bank

The extent of anti-money laundering regulations in the various countries

The anti-money laundering risk posed by the products and services offered by the bank

The types of customers serviced by the bank

The customer onboarding platform that will be used

The extent of anti-money laundering regulations in the various countries

The anti-money laundering risk posed by the products and services offered by the bank

The amount of resources needed to implement the anti-money laundering program in the countries

What do the Financial Action Task Force (FATF) mutual evaluations of each member assess?

The levels of implementation of the FATF Recommendations

The member's ability to send a representative to the plenary sessions

If the member has a large enough economy to maintain its membership

If the member has made any suggestions for updates to the FATF Recommendations

A compliance officer is reviewing the activity of the wire transfer department for the previous month and identifies an unusual wire transfer from a customer's account.Which information should be included in the review of the customer's activity?

Wire transfer requests initiated by phone and internet

Records of the recent deposit activity

Wire transfer requests initiated by phone and internet

Total number of wires processed each month over the previous year

Whether the bank processes wire transfers through a correspondent bank

Which two steps should a financial institution take when it receives a law enforcement request to keep an account open that may be associated with suspicious or criminal activity? (Choose two.)

Maintain account records for at least five years after the request expires

Ask for a written request from the law enforcement agency that defines the duration

File a suspicious transaction report on the account owner(s)

Maintain account records for at least five years after the request expires

Ask for a written request from the law enforcement agency that defines the duration

Stop filing suspicious transaction reports because law enforcement will be monitoring the account

A startup virtual currency exchange has registered as a money services business and will commence operations in six months. The company will provide digital wallets to customers to hold their virtual currency after purchase. Customers will have the option to conduct purchases of the virtual currency and transfer the currency to and from the digital wallet. The startup must develop an anti-money laundering compliance program prior to launch.Which two anti-money laundering responsibilities should be considered before business launch? (Choose two.)

Transaction limits consistent with risk appetite

Employees to handle complaints in a timely fashion

Mechanisms to monitor and protect customers' digital wallets from cyber-attacks

Which three measures are contained in Financial Action Task Force 40 Recommendations for reporting suspicious activity? (Choose three.)

The activity should be reported promptly to the country's financial intelligence unit.

The financial institution has grounds to believe the activity is related to terrorist financing.

The financial institution has reasonable grounds to suspect the funds are proceeds of criminal activity.

The activity should be reported promptly to the country's financial intelligence unit.

The financial institution has been contracted by law enforcement regarding the activity.

The financial institution has grounds to believe the activity is related to terrorist financing.

The financial institution has contacted the account holder to determine the activity of the account.

The financial institution has reasonable grounds to suspect the funds are proceeds of criminal activity.

What is a tool governments and multi-national bodies can use to prevent the proliferation of weapons of mass destruction?

Mutual Legal Assistance Treaties

Which two actions should Financial Intelligence Units (FIUs) take when submitting a request to another FIU? (Choose two.)

Disclose the reason and purpose for the request

Provide feedback on how the information was used

Send the same request to all FIUs

Disclose the reason and purpose for the request

Provide feedback on how the information was used

Make best efforts to provide complete and factual information

What can a compliance officer do in the absence of automated software to conduct U.S. Department of the Treasury Office of Foreign Assets Control (OFAC) sanction screens?

Obtain up-to-date copies of the OFAC's Specially Designated Nationals list

Rely on a credit report from OFAC

Conduct a key-word search on the Internet

Use the consolidated Sanctions List Search screen on the OFAC website

Obtain up-to-date copies of the OFAC's Specially Designated Nationals list

A bank maintains a number of United States (U.S.) dollar correspondent accounts for foreign financial institutions. Upon a routine review of a U.S. dollar correspondent account owned by Foreign Bank A, a number of transactions appear to have been originated by Foreign Bank B outside the expected activity for this account. These transactions appear suspicious and a suspicious transaction report was filed by the compliance officer.Which step should the compliance officer take?

Notify Foreign Bank A of the discovery and seek documentation supporting Foreign Bank A was collusive and a willing partner with Foreign Bank B in the activity

File a report with the appropriate tax authorities in the jurisdictions of Foreign Bank A and Foreign Bank B

Notify senior management of the money laundering risks by allowing Foreign Bank A to maintain its U.S. dollar correspondent account

Notify Foreign Bank A of the discovery and seek documentation supporting Foreign Bank A was collusive and a willing partner with Foreign Bank B in the activity

Notify other U.S. financial institutions who maintain U.S. dollar correspondent accounts for Foreign Bank A and Foreign Bank B in an effort to shut down the activity

The local manager of a remote mortgage origination department of a financial institution has just discovered that sanctions screening of new customers is not being performed.Which action should the local manager take in this situation?

Immediately inform senior management

Immediately inform the regulators

Immediately inform senior management

Do nothing because the department only handles a very small number of mortgages

What is a method of placement that can be used by a money launderer in a deposit taking institution?

Depositing cash into the money launderer's account

Sending a large number of funds transfers between accounts

Withdrawing large amounts of cash from the money launderer's account

Depositing cashier's checks and money orders into the money launderer's account

The compliance officer for a private bank has been tasked with reviewing the procedure for authorized signatories on customer accounts to ensure it is in line with relevant Wolfsberg Anti-Money Laundering Principles for Private Banking.Which three statements from the procedure are in line with Wolfsberg? (Choose three.)

The responsible private banker must establish the identity of a holder of general powers over an account (e.g. a signatory for the account) and, as appropriate, verify that identity.

The responsible private banker must obtain the necessary documentation establishing the authorized signer's authority to act on behalf of the account holder or beneficial owner (e.g. a Power of Attorney).

If an individual has signing authority over an account but does not act on a professional basis as a manager of funds, the responsible private banker must understand and document the relationship between that authorized signer, the account holder, and, if different, the beneficial owner of the account.

Where the Authorized Signatory is not a lawyer or accountant, due diligence as to the source of funds and wealth of the Authorized Signatory should be undertaken.

The responsible private banker must establish the identity of a holder of general powers over an account (e.g. a signatory for the account) and, as appropriate, verify that identity.

Where due diligence has been satisfactorily completed on all authorized signers, the responsible private banker may reduce the due diligence performed on the account holder and/or beneficial owner.

The responsible private banker must obtain the necessary documentation establishing the authorized signer's authority to act on behalf of the account holder or beneficial owner (e.g. a Power of Attorney).

If an individual has signing authority over an account but does not act on a professional basis as a manager of funds, the responsible private banker must understand and document the relationship between that authorized signer, the account holder, and, if different, the beneficial owner of the account.

The board of directors receives notice from the primary regulator of the bank that potentially suspicious activity has been identified and the bank president appears to be involved. The Board asks the compliance officer for advice.Which action should the compliance officer take when informed?

Inform the bank's legal counsel and follow their instructions

Destroy all records relating to the matter

Insist on the president's immediate resignation

Inform the bank's legal counsel and follow their instructions

Inform the president of the regulator's suspicions and ask for his advice

In which two ways do Financial Action Task Force-style regional bodies influence anti-money laundering and terrorist financing standards within their respective regions? (Choose two.)

They issue typologies specific to their geographical region.

They administer mutual evaluations of participating members.

They issue typologies specific to their geographical region.

They administer mutual evaluations of participating members.

They enforce the laws of the member countries in their geographic region.

They require participating countries to adopt laws in line with their recommendations.

What are two aspects of the Wolfsberg Anti-Money Laundering (AML) Principles for Correspondent Banking? (Choose two.)

At least one person, aside from the person sponsoring the relationship, should approve the correspondent relationship.

Factors such as politically exposed person involvement and downstream (nested) correspondents increase the risk inherent in a correspondent relationship.

At least one person, aside from the person sponsoring the relationship, should approve the correspondent relationship.

Correspondent banking is an inherently high risk business and all correspondent bank relationships should be reviewed on an annual basis.

Factors such as politically exposed person involvement and downstream (nested) correspondents increase the risk inherent in a correspondent relationship.

An Institution may assign a low risk rating to a correspondent bank located in a jurisdiction deemed to have an adequate AML environment (e.g., Financial Action Task Force member country) without needing to consider other factors

A local law enforcement officer, who is conducting a criminal investigation, requests information about a customer.Which two actions should the bank take? (Choose two.)

File a suspicious transaction report

Monitor the account for suspicious activity

File a suspicious transaction report

Monitor the account for suspicious activity

Review the money laundering risk posed by the account

Which action should financial institutions with cross border correspondent banking activity be required to perform according to the Financial Action Task Force 40 Recommendations?

Obtain senior management approval before establishing the relationship

Gather a list of their politically exposed customers

Identify natural persons who own or control more than 5%

Obtain senior management approval before establishing the relationship

Obtain a third party independent review of the respondent's anti-money laundering program

Which information must a United States financial institution retain for having foreign correspondent accounts as part of the USA PATRIOT Act record keeping requirements?

Records identifying the owners of each foreign bank

Section 314(b) information sharing results related to foreign correspondent accounts

Purchase of monetary instruments of $3,000 or more involving foreign correspondent accounts

A suspicious activity report filed and the supporting documentation involving foreign correspondent accounts

A financial institution has expanded its scope of services so that it is attracting the business of politically exposed persons (PEPs) who had previously never been part of the customer base.Which two courses of action should the compliance officer include in the institution's procedures for considering PEPs as customers? (Choose two.)

Conduct enhanced ongoing monitoring of the business relationship

Take adequate measures to establish the source of wealth and source of funds which are involved in the business relationship or occasional transaction

Conduct enhanced ongoing monitoring of the business relationship

Expedite due diligence when a PEP is pre-approved by a member of senior management

Obtain appropriate senior management approval for establishing a business relationship with a PEP from a high risk country

Take adequate measures to establish the source of wealth and source of funds which are involved in the business relationship or occasional transaction

A compliance officer for a casino may suspect money laundering if an individual:

purchases a low volume of chips with cash and turns them in for a casino check.

invokes reporting requirements through a lump sum payment.

refers to casino associates by their first name.

purchases a low volume of chips with cash and turns them in for a casino check.

requests to have winnings transferred to a bank account of a third party.

Which response represents a high-level principle for FATF-Style Regional Bodies (FSRB)?

Reciprocity for effective participation and recognition of work

Membership, mission, financial procedures, and budget

Dependent with different experiences to strengthen the overall effort

Access to documents and assistance with meetings

Reciprocity for effective participation and recognition of work

A benefit of using bearer shares in corporate formations is that bearer shares are:

easily transferred so the holder claims ownership.

widely accepted in the financial world.

entered in the register of owners.

associated with lower costs in setting up a company.

easily transferred so the holder claims ownership.

OFAC-issued regulations apply to which entities? (Choose two.)

Foreign subsidiaries of US banks

Intermediaries transacting with US banks

Foreign banks with US customers

Foreign subsidiaries of US banks

Foreign import-export companies

What is an aspect of the USA PATRIOT Act that has extraterritorial reach?

To require scrutiny of foreign financial institutions (FIs) and classes of international transactions that are susceptible to criminal abuse.

To strengthen US measures to prevent, detect and prosecute international money laundering and financing of terrorism.

To implement economic and trade sanctions based on US foreign policy.

To mandate stricter money laundering controls across the continent.

To require scrutiny of foreign financial institutions (FIs) and classes of international transactions that are susceptible to criminal abuse.

Based on the USA PATRIOT Act, what action might the US take to demonstrate extraterritorial reach?

Send requests for information to a non-US based financial institution (FI)

Hand over potential penalties from the US to another government

Freeze U. S. accounts that contain funds from the non-US FI

Initiate a lawsuit in the home country of the non-US FI

How should a compliance officer respond to law enforcement agencies' request for information on a customer undergoing an investigation?

Collaborate with the financial institution's (FI's) designated department to determine the appropriate course of action to comply with the request.

Gather all requested documentation and send via secure email to the requesting authority.

Share details of the investigation with respective colleagues who deal with this customer type on a daily basis.

Freeze account assets and advise the customer that assets will not be released until the investigation has been completed

ACAMS CAMS Practice Test 7 - Free Online Exam Questions 241-280

A bank has opened a new account for a well-known attorney to manage client funds. During the first six months, bank staff observe the account receives multiple deposits via wire transfer. They also observe that the attorney withdraws cash, makes payments to various people, and transfers funds to the law firm's account online.

What is considered a red flag for potential money laundering in this situation?

Become a Premium Member for full access

Unlock Premium Member

ACAMS CAMS Practice Test 7

Question

ACAMS CAMS Practice Tests

Practice Tests