ACAMS CAMS Practice Test - Questions Answers, Page 5

The correct answer is B, as a customer acceptance policy is an essential element of KYC standards according to the Basel Committee's Customer Due Diligence for Banks paper1. A customer acceptance policy defines the types of customers that the bank is willing to accept, and the conditions and limitations that apply to such relationships.A customer acceptance policy helps the bank to avoid customers who are likely to pose a higher than average risk of money laundering or terrorist financing, or who are not willing to provide sufficient information for identification and verification purposes1.

Under the USA PATRIOT Act, a U.S.bank that maintains a correspondent account for a foreign bank operating under an offshore license must obtain from the foreign bank the name and address of a person residing in the United States who is authorized to accept service of legal process for records related to the correspondent account1. This requirement is intended to facilitate the U.S. authorities' access to information and records regarding the correspondent account and its underlying transactions, especially in cases where the foreign bank is located in a jurisdiction that does not cooperate with U.S.law enforcement or regulatory requests2.

USA PATRIOT Act, Section 319(b)(2)(A)1

ACAMS, CAMS Examination Study Guide, 6th Edition, Chapter 5, pp. 151-152

Wolfsberg%27s_CBDDQ_Capacity_Building_Guidance_Final%20V1.1.pdf

The primary consideration the institution should keep in mind when deciding whether to agree to the law enforcement request is whether the institution can continue to meet its regulatory obligations with the accounts open. This is because the institution has a duty to comply with the applicable laws and regulations, and to protect its reputation and integrity from being associated with money laundering or terrorist financing. The institution should assess the risks and benefits of keeping the account open, and consult with its legal counsel and senior management before making a decision.The institution should also document its decision and the rationale behind it, and communicate it to the law enforcement agency12.

1: CAMS Certification Package - 6th Edition | ACAMS, Chapter 7: Conducting or Supporting the Investigation Process, p.143-1442: FATF Guidance: Anti-Money Laundering and Terrorist Financing Measures and Financial Inclusion, February 2013, p. 50-51, http://www.fatf-gafi.org/media/fatf/documents/reports/AML_CFT_Measures_and_Financial_Inclusion_2013.pdf

According to the ACAMS CAMS Certification Study Guide (6th edition), the bank should file a SAR if it knows, suspects, or has reason to suspect that a transaction involves funds derived from illegal activity, or is intended or conducted to hide or disguise funds or assets derived from illegal activity, or to evade any BSA regulation or federal law, or has no business or apparent lawful purpose, or is not the sort in which the customer would normally be expected to engage1. The scenario described in the question meets these criteria, as the small deposits and withdrawals from a high-risk country could indicate money laundering, terrorist financing, or other illicit activities.The bank should also document its decision to file or not file a SAR, and retain the supporting documentation for five years1.

The other options are not correct because they either do not comply with the BSA requirements, or do not adequately address the potential risk of the activity. Blocking any further activity could alert the customer of the bank's suspicion, and could also interfere with law enforcement investigations. Initiating an investigation into the activity could be part of the bank's due diligence process, but it does not substitute the obligation to file a SAR if the activity is suspicious. Contacting the customer could also tip off the customer, or elicit false or misleading explanations that could hinder the bank's assessment of the activity.

Wire transfers to high-risk jurisdictions and large cash deposits from a high-risk jurisdiction are two red flags that may indicate money laundering.These activities suggest that the customer is trying to move funds from or to a country that has weak anti-money laundering (AML) controls, or that is known to be a source or destination of illicit funds12.Wire transfers can also be used to obscure the origin or destination of the funds, or to layer transactions through multiple accounts or intermediaries3.Large cash deposits can indicate that the customer is trying to avoid the reporting or record-keeping requirements that apply to cash transactions, or that the customer is dealing with proceeds from illegal activities45. The other two options are not necessarily red flags, as the bank may have legitimate reasons to allow cash deposits, and the client may reside in a high-risk jurisdiction for legitimate reasons.

The bank's existing anti-money laundering training is not adequate to be delivered to the employees of the newly acquired credit card business, because anti-money laundering training needs to be tailored and focused on the risks specific to the business. Credit card businesses face different types of money laundering risks than retail banks, such as card-not-present fraud, identity theft, card skimming, and prepaid card abuse. Therefore, the anti-money laundering training for credit card businesses should cover the specific red flags, indicators, typologies, and mitigation measures related to these risks, as well as the relevant laws and regulations that apply to credit card businesses.

CAMS Study Guide, 6th Edition, Chapter 4, Section 4.31

CAMS Study Guide, 6th Edition, Chapter 5, Section 5.21

Certification Candidate Handbook, Section 3.22

Latest CAMS Exam Questions, Question 433

Cash couriers are individuals who physically transport cash or other monetary instruments across borders or within a country, often to avoid detection by authorities or reporting obligations.Cash couriers are a common method used by terrorist financiers to move funds without leaving an audit trail, as cash is anonymous, portable, and widely accepted12.

1: ACAMS CAMS Certification Video Training Course, Module 4: Terrorist Financing, Section 4.2: Methods of Terrorist Financing, Slide 92: ACAMS CAMS Certification Study Guide, 6th Edition, Chapter 4: Terrorist Financing, Page 97

20Typologies%20Report.pdf (24)

'Increasingly, countries are using economic sanctions instead of military force as an instrument of foreign policy'

'The decision of whether or not to file a suspicious transaction report (also known as a suspicious activity report or SAR in the United States) often involves weighing the aggravating and mitigating factors arising from the research conducted during the investigative process. Financial institutions should draft procedures that document the factors to consider when determining whether a suspicious transaction report (STR) is appropriate.'