CAMS Certified Anti-Money Laundering Specialist (CAMS7 the 7th edition) Question and Answers

The agent requested a disposal of assets at a lower price than recently acquired.

The assets acquired through an auction were put in the name of an offshore company

The agent acted on behalf of an individual residing in a country which is on the EU's list of high-risk jurisdictions

The power of attorney was issued by a law firm in a different EU country from where the transaction took place.

Past employment records.

Personal references from close associates.

Personal resume.

Internet and public media searches.

Criminal history searches.

A court order requests the bank to disclose the SAR subject to obtaining agreement from the legal team

A customer asks about potential reporting to the local Financial Intelligence Unit (Fill)

An external consultant inquires about the details of the SAR

A third-country police directly inquires about the customer.

Focus on understanding the risks presented by new clients within the assessment period, and the controls to mitigate associated money laundering risks.

Include appropriate measures and controls to mitigate money laundering risks stemming from higher-risk customers, products, and geographies.

Focus on the inherent risk in the FI's product and service offerings and the controls to mitigate potential money laundering risks.

Use a framework provided by a third-party vendor and used by other FIs in the jurisdiction.

Engagement of third-party art advisors as representatives at art auctions

High-quality single pieces of significant value sold on social media platforms

Use of art and antiquity experts to verify an item's authenticity

Paying fair market value or premium prices for valuable art, gems, or precious metals at auction

Use of art storage facilities located in tax-free zones

The principal activities of the proposed company are importing and exporting new furniture

The prospective client presents confusing details about the proposed business and has very little knowledge about the proposed business activity

The prospective client is unable to provide information about the beneficial owners

The prospective client exhibits confidence when speaking to the accountant when providing personal details

The prospective client is able to provide source of funds and source of wealth documents

Investigate the changes of address and change of UBO and in the meantime decline payment and withdrawal instructions from the policy until completion of the investigation and next steps are agreed upon

Request the relationship manager set up a meeting with the policyholder to update their address and submit details of the new UBO in the name of good customer service

Investigate the changes of address and change of UBO and in the meantime freeze the client's policy

File a suspicious transaction report because the insurance company was not made aware of the business' change of UBO

Oversight of the Financial Intelligence Units in FATF Member countries

Providing a unique platform for information exchange regarding anti-money laundering efforts

Regulation of financial markets through directives and executive orders

Enhancement of international cooperation to foster anti-money laundering efforts via recommendations and guidance

The Bank Secrecy Act (BSA) extraterritorial reach requires that the Travel Rule be applied to all financial institutions globally, including all USD transactions

The Anti-Money Laundering Act of 2020 (AML Act) extraterritorial reach covers all USD transactions throughout the global economy

The Office of Foreign Assets Control's (OFAC's) economic and trade sanctions may pose extraterritorial risks for financial institutions and businesses outside of the US

Section 319(b) of the USA PATRIOT Act extraterritorial reach permits the seizure of funds from a correspondent bank account in the US that have been opened and maintained for the foreign bank

A long-term client wants a change to a policy that is already in force

The payment was made via a company that appears to be owned and controlled by the client being insured

The additional premium payable appears to be within the client's means based on the KYC information collected

The payment was made via a company in a jurisdiction known to have lax AML controls

Pre-populated templates for SAR filing

Integration of open-source tools to gather real-time intelligence

Automated case prioritization based on risk scoring

AI-powered dashboards summarizing flagged transactions

Conduct an open-source intelligence investigation using artificial intelligence tools to gain more information on the activities of the suspected employee

Use the FI's whistleblowing channel to report the suspected employee

Question their co-worker to determine if their suspicions are correct before reporting to the FI's Human Resources department

Warn colleagues and customers of the FI that the employee's suspicious financial investment proposals could be a scam

Report the suspected employee to the line manager of the FI to take the required action

Blockchain to ensure traceability and security in shared data transactions

Data encryption to protect sensitive information from unauthorized access

Privacy-enhancing technologies (PETs) to enable secure and privacy-compliant data sharing

Artificial intelligence (AI) to automating compliance processes like data anonymization and secure sharing

Cloud storage solutions for efficient data handling and management

Policies are detailed instructions for specific processes. Procedures are an overarching framework. Neither policies nor procedures are mandatory for knowledge and adherence

Policies are broad guidelines. Procedures are detailed Instructions for specific processes. Only procedures are mandatory for knowledge and adherence.

Policies are detailed instructions for specific processes Procedures are an overarching framework Both policies and procedures are mandatory for knowledge and adherence.

Policies define the principles of an organization and influence the drafting of procedures. Procedures are detailed instructions for specific processes.

to force developing nations to adopt liberal or substantive democracies.

to support governments and regimes in the peaceful resolution of conflict.

to punish governments for having weak financial crime controls.

to deter non-democratic and non-constitutional changes within countries.

to support the protection of human rights.

Using gaming accounts to transfer illicit funds between players undetected

Structuring transactions to avoid reporting thresholds by keeping them under certain limits

Providing false personal information to evade regulatory oversight

Ensuring identity verification is completed prior to the onboarding of new customers

Investing all gaming winnings into high-risk stocks to conceal funds

Providing basic AML training to all employees

An AML officer being appointed to the board as a working member of management with increased authority

Auditors providing prescriptive guidance and support to the program following a less than satisfactory audit

Providing effective challenge with AML staff and continuous cross-training

collecting complete customer information.

ongoing screening of customers.

suspicious activity and sanctions reporting.

evaluating the effectiveness of compliance controls.

FIs may disclose customer information to any third party

FIs may provide information about their internal compliance programs to law enforcement agencies without any limitations

FIs are required to report all transactions involving foreign entities to FinCEN so that FinCEN can share this information with other financial institutions

FIs may share information about suspected money laundering activities with other FIs to aid in identifying and reporting suspicious transactions

Permanent US resident aliens regardless of location

Merchants that offer US-origin goods for sale regardless of location

Non-US financial institutions that offer accounts in USD regardless of location

US citizens regardless of location

US incorporated entities and their foreign branches

The EU AMLD and local AML regulations are separate and unrelated legal frameworks.

The EU AMLD and local AML regulations must have identical requirements.

Local AML regulations may impose additional or more stringent requirements than the EU AMLD.

The EU AMLD take precedence over local AML regulations.

Local AML laws and regulations override the requirements of the EU AMLD.

The EU AMLD provide a framework that member countries must implement through local AML regulations.

Public organizations can belter understand what the private sector experiences and inform policy and the enactment of laws

Data-protection privacy policies provide an opportunity to develop information sharing protocols to prevent unauthorized access to information

Data-protection privacy policies prohibit the evolution of PPPs due to restrictions based on legacy government legislation

Small business owners can choose third-party providers or financial institutions to keep their private data safe which can easily be shared within a PPP

Digital identification on mobile devices

Different applications to connect and communicate

Authentication via artificial intelligence (AI) and biometrics

Quick CDD and client traits analysis during onboarding

Developing a culture of compliance

Improving governance in the public sector by requesting feedback from financial institutions

Reducing transaction monitoring false positives for all financial institutions

Improving the quality and quantity of data available for analysis by sharing information

Drafting detailed action plans for the audit team to execute to close the findings

Reperforming the testing for the controls mentioned in the findings to confirm the results of the audit

Defining remedial actions based on the findings' root cause analysis

Assigning responsibility for reviewing the action plan to the board of directors

To avoid sanctions breach related to payments

To avoid onboarding customers previously exited due to true match

To meet international regulatory requirements and identify risks across jurisdictions

To be in line with the risk appetite statement

Whether the vendor has documented appropriate internal controls for designing system and data integration schema

Whether the permissions and user access settings for reviewing, investigating, and reporting details of alerts generated by the system are commensurate with those in use at other banks

Whether the monitoring system is adequate with respect to the bank's size, activities, complexity, and risks

Whether the monitoring system can be configured to enable the bank to execute trend analysis of transaction activity and to identify unusual business relationships and transactions

Ensuring an effective export control and treaty compliance system

Administering and enforcing economic and trade sanctions

Designating jurisdictions as primary money laundering concerns

Managing trade agreements between the US and foreign countries

Adversary governments using sophisticated attacks to threaten critical infrastructure and sectors, including finance, health care and energy

Networks of individuals and entities exploiting financial systems to move funds that will be used to acquire weapons of mass destruction or their components

Transnational criminal organizations expanding their engagement into more varied types of illicit activities, including human trafficking and corruption

Networks of individuals and entities raising funds to further proliferate their ideological goals wholly or in part through unlawful acts of force or violence

Determining whether the potential suspicious activity is consistent with the customer's transactional behavior, nature of business, and occupation

Contacting the country's financial intelligence unit's (FIU's) officers to seek advice on whether the potential suspicious activity is indeed a suspicious activity

Gathering and assessing internal sources of information, including information obtained from the customer, transactions, and value and volume

Identifying and reviewing external information, including online presence, customer-related entities, and relevant media

A customer changes multiple high-denomination notes to low-denomination notes.

A customer conducts cash transactions using multiple branches of the MSB on the same day.

A customer has a family link to the destination of a money transfer

A customer sends and receives money transfers in equal amounts at or about the same time.

A customer only wants to deal with a particular employee in the MSB.

how an organization defines Its risk-based approach.

how an organization determines its key risk and performance indicators.

the level and type of risk the organization is willing to take to meet its objectives

the purpose of an organization's financial crimes compliance program.

AML and Data Protection Privacy laws should not be mutually exclusive.

During evidence gathering, privacy laws are less important than local AML laws.

Terrorist financing is more relevant in the context of data protection and supersedes laws.

Countries should clarify where AML and Data Protection Privacy laws are not balanced.

Companies operating in cash intense businesses not subject to licensing requirement

Companies operating hospitals and health-care services

Companies operating in cash intense businesses subject to licensing requirement

Companies producing pharmaceutical products and medical devices, companies active in the mining industry

Companies operating retail shops countrywide

Investment advisor

Relationship manager

Operations manager

Compliance officer

Without the expectation of reciprocity on how the information will be used.

Only if the status of the foreign FIU is related to law enforcement.

Freely, spontaneously, and upon request, on the basis of reciprocity.

With set limits on the amount of financial and administrative information provided.

The Organisation for Economic Co-operation and Development (OECD)

The Egmont Group

The Wolfsberg Group

The International Monetary Fund (IMF)

mutual legal assistance treaty.

memorandum of understanding.

request for urgent information.

declaration of understanding.

memorandum of agreement.

Notify the customer of the information-sharing request from the other financial institution and seek their consent before responding

Consult the institution's legal counsel to validate the subpoena, then respond directly to law enforcement while ensuring all documentation is properly recorded

Respond to the FinCEN 314(b) request first, as it allows for voluntary information sharing with partner organizations

Provide the requested records to both law enforcement and the other financial institution immediately to ensure full cooperation and transparency

a deliberate attempt not to pay the tax which is due or obliged.

bending the rules to pay less tax than required.

not an important crime as it does not impact society.

a sophisticated process which always means the same as tax avoidance.

The bank's designated AML compliance officer is likely to face criminal prosecution because the bank received a regulatory order

The bank's designated AML compliance officer and senior management can face civil prosecution but not criminal prosecution for violation of AML laws

The bank's designated AML compliance officer and senior management may face personal liability if they failed to take actions while aware of AML violations at the bank

The bank's designated AML compliance officer is the only individual in the company's senior management team that can face personal liability for violation of AML laws

The customer is the object of a civil subpoena.

The customer uses a shipping company dealing with specially designated nationals.

The account shows periodic fixed amount remittances for tuition fees.

The account has transactions that triggered multiple suspicious activity reports.

Use of cash to purchase property

Unlicensed real estate agents acting as front companies

Use of a registered trust for the purchase of property

Use of a company for the purchase of property

Manipulation of the value of a property

Cash access from a pre-paid card increases the potential that the card will be used for money laundering purposes.

Transaction monitoring examines the relationship between due diligence information and account closings.

Account and transactional activity are monitored after the proper identification and verification of customers.

Numbered or alternate name accounts will only be accepted if the bank has established the identity of the client and beneficial owner.

Formal assessment

Regulatory overview

Technical analysis

Mutual evaluation

have never worked in previous assignments within the AMUCFT departments.

have no involvement with the organization's AML/CP T compliance staff.

have been screened by the board of directors before the audit starts

be sufficiently trained in AML to be able to provide an independent review.

These businesses are all cash intensive, increasing the risk of financial crime

KYC challenges arise because e-commerce platforms face global customers making customer due diligence complex and resource intensive

These businesses are highly regulated and therefore have no reason to be non-compliant as this would put them at risk of sanctions and fines

Criminals can make use of identify fraud to fulfill KYC processes for layering purposes

The settlement systems of these businesses are not sophisticated enough to cope with the high transaction volume

Restrict the client's access to the account

Request information from the relationship manager assigned to the account that caused the alert

Perform below-the-line testing to ensure the automated monitoring system is operating effectively

Send a request for information to the counterparty bank involved in the transaction that caused the alert

The residual risk would be eliminated entirely because the controls are sufficient to mitigate all potential risks

The residual risk would be significantly reduced due to the effectiveness of the controls in place

The residual risk would remain high due to the inherent nature of the private banking business

The residual risk would be moderately reduced, but further controls may be necessary to achieve an acceptable level

Low thresholds for transactions

Frequent use of cash

Cross-border transactions

Weak KYC policies and procedures

helping to identify high-risk sectors that require enhanced due diligence (EDO),

eliminating the need for sectoral risk assessments within the organization

guiding the allocation of resources for mitigating financial crime risks

requiring all organizations to apply standardized measures

automatically reducing the organization's responsibility for conducting its own risk assessment

The customer is attempting to convert illicit funds into “clean” withdrawals

The customer is attempting to avoid high fees by minimizing gambling activity

The customer is testing the gaming platform’s payout system for potential fraud

The customer is a high-risk gambler who regularly places large bets

Periodic review of suspicious activity reports (SARs) filed with FinCEN to determine whether any should be withdrawn.

Periodic and ad hoc cooperation with the legal team to appropriately investigate and monitor the transactions of subjects of subpoenas or government inquiries.

Periodic review of client profiles to ensure that the most up-to-date information is on file for high-risk clients in line with the bank’s internal policies and procedures.

Periodic review of the transaction monitoring scenarios and their productivity to ensure that appropriate AML typologies are reflected.

International cooperation provides actionable information to use against criminals

Those convicted of money laundering offenses are denied access to basic banking services

Money laundering offenses are investigated and criminally prosecuted

Financial intelligence information is collected by authorities and shared with the FATF for further investigation

Supervisors regulate financial institutions and non-bank financial institutions and their risk-based AML/CFT programs

The European Commission and the High Representative issue a joint proposal for an import ban on refined oil products.

The European Commission and the High Representative issue a joint proposal for an import ban on oil extraction equipment

The Council of the European Union adopts a new export control regime for electronic equipment

The Council of the European Union adopts a new import restriction regime for goods coming from countries that do not respect human rights

Only commit to action plans that require no new investment to maximize shareholder value

Draft action plans in consultation with the jurisdiction's FIU to remain aligned with other similar companies

Only commit to action plans that can be implemented and closed within the three-month management reporting cycle

Draft action plans to address the root cause of the deficiencies, regardless of how long they will take to fully implement

Politically exposed persons (PEPs)

Capital flight risk

Anti-bribery and corruption risk

Tax evasion

The Dutch bank should limit any information sharing to what is necessary, reasonable, and proportionate, in line with applicable laws and regulations

The Dutch bank's legal obligations to protect customer privacy and bank secrecy prohibit it from sharing any such information

The Dutch bank should require a production order from the Italian bank and receive approval from its legal department before sharing the requested information

The need to fight financial crime outweighs the EU's data protection and privacy regulations

Types of payment messages

Customers

Third-party service providers

Customer spouses

Gathering sufficient information to establish the source of funds and source of wealth

Assessing the level of money laundering risk posed by prospective and existing high-risk customers

Assessing and reviewing the minutes of the relevant committee responsible for onboarding customers

Ensuring an employee is responsible for liaison with the authorities on matters related to countering the finance of terrorism

Ensuring that resources in its compliance and AML areas kept pace with the bank's growth

An external audit highlights several deficiencies

The company is merging with or acquiring another entity

Extensive AML legislation is proposed by a legislative body in the company's jurisdiction

A high-profile money laundering case involving another industry is publicized

Paying premium several years in advance and terminating early for a refund

Natural persons having more than one insurance policy

High-premium life insurances that provide high payouts

Regularly switching policies and accepting penalties

Beneficiary payouts to elderly people

Introduction of new products or services

Mergers or acquisitions

Restructuring of the FI's risk and compliance functions

Use of new technologies for delivering existing products

Changes in the individuals overseeing the FI's product lines and sales strategies

comparing these risks with industry benchmarks to determine the residual risk.

implementing new controls to eliminate all risks

rating the effectiveness of the related controls in order to calculate the residual risk.

documenting the historical risk incidents for future reference.

The beneficiary of the wire transfers is a foreign company whose shareholders and director are other companies

The wire transfers are for different amounts but with the same beneficiary

The beneficiary of the wire transfer is a resident of a grey-list country

The beneficiary of the wire transfers is a resident of a foreign country bearing the same family name as the business owner

Send a 314(b) request to the corporation's bank in Hong Kong

Call the receiving individual to review identity verification documents

Confirm that neither the beneficiary nor the originator are sanctioned parties

Request supporting documents, including invoices and contracts to confirm the purpose of the payment

Check for negative news in public sources on the sender and receiver

difficulty in tracking the originator, recipient, and source of transactions.

remote verification of identity by third-party program managers.

heavy usage by senior political figures.

informal networks used for cross-border transactions outside of the formal banking system.

heightened risks of returned transactions.

Use of wire transfers

Loitering

Instructions or involvement from third parties

Amended letters of credit without reasonable justification

Non-standard settlement arrangements

The payment of company secretarial retainer fees to a foreign company in a tax-efficient jurisdiction

The payment of virtual offices services overseas

Inter-company loans from the holding company to the subsidiary company to finance the shipment of machinery

The payment of consultancy fees to unrelated companies and service providers established in a foreign jurisdiction

Implementation of a blacklist of correspondent customers with previously detected and investigated suspicious activity

Enhancement of a customer acceptance policy to more clearly identify high-risk customers

Increased frequency of training provided to front office employees

Enhancement of customer identification procedures to appropriately identify trust, nominee, and fiduciary accounts

KYC analyst

Senior management

Relationship manager

Enhanced due diligence compliance officer

The preference of upper management regarding which teams should participate in the data-sharing initiative

The cost of the data-sharing system and whether it its within the existing IT budget

The potential return on investment (ROI) from the data shared versus the financial crime prevention effort

Ensuring that the shared data complies with applicable data protection regulations while maintaining the integrity and accuracy of the information

A privately held company originates funds transfers through the casino into the betting accounts of multiple patrons

A patron requests the casino to transfer their winnings to another gambling operator

A patron purchases a large amount of chips at a blackjack table using cash

A patron routinely places multiple bets on the same sporting events

A customer wants to purchase gold bars with a combination of cash and cryptocurrency

A customer specifically requests to purchase a Kimberly Process-certified cut diamond

A customer pays an antique dealer with a credit card for a high-value antique item

A customer wants a hand-written receipt for a cash purchase of a high-end, limited-edition luxury watch

A large multinational corporation with extensive, documented wire transfer activity

A local convenience store that replenishes the onsite automated teller machine (ATM) with cash from its till

A local used car sale lot that allows individuals to pay their monthly bill in cash

A virtual asset service provider (VASP), facilitating peer-to-peer cryptocurrency transactions

Advise further clarification is necessary, including which coins or tokens were sold and whether the crypto exchange conducts due diligence on its clients

Advise that the transaction should be stopped because cryptoassets in general are not regulated and by definition pose an unacceptable AML risk for the bank

Confirm to the advisor that the customer can proceed with the transaction if the client's KYC is up to date and a search on a public blockchain explorer does not provide any adverse media hits

Confirm to the advisor that the customer can proceed with the transaction because clients are already correctly onboarded KYC is complete and the source of funds is transparent

wire transfers in different currencies between accounts held at different banks for the same client.

an incoming third-party wire transfer followed by the purchase of real estate in the client's name.

an incoming wire transfer followed by the loan payment to a third party that is a business associate of the client.

multiple wire transfers sent to counterparties associated with the client as per KYC documentation.

Relevant information should be shared throughout the organization.

Revenue-generating business sectors should have precedence over compliance.

First line of defense should establish its own policies independently.

Cost of compliance should increase proportionately to revenues.

Keep senior management informed at all times to strategically organize a defense to terminate the law enforcement request

Verify the officer's identification and ask for the law enforcement request to be served when the Chief Executive Officer is available to sign for it

Ask for an extension to review the FI's privacy policy and confidentiality policy before providing any information under the law enforcement request

Designate a person responsible for the internal investigation in preparation of documents for the request

Information security, data privacy, and cybersecurity

Foreign exchange control, and precious gemstone and metal dealing

Ombudsman and anti-competition authority

Electronic contract and biological signature acceptance

Consumer protection, financial inclusion, and environmental, social and governance

The family members and close associates of PEPs may be involved in illicit activities.

PEPs are granted unlimited credit and financial immunity under international banking regulations.

PEPs may exploit embassy activities to conceal bribery and corruption transactions.

PEPs can have illegitimate fund sources but are legally protected from having their accounts closed for activities outside a bank's risk appetite.

E-commerce platforms exploited to move criminal proceeds

Use of stolen bank cards for online purchases

E-commerce platforms susceptible to fraud schemes

E-commerce platforms used as a front for illicit transactions

E-commerce platforms encouraging unregulated peer-to-peer lending

Use of foreign currency to mask criminal proceeds

PPPs improve financial crime detection and prevention by sharing intelligence between banks and law enforcement.

PPPs help banks reduce compliance costs by automating information sharing.

PPPs allow banks to manage their own suspicious activity report (SAR) filing process without the need to involve the Financial Intelligence Unit (FIU).

PPPs maximize the efficiency of the bank's compliance program by providing real-time intelligence from law enforcement.

collaborating with law enforcement agencies, financial institutions, and other stakeholders to detect and prevent Illicit financial activities.

conducting examinations of financial institutions to ensure compliance with anti-money laundering regulations.

engaging in providing financial services, including banking and investment activities, to the public and private sectors

facilitating the exchange of information between the public and private sectors.

enacting legislation regarding the operations of financial institutions.

cross-border purchases

purchases in the name of a natural person

paying true market price for a property

non-financed purchases

identify and address the current financial crime trends through the issuance of typologies originating in members outside of their FSRB's Jurisdiction.

provide AM L/C FT technical assistance needed by members in their FSRB junsdiction.

coordinate technical assistance for members in their FSRB jurisdiction

set and amend the FATF 40 Recommendations for members in their FSRB jurisdiction.

identify and address any gaps in the AML/CFT policies for members outside of their FSRB jurisdiction.

offer mutual evaluation and follow-up processes for members in their FSRB Jurisdiction.

All US citizens and permanent residents while located in the US, all US incorporated entities and their foreign branches, and all individuals within the United States

All US citizens and permanent residents regardless of where they are located, all US incorporated entities excluding their foreign branches, and all individuals and entities within the United States

All US citizens except those with dual nationality, US permanent residents, all US incorporated entities, and all individuals within the United States

All US citizens and permanent residents regardless of where they are located, all US incorporated entities and their foreign branches, and all individuals and entities within the United States

Inquiring about the source of wealth and source of funds

Asking to provide a list of immediate family members

Verifying the financial crime awareness of the client

Collecting necessary documents to verify the veracity of information

funds being stolen from other users.

obscuring the source of illicit funds.

layering transactions to hide the origin of funds derived from illicit activity.

difficulty converting into physical currency.

facilitating payment for other illicit activities and goods.

Customer privacy regulations should guide the development of due diligence and other money laundering and terrorist financing preventive measures.

Nations should work towards implementing targeted financial sanctions in alignment with the UN Security Council.

Nations should take measures to ensure there is transparency to the beneficial ownership of legal persons.

Nations should establish frameworks that take a risk-based approach to prevent and mitigate money laundering and terrorist financing.

Governments must work toward developing identical administrative and operational frameworks for investigating and prosecuting crime.

Regulators should direct Financial Institutions to establish appropriate frameworks to avoid banking higher risk customers.