ACAMS CAMS Practice Test - Questions Answers, Page 39

According to the CAMS Study Guide, EDD is a higher level of scrutiny applied to customers who pose a greater risk of money laundering or terrorist financing. EDD may include obtaining additional information on the customer's identity, source of funds, business activities, beneficial owners, and expected transactions. Details on individuals with control over the account are relevant for EDD, as they may indicate the involvement of politically exposed persons (PEPs), sanctioned individuals, or other high-risk entities. Therefore, this information should be gathered as part of EDD for a high-risk customer.

Ref This transaction should result in a SAR/STR filing because it indicates possible structuring, which is a form of money laundering that involves breaking down large amounts of cash into smaller deposits to avoid detection or reporting requirements. Structuring is often done to conceal the source or destination of illicit funds, or to evade taxes, regulations, or sanctions. A small business owner who deposits checks just below the $10,000 USD threshold on a daily basis without providing a legitimate purpose raises a red flag for suspicious activity and should be reported to the relevant Financial Intelligence Unit.

Suspicious Transaction Report (STR) / Suspicious Activity Report (SAR)

What Is a Suspicious Activity Report (SAR)? Triggers and Filing

How to decide if SAR filing is needed

Rerence: https://aml-cft.net/library/suspicious-transaction-report-str-suspicious-activity-report-sar/

According to the Anti-Money Laundering Specialist (the 6th edition) study guide, an effective anti-money laundering program should be subject to periodic independent testing by a qualified party, such as an internal or external auditor, a consultant, or a compliance professional1.This ensures that the program is compliant with the applicable laws and regulations, and that it meets the standards of sound risk management and internal controls2. The regulatory authorities, a member of senior management, or the anti-money laundering specialist may not have the necessary expertise, objectivity, or independence to conduct a thorough and unbiased evaluation of the program.

1: CAMS Study Guide, 6th Edition, Chapter 2, Section 2.3, page 51

2: CAMS Study Guide, 6th Edition, Chapter 2, Section 2.4, page 52

The anti-money laundering officer (AML officer) is responsible for overseeing the implementation and effectiveness of the anti-money laundering (AML) program of a financial institution. The AML officer should have sufficient authority, independence, and access to resources to perform this role. Reporting to the Sales Director may compromise the independence and objectivity of the AML officer, as the Sales Director may have conflicting interests or incentives that could influence the AML officer's decisions or actions. The AML officer should report to a senior management level that is independent of business functions and has direct access to the board of directors or a relevant committee. This would ensure that the AML officer can communicate any AML issues or concerns to the board without any interference or undue influence from the business functions.

ACAMS Study Guide for the CAMS Certification Examination, Chapter 2, Section 2.2.1, page 41: ''The AML officer should report to a senior management level that is independent of the business line and has direct access to the board of directors or a relevant committee.''

Money Laundering Reporting Officer: The Role Of MLRO, Section ''Role Of Money Laundering Reporting Officer'': ''The MLRO should have independent monitoring and should be able to connect directly with people who make business decisions, such as senior management or the board of directors.''

Money Laundering Reporting Officer (MLRO)? | Dow Jones, Section ''What is a Money Laundering Reporting Officer (MLRO)?'': ''A Money Laundering Reporting Officer (MLRO) is tasked with overseeing a firm's compliance with the Financial Conduct Authority's (FCA) rules on money laundering. ... The MLRO should have sufficient authority and independence within the firm to carry out their responsibilities effectively.''

According to the ACAMS CAMS Study Guide (the 6th edition), one of the key steps in conducting an effective investigation of a potential money laundering or terrorist financing activity is to gather all relevant information about the customer and the transaction, including the nature and purpose of the account, the source and destination of funds, the expected account activity, and the customer's risk profile1. In this case, the compliance officer should meet with the staff who opened the new account for the public official to obtain this information and assess whether the account is consistent with the customer's profile and needs, or whether it indicates a possible attempt to conceal or launder illicit funds.Waiting for the new account to receive funds, calling the competent authorities, or calling the official's office are not appropriate actions at this stage, as they may compromise the investigation, alert the customer, or violate confidentiality rules1.

ACAMS CAMS Study Guide (the 6th edition), Chapter 4: Conducting or Supporting the Investigation Process, page 1311

According to the Financial Action Task Force (FATF) Special Recommendation IV, if financial institutions, or other businesses or entities subject to anti-money laundering obligations, suspect or have reasonable grounds to suspect that funds are linked or related to, or are to be used for terrorism, terrorist acts or by terrorist organisations, they should be required to report promptly their suspicions to the competent authorities1.This is consistent with the FATF Recommendation 20, which requires the same reporting obligation for money laundering and the financing of proliferation of weapons of mass destruction2. Reporting suspicious transactions related to terrorism is a key measure to detect, prevent and suppress the financing of terrorism and terrorist acts, and to facilitate international cooperation and information exchange.

1: The FATF Recommendations - Financial Action Task Force

2: IX Special Recommendations - Financial Action Task Force

these are the enhanced customer due diligence measures that the 5th EU Money Laundering Directive requires for high-risk third country nationals. According to the directive, entities must obtain the approval of senior management for establishing or continuing the business relationship, obtain information on the reasons for intended or performed transactions, and obtain information on the source of funds and source of wealth of the customer and of the beneficial owner(s). These measures are intended to increase the transparency and scrutiny of the customers and their transactions, and to prevent the misuse of the financial system for money laundering or terrorist financing purposes.

ACAMS Study Guide 6th Edition, Chapter 2, Section 2.3, page 56: ''The EU's Fifth Anti-Money Laundering Directive''.

ExamTopics, Question 456: ''According to the 5th EU Money Laundering Directive, member states require entities to apply enhanced customer due diligence measures with respect to business relationships or transactions involving high-risk third country nationals. Which are included in these requirements? (Choose three.)''

Mutual Legal Assistance (MLA) is a form of cooperation between different countries for the purpose of collecting and exchanging information and evidence in criminal matters. MLA is usually governed by bilateral or multilateral treaties that establish the procedures and requirements for requesting and providing assistance. The first valid step in the MLA process is to send a formal request from the central authority of the requesting country to the central authority of the requested country. The central authority is the designated entity that is responsible for making, receiving, and facilitating the execution of MLA requests. The request should contain the necessary information and documents to enable the requested country to assess and execute the request, such as the nature and purpose of the request, the legal basis, the description of the assistance sought, the identity of the persons involved, the applicable legal provisions, and the deadline for the response. The request may also be accompanied by a commission letter of request, which is a judicial document that authorizes a foreign authority to perform certain acts on behalf of the requesting authority, such as taking evidence or statements from witnesses or suspects.

Guidelines on Mutual Legal Assistance in Criminal Matters, Section 1.1, 1.2, 1.3, 2.1, 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 2.9, 2.10, 2.11, 2.12, 2.13, 2.14, 2.15, 2.16, 2.17, 2.18, 2.19, 2.20, 2.21, 2.22, 2.23, 2.24, 2.25, 2.26, 2.27, 2.28, 2.29, 2.30, 2.31, 2.32, 2.33, 2.34, 2.35, 2.36, 2.37, 2.38, 2.39, 2.40, 2.41, 2.42, 2.43, 2.44, 2.45, 2.46, 2.47, 2.48, 2.49, 2.50, 2.51, 2.52, 2.53, 2.54, 2.55, 2.56, 2.57, 2.58, 2.59, 2.60, 2.61, 2.62, 2.63, 2.64, 2.65, 2.66, 2.67, 2.68, 2.69, 2.70, 2.71, 2.72, 2.73, 2.74, 2.75, 2.76, 2.77, 2.78, 2.79, 2.80, 2.81, 2.82, 2.83, 2.84, 2.85, 2.86, 2.87, 2.88, 2.89, 2.90, 2.91, 2.92, 2.

A risk-based compliance program is one that identifies and prioritizes the highest compliance risks to the FI and implements controls, policies and procedures to mitigate them. A data-based option is the most suitable for a risk-based compliance program, as it allows the FI to collect, analyze and monitor relevant data on its customers, transactions, products, services, geographies and other risk factors.A data-based option also enables the FI to measure the effectiveness of its compliance program and adjust it as needed to respond to changing risks and regulatory expectations12.

1: Risk-Based Approach to Compliance Management2

2: A Risk-Based Approach to Regulatory Compliance1