Which requirement of a financial institution's compliance program should an auditor review first to understand key roles and responsibilities?

Designation of an individual or individuals responsible for coordinating and monitoring day-to-day compliance

List of high-risk customers subject to enhanced due diligence and the measures taken to mitigate the risks

Names of politically exposed persons that are subject to ongoing monitoring

List of suspicious transactions reported to the regulator

Which should be evaluated when analyzing components of risk mitigation in an AML risk assessment? (Select Two.)

Office of Foreign Assets Control filtering

Which are key responsibilities of internal auditors? (Select Two.)

Evaluating the management of risk

Acting as a catalyst for improvement

Implementing controls and other safeguards

Determining appropriate risk appetite of the entity

Evaluating the management of risk

Acting as a catalyst for improvement

Mitigating the risks facing the organization

When reviewing an entity's sanctions compliance program, the auditor should ensure who is exempt from the Office of Foreign Assets Control's regulations?

Non-US citizens residing in the US

US entities having branches outside the US

Non-US entities having branches outside the US

US citizens residing outside the

Non-US citizens residing in the US

Which best explains why the auditor rates the audit finding on sanction screening severity high?

The tool might miss potential sanction violations given the long intervals before the sanctions lists are updated.

The efficiency of the sanction screening tool is not properly tuned due to the wrong sanctions lists.

The finding is on a different audit topic than the KYC related findings.

The tool might miss potential sanction violations given the long intervals before the sanctions lists are updated.

The organization might have reported a sanction breach that is not a current sanction violation.

Which KYC-related finding poses the most risk to the organization?

KYC requirements being considered a low priority not designed into business processes and implemented after product launch

Sanctions fists that are updated on a periodic basis following an annual risk assessment

KYC processes not being integrated into the business and associated application systems

Backlogs and delays in maintaining client files in accordance with the organization's policy

Which is the most significant risk associated with KYC requirements being considered a low priority not designed into processes and subsequently implemented after the products are already launched?

Frontline will not complete adequate CDD.

Product launches may not be adequately prepared.

Client experience improves as accounts can be opened more quickly.

Product launches will motivate frontline to get more customers.

Frontline will not complete adequate CDD.

Which should the external auditor recommend to ensure that the institution did not facilitate transactions involving a sanctioned person?

Re-screen all transactions over the period of time when the updated sanction lists were not uploaded against the current sanctions lists.

Perform a security risk and access assessment on the sanction screening tool to ensure more timely sanctions lists are uploaded.

Re-screen all transactions based on the sanctions lists that were active at that time but not uploaded.

Periodically monitor the sanctions lists uploaded by the screening tool to ensure the most up-to-date lists are in the system.

Which conclusion should the auditor make regarding the staff attendance of the periodic AML training program organized by the bank?

Staff attendance is incomplete because the board of directors is not part of the staff required to attend the periodic trainings, and there is no other specially designed AML training for the board.

Staff attendance is complete because the training is mandatory for staff in the business, operations compliance and senior management whose duties involve knowledge of AML controls and processes.

Staff attendance is complete because all staff in the institution are required to attend the AML training as part of the staff onboarding process.

Staff attendance is incomplete because the board of directors is not part of the staff required to attend the periodic trainings, and there is no other specially designed AML training for the board.

Staff attendance is incomplete because the compliance officer or the delegates are not part of the staff facilitating the 3-hour periodic AML training.

What conclusion should the auditor make regarding AML training for outsourced AML providers?

The approach outlined by the Dank is deficient, as it does not provide controls for the Dank to verify training delivered by outsourced providers to the bank's staff is appropriate.

The approach outlined by the Dank is deficient, as the service providers are not pan of the Dank s AML training during its staff onboarding.

The approach outlined by the Dank is appropriate as the Dank can rely on a professional service provider to deliver the AML training program for the Dank s staff.

The approach outlined by the Dank is deficient, as it does not provide controls for the Dank to verify training delivered by outsourced providers to the bank's staff is appropriate.

The approach outlined by the bank Is appropriate as it considers practical issues such as time zone differences and availability of both classroom and online sessions.

The auditor finds that the customer risk assessment (CRA) is completed at initial onboarding and is repealed for each customer every other year. The auditor's observations should Include that the CRA should:

include an assessment of jurisdiction where the customer currently resides as this may have changed.

be updated more often given the risk of the entity.

include an assessment of jurisdiction where the customer currently resides as this may have changed.

allow for sales oy third patties other than advisors since most of the customers are local residents.

include a qualitative overlay that 95% of the products offered are subject to regulatory exemptions.

The company has automated the completion of the customer risk assessment (CRA) into its main customer relationship management (CRM) system The CRM has needs recording the overall risk level assessed (Standard. Enhanced), the ID number of the staff member who completed the assessment, and me date of the last assessment Which additional fields should the auditor recommend to document the CRA process? (Select Three.)

Risk factors (Y/N. if Y please specify)

Type of customer (Trust. Company Individual)

Risk factors (Y/N. if Y please specify)

Type of customer (Trust. Company Individual)

Photo ID taken (Passport Driver's License. Other)

Suspicious activity report testing in the last three audits did not identify any metrics to indicate that volume vanes dramatically each month. Which step should the auditor take next?

Include the lack of metrics as a deficiency in the reporting.

Assign to continuous monitoring.

Include the lack of metrics as a deficiency in the reporting.

Escalate the finding regarding the lack of metrics to the board of directors.

During the interview, the local director informs the audit manager that no internal or regulatory audits have occurred since the local director's appointment The local director relies on a locally-approved independent external review of Company A performed 12 months ago by a local firm How should the audit manager respond?

Review the independent external review report to determine the extent to which reliance can be placed on it and identify matters requiring further review by internal audit.

Validate the accuracy of content of the independent external review report by recommending an audit and assess if the findings of both the independent review and audit are similar.

Review the independent external review report to determine the extent to which reliance can be placed on it and identify matters requiring further review by internal audit.

Rely upon the independent external review report as the base to formulate conclusions of the current onsite visit by internal audit.

Advise the group board that the group should set aside the external review reports as the use of the third party independent reviewer was not authorized at group board level.

Which should the auditor recommend to management in terms of the client's risk rating procedures?

Include an assessment of risk factors of channel, credit, and transaction risk to determine the client's composite AML and sanctions risk score.

Remove enhanced due diligence requirements for long-standing clients that are art collectors and do not transact with precious metals.

Include an assessment of risk factors of channel, credit, and transaction risk to determine the client's composite AML and sanctions risk score.

Provide staff with training on new record retention requirements for occasional transactions.

Remediate client files to verify their AML and sanctions risk rating and document enhanced due diligence measures, where applicable.

Review of client files reveals that staff members have been performing negative media searches for clients only when they recognize the client name. When an interesting story is identified a print of the results is inserted in the client file. There are no clear procedures on adverse media screening. Which should the auditor recommend? {Select Two.)

All staff members should be provided with additional training to ensure they adhere to standard procedures.

Procedures should be enhanced to require that all clients are subject to regular negative media screening.

Evidence of negative media screening retained in client files must comprise negative reports only.

All staff members should be provided with additional training to ensure they adhere to standard procedures.

Identification of relevant reports via adverse media searches must be escalated for an assessment for materiality.

Privacy regulation requires that clients who have a print copy of the adverse media m their files should be notified.

Procedures should be enhanced to require that all clients are subject to regular negative media screening.

The standard audit report format requires that an executive summary of the findings is included. Which statement is most appropriate for summarizing detailed findings'?

Evidence indicated inconsistent application of the client risk rating procedures and lack of evidence of enhanced due diligence measures for higher risk clients.

Although the evidence of enhanced due diligence performed was not available audit was satisfied that the risk of higher risk clients has been appropriately mitigated.

Deletion of transaction records for completed occasional transactions is operationally an efficient practice.

The dealers have assured they are able to identify long-standing regular clients that are typically collectors and customers for occasional transactions.

Evidence indicated inconsistent application of the client risk rating procedures and lack of evidence of enhanced due diligence measures for higher risk clients.

When sample testing client transaction records, the auditor finds that a client offered to sell a piece of art on a commission basis. A sale was completed and the purchase price was remitted to the client with less commission. What further investigation should the auditor undertake?

Perform enhanced due diligence on the seller and buyer and update client records with findings

Update the national art registry with the sale price of the art work so that art-based money laundering can be detected.

Perform enhanced due diligence on the seller and buyer and update client records with findings

Review procedures for accepting commission sales and determining the buyer's source of funds on a best effort basis

Commission an external investigator to perform enhanced due diligence on the buyer.

An auditor is asked to select a judgmental sample from a population of 1 000 clients onboarded during the previous 12 months. Which step should the auditor take first?

Review the CDD onboarding policies and procedures to determine the criteria for selection.

Evaluate quality assurance processes tor onboarding new clients.

Initially sample 10% of new clients onboarded.

Request a list of high-risk clients onboarded from management.

An audit determines that an important control is not being performed. The operational manager responds to the audit comment stating that they do not have adequate resources in the department to accomplish this task. The audit item discussion between the auditor and the operational manager is a(n):

general license authorizing a transaction for an entity, and a specific license authorizing a transaction for an individual.

A financial institution (FI) recently updated its transaction monitoring (TM) thresholds During validation which should be provided as evidence of optimized thresholds'? (Select Two.)

Comparison against past suspicious activity reported

Above-the-line and below-the-line testing

A copy of the FI's AML risk assessment

Comparison against past suspicious activity reported

Above-the-line and below-the-line testing

Length of time the FI has deployed the software program

Proof of validation from the TM software provider

What is the role of the internal audit in the governance process?

Periodically evaluate the effectiveness of processes and controls.

Perform quality assurance testing of transaction monitoring.

Monitor the risks of noncompliance with applicable laws and regulations.

Periodically evaluate the effectiveness of processes and controls.

Execute the corrective action plan.

An audit finding can be closed when:

the follow-up actions are completed.

all necessary evidence is collected and analyzed.

the underlying risk is reassessed and mitigated.

the final audit report is ready for delivery.

the follow-up actions are completed.

Independent testing of the New York branch of a foreign bank is conducted by an outsourced audit firm. The independent testing report should be submitted to which authority in order to provide appropriate level of governance and oversight?

Bank's designated board committee at the head office

Main office risk management committee

Bank's designated board committee at the head office

Compliance oversight committee of the New York branch headed by the chief compliance officer

New York branch regulatory compliance committee headed by the chief incumbent of the branch

What should the auditor look for to assess the adequacy of controls for non-profit organizations that are vulnerable to terrorist financing (TF) abuse? (Select Two.)

Ongoing due diligence on the business relationship and scrutiny of transactions undertaken throughout the course of that relationship

Concealing of the secretive diversion of funds intended for legitimate purposes to terrorist organizations

Ongoing due diligence on the business relationship and scrutiny of transactions undertaken throughout the course of that relationship

Exploitation of legitimate entities as conduits for TF for the purpose of escaping asset-freezing measures

Concealing of the secretive diversion of funds intended for legitimate purposes to terrorist organizations

Testing of the customer's identifying information using reliable and independent source documents

The overall volume of cash deposit reporting for the quarter

An auditor should present exceptions identified during testing to the auditee after.

analysis of likelihood and impact.

preliminary observation of exceptions.

performance of additional testing.

analysis of likelihood and impact.

When reviewing an AML policy, an auditor should expect to find that the policy.

contains items related to staff training.

is aligned with investment strategy.

was reviewed and approved by the money laundering reporting officer.

has been approved by regulators.

contains items related to staff training.

Which should be requested from a financial institution (FI) prior to beginning a data integrity review?

An end-to-end diagram that depicts core elements such as source systems and data flows

A report from the AML system showing the import of transactional data

A document from the vendor confirming the data integrity of the AML system's software

An end-to-end diagram that depicts core elements such as source systems and data flows

Which key elements of testing methodology should be documented? (Select Three.)

Documentation requirements of test results supporting the conclusion

Sampling method applied to select an appropriate sample size

Test objectives and population selection criteria to mitigate the inherent risk in the operational unit

Documentation requirements of test results supporting the conclusion

Sampling method applied to select an appropriate sample size

Planned expansion or changes in the business profile of the organization

Test objectives and population selection criteria to mitigate the inherent risk in the operational unit

Elements contributing to the inherent risk of the organization

Relevant testing techniques subject to the nature and size of the test population

If a final audit communication contains a significant error, the chief audit executive must:

recall the audit report assess the error and resubmit the correct one.

report the error to the local AML regulator.

reevaluate the item(s) and resubmit findings for discussion on factual accuracy.

tell those who received the communication of the error and corrections.

ACAMS Advanced-CAMS-Audit Practice Test 1 - Free Online Exam Prep & Questions

Question 1 / 40

Which factors should be taken into consideration in designing a follow-up strategy when remedial action needs to be taken due to deficiencies identified in an AML audit?

Available resources and board of directors' commitment

Responsible action owner and internal audit commitment to follow up

Reporting the breach and the regulatory response

Target completion date and status update on remedial action In follow-up strategies, the focus should be on ensuring accountability and tracking progress.

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