ACAMS CAMS Practice Test - Questions Answers, Page 4

List of questions
Question 31

An organization's automated surveillance system identifies large fluctuations in customer activity. As a result of an audit, the compliance officer is informed that the system is not generating alerts when activity is consistently abnormal over a long period of time. Currently the organization is evaluating new alert scenarios in an attempt to address this problem.
Which type of scenario is helpful in mitigating this weakness?
Peer
Income
Mapping
Below-the-line
The correct answer is C, as mapping scenarios are helpful in mitigating the weakness of not generating alerts when activity is consistently abnormal over a long period of time.Mapping scenarios are used to compare a customer's activity with their expected activity based on their profile, risk rating, or historical behavior1. By using mapping scenarios, the organization can identify customers whose activity deviates significantly from their normal or expected patterns, and flag them for further investigation. Mapping scenarios can also help detect changes in customer behavior over time, and alert the organization of any potential money laundering or terrorist financing risks.
Question 32

Upon a routine account review a money laundering investigator identified a number of large round dollar wire transfer deposits into a business account owned by a local auto repair shop. The wire transfers all originated from a country that is a known financial secrecy haven with poor anti-money laundering controls. The investigator concludes there appears to be no legitimate business purpose for the wire transfers and files a suspicious transaction report. The owner of the auto repair shop is popular in the community and is a wellknown philanthropist.
To whom should the investigator escalate these concerns?
Audit committee
Chairman of the Board
The owner of the auto repair shop
The bank anti-money laundering officer
The investigator should escalate these concerns to the bank anti-money laundering officer, who is responsible for overseeing the implementation and effectiveness of the bank's AML/CFT policies and procedures, as well as ensuring compliance with relevant laws and regulations. The bank anti-money laundering officer can then decide on the appropriate course of action, such as conducting further investigation, reporting to the regulators, or terminating the relationship with the customer. The other options are not suitable for escalating these concerns, as they may not have the authority, expertise, or responsibility to handle such matters.
ACAMS, CAMS Examination Study Guide, 6th Edition, Chapter 4, pp. 113-114
FATF Guidance: The Role of Hawala and Other Similar Service Providers in Money Laundering and Terrorist Financing, October 20131, p. 19
Basel Committee on Banking Supervision, Sound management of risks related to money laundering and financing of terrorism, June 20172, p. 10
Question 33

A compliance officer learns from an Information Technology (IT) source of a potential new financial service being discussed by the new product approval committee.
What is the correct next course of action?
Request that the new product approval committee include the compliance officer.
Go to the board of directors and try to shut the new service down immediately because the committee did not communicate with the compliance officer.
Get as much information as possible from the source so that potential risks can be researched and a report prepared and presented to the head of marketing.
Start initial research into potential risks but wait until notified that the service has been approved by the committee before initiating extensive research.
The correct next course of action is to request that the new product approval committee include the compliance officer. This is because the compliance officer has the responsibility to ensure that the new financial service complies with the applicable laws, regulations, and standards, and does not pose any undue risks to the institution or its customers.The compliance officer should be involved in the new product development process from the beginning, and provide guidance and feedback on the potential compliance implications and requirements of the new service12.
1: CAMS Certification Package - 6th Edition | ACAMS, Chapter 6: Developing an Effective Anti-Money Laundering Program, p.121-1222: FATF Guidance: The Role of Hawala and Other Similar Service Providers in Money Laundering and Terrorist Financing, October 2013, p. 28, http://www.fatf-gafi.org/media/fatf/documents/reports/Role-of-hawala-and-similar-in-ml-tf.pdf
Question 34

What is the goal of the Egmont Group in providing a forum for Financial Intelligence Units (FIUs) around the world?
To improve international laws to combat money laundering and the financing of terrorism and foster the implementation of domestic programs.
To provide a forum for FIUs to improve cooperation in the fight against money laundering and the financing of terrorism and to foster the implementation of domestic programs in this field.
To improve communication with law enforcement in the fight against money laundering and the financing of terrorism and to foster the implementation of domestic programs in this field.
To improve cooperation with state and federal governments in the fight against money laundering and the financing of terrorism and to foster the implementation of domestic programs in this field.
According to the web search results, the Egmont Group is a united body of 170 Financial Intelligence Units (FIUs) that provides a platform for FIUs to securely exchange expertise and financial intelligence to combat money laundering, terrorist financing, and associated predicate offences12.The goal of the Egmont Group is to provide a forum for FIUs around the world to improve support to their respective governments in the fight against money laundering, terrorist financing, and other financial crimes345. The other options are not correct because they either do not capture the full scope of the Egmont Group's activities, or they are not the primary focus of the Egmont Group.
https://2009-2017.state.gov/j/inl/rls/nrcrpt/2015/vol2/239473.htm\
Question 35

A compliance officer at an insurance company has been reviewing the transaction activity of several clients.
Which transaction is considered a red flag for potential money laundering?
A client paid the quarterly life insurance premium using money orders from two different banks.
A client from a high-risk jurisdiction recently purchased property insurance for a real-estate development.
A corporation owns several affiliates and recently opened separate group life insurance policies for each of the affiliates.
A client established a $100,000 charitable annuity with a non-profit organization that provides health and safety assistance internationally.
https://www.naic.org/documents/committees_d_antifraud_meetingcc_faqsinsurance_103105.pdf
Paying the quarterly life insurance premium using money orders from two different banks is considered a red flag for potential money laundering.This is because money orders are often used by money launderers to avoid the scrutiny of banks and regulators, and to disguise the source and origin of funds12.Using money orders from two different banks also suggests that the client is trying to evade the reporting thresholds or the record-keeping requirements that apply to cash transactions3. The other transactions are not necessarily indicative of money laundering, although they may warrant further due diligence depending on the risk profile of the client and the nature of the insurance product.
Question 36

The branch manager notices that a number of customers come in weekly and always use the same teller to process their deposits. The manager notices that the customers and the teller, who are from the same ethnic group, are speaking in a foreign language and every once in a while the customers from local ethnic restaurants will bring the teller lunch. The commercial customers that visit the teller generally deposit the same amount of cash each time they come in.
How should the branch manager respond to this activity?
Transfer the teller to another branch
Conduct further investigation before taking any other action
Encourage the teller to bring in more business from the ethnic community
Suggest to the teller to send the customers to other tellers to avoid the opportunity for collusion
The branch manager should conduct further investigation before taking any other action, as this activity may indicate possible money laundering or fraud. The branch manager should review the transaction records of the customers and the teller, and look for any unusual or suspicious patterns, such as large or frequent cash deposits, round amounts, structured transactions, or inconsistent information. The branch manager should also interview the teller and the customers, and ask them about the nature and purpose of their relationship, the source and use of funds, and the reason for choosing the same teller. The branch manager should document the findings and report any suspicious activity to the appropriate authorities, if necessary.
CAMS Study Guide, 6th Edition, Chapter 3, Section 3.21
CAMS Study Guide, 6th Edition, Chapter 4, Section 4.21
CAMS Exam Questions and Free Practice Test, Question 322
Question 37

A law enforcement official calls a bank inquiring about a customer who is currently under investigation. The law enforcement official requests information about the customer.
How should the bank respond?
Confirm the customer is either a current or former customer
Inform the board of directors before responding to the request
Provide the requested information to help aid in the investigation
Request a formal letter be submitted to verify the validity of the request
The bank should request a formal letter be submitted to verify the validity of the request, as this is the best practice to ensure compliance with the law and protect customer privacy. The bank should not confirm or deny the existence of a customer relationship, nor provide any information without proper authorization. The bank should also not inform the board of directors before responding to the request, as this could compromise the confidentiality of the investigation or alert the customer.
ACAMS CAMS Certification Video Training Course, Module 2: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), Section 2.3: Data Protection and Privacy, Slide 10
ACAMS CAMS Certification Study Guide, 6th Edition, Chapter 2: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), Page 51
Question 38

A bank compliance officer has implemented enhanced monitoring rules that have identified some unusual activity that may be indicative of human trafficking.
Which red flag should prompt additional transactional review?
Wire transfer activity from countries with significant migrant populations
Cash deposits that occur in cities where the customer resides and conducts business
Cash deposits that occur in cities where the customer does not reside or conduct business
Cash deposits that occur in cities where the customer does not reside or conduct business followed by same-day withdrawals
A customer's account appears to function as a funnel account whereby cash deposits occur in cities/states where the customer does not reside or conduct business. Frequently, in the case of funnel accounts, the funds are quickly withdrawn (same day) after the deposits are made
Question 39

The compliance officer for a private bank has been tasked with writing a policy on how the bank will deal with intermediaries.
Which two aspects should be included in the policy in respect of intermediaries to align it with the Wolfsberg
Anti-Money Laundering Principles for Private Banking? (Choose two.)
When an intermediary introduces clients to the bank, it is not necessary for the bank to perform due diligence on the intermediary's clients.
Where an intermediary introduces clients to the bank, the bank must obtain the same type of information with respect to an introduced client that would otherwise be obtained by the bank, absent the involvement of the intermediary.
Where an intermediary manages assets on behalf of a number of clients and is the account holder with the bank, but that intermediary does not conduct the same level of due diligence as the bank, it is necessary for the bank to undertake due diligence on the intermediary's clients.
Where an intermediary manages assets on behalf of a number of clients and arranges for the opening of accounts for its clients with the bank, and that intermediary is a financial institution subject to similar regulations, it is necessary for the bank to perform due diligence on the intermediary's clients.
According to the Wolfsberg Anti-Money Laundering Principles for Private Banking (2012), the bank should have a clear policy on how to deal with intermediaries, such as lawyers, accountants, trust and company service providers, or other financial institutions, that introduce or manage clients on behalf of the bank.The policy should reflect the following aspects1:
The bank should perform due diligence on the intermediary itself, including its ownership, reputation, regulatory status, and AML policies and procedures.
The bank should obtain the identity and beneficial ownership information of the clients introduced or managed by the intermediary, and verify them using reliable and independent sources, unless there are legal or regulatory impediments to do so.
The bank should assess the level of due diligence performed by the intermediary on its clients, and determine whether it is equivalent or comparable to the bank's own standards. If not, the bank should perform additional due diligence on the intermediary's clients, or decline to accept them.
The bank should monitor the transactions and activities of the clients introduced or managed by the intermediary, and report any suspicious or unusual activity to the relevant authorities.
Option B is consistent with these aspects, as it states that the bank must obtain the same type of information with respect to an introduced client that would otherwise be obtained by the bank, absent the involvement of the intermediary. This ensures that the bank has a sufficient understanding of the client's identity, source of wealth, and risk profile, and can apply appropriate AML measures.
Option C is also consistent with these aspects, as it states that where an intermediary manages assets on behalf of a number of clients and is the account holder with the bank, but that intermediary does not conduct the same level of due diligence as the bank, it is necessary for the bank to undertake due diligence on the intermediary's clients. This ensures that the bank does not rely solely on the intermediary's due diligence, and can identify and mitigate any potential money laundering risks associated with the clients.
Option A is not consistent with these aspects, as it states that when an intermediary introduces clients to the bank, it is not necessary for the bank to perform due diligence on the intermediary's clients. This contradicts the principle that the bank should obtain and verify the identity and beneficial ownership information of the clients introduced by the intermediary, unless there are legal or regulatory impediments to do so.
Option D is also not consistent with these aspects, as it states that where an intermediary manages assets on behalf of a number of clients and arranges for the opening of accounts for its clients with the bank, and that intermediary is a financial institution subject to similar regulations, it is necessary for the bank to perform due diligence on the intermediary's clients. This contradicts the principle that the bank may rely on the due diligence performed by the intermediary on its clients, if the intermediary is a regulated financial institution that applies equivalent or comparable AML standards to the bank, and if the bank has access to the relevant information and documentation.
1: Wolfsberg Anti-Money Laundering Principles for Private Banking (2012), Section 3: Intermediaries
Question 40

A non-U.S. bank wants to open an account at Bank A, which is a U.S.-based bank.
Which information must Bank A obtain under the USA PATRIOT Act?
A complete client list from the non-U.S. bank
The identity of owners and percentage of ownership of the non-U.S. bank
The structure and identity of the management team at the non-U.S. bank
The details of the non-U.S. bank's anti-money laundering compliance training program
Section 313 of the USA PATRIOT Act prohibits U.S. financial institutions from establishing, maintaining, administrating or managing correspondent accounts for foreign shell banks. A foreign shell bank is a foreign bank that does not have a physical presence in any country. To ensure compliance with this prohibition, U.S. financial institutions must obtain from each foreign bank that maintains a correspondent account the identity of each owner of the foreign bank and the nature and extent of each owner's ownership interest. This information must be updated within 30 days of any change.
USA PATRIOT Act | FinCEN.gov, Section 313
US PATRIOT ACT | State Street
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