ACAMS CAMS Certified Anti-Money Laundering Specialist (CAMS7 the 7th edition) Exam Practice Test

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

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

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

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

Consistency of approach

Periodic training of the function

Qualification of the team

Independent testing

Money services business (MSB)

Multinational corporations

Individual foreign customers

Non-profit organizations with international operations

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.

Ensuring the structure is reviewed by an outside auditor or consultant

Establishing a system of internal controls commensurate with the institution’s size and complexity

Designating a qualified board of directors to monitor day-to-day compliance

Establishing clear roles and responsibilities for AFC risk escalations and issues

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

Use the Fl's whistle blowing channel to report the suspected employee

Warn colleagues and customers of the F1 that the employee's suspicious financial investment proposals could be a scam

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

Report the suspected employee to the line manager of the F1 to take the required action

Incoming fund transfers from third-party payment processors, with limited originator information

Transactional activity with a registered virtual currency exchange

Large amounts of cash payments to migrant agricultural workers

Frequent payments for online advertisements or non-local classified ads

Private bankers should receive training on AML procedures.

All employees should receive refresher AML training.

The board should review and approve a revised AML policy to change customer due diligence requirements in private banking.

The legal department should conduct a review to assess potential legal consequences.

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

Past employment records.

Personal references from close associates.

Personal resume.

Internet and public media searches.

Criminal history searches.

Conduct AML audits no less often than every 12 months for consistency in annual reporting.

Remain independent from expressing opinions on the sufficiency of remediation or action plans to address findings and recommendations.

Be involved in the day-to-day operations of the AML program to immediately prevent control failures.

Report to the audit committee of the board of directors to maintain independence.

Determining detailed risk profiles for customers based on their activities and relationships

Focusing monitoring primarily on previously flagged customers while using standard controls for others

Choosing and applying effective controls that align with the identified risk levels

Performing a comprehensive risk assessment to identify customer, transaction, and geographic risks

Allocating resources equally across all customer segments to ensure fairness

Organizations are required to demonstrate that customers have opted into information sharing before submitting suspicious activity reports to relevant financial intelligence units (FIUs)

Any customer that is the subject of a suspicious report filing has the right to request redaction of their personal data

FIUs should document purposes for which personal data included on suspicious activity reports may be shared with other agencies

Data privacy laws prohibit information sharing between financial institutions for the purposes of AML investigations in all jurisdictions

Make an official request directly from the head of Country A's anti-corruption authority to Country B's corresponding law enforcement authority

Make a request for the required evidence using Country A's mutual legal assistance treaty with Country B

Use the International Criminal Police Organization (INTERPOL) network to obtain the required evidence from Country B

Use the Egmont Secure Web to obtain the required evidence from Country B's financial intelligence unit

Policies are broad guidelines. Procedures are detailed instructions for specific processes. Only 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.

Policies are detailed instructions for specific processes. Procedures are an overarching framework. Neither policies nor 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.

generative copilots.

small language models.

privacy coins.

crypto-mixers.

Reporting entities are prohibited from disclosing to clients or third parties that a suspicious activity report (SAR) has been filed or that an investigation is ongoing

Reporting entities can share general information about suspicious activities internally within the organization without compromising confidentiality

Reporting entities must inform their clients if a suspicious activity report (SAR) has been filed, as part of maintaining transparency in customer relations

Reporting entities are allowed to discuss suspicious activities with clients if it helps clarify a situation before submitting a suspicious activity report

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

Information security office (ISO)

Marketing and sales

Human resources (HR)

Data privacy office (DPO)

evaluate and monitor compliance with the FATF standards and provide recommendations for improvement.

assist countries in implementing EU, UN, and regional sanctions regimes.

develop and promote international standards to prevent money laundering and terrorist financing.

conduct investigations on countries legislations and laws to prevent them from being used for money laundering and terrorist financing.

ensure that countries follow its laws to maintain financial stability.

Criminal history searches

Personal resume

Internet and public media searches

Past employment records

Personal references from close associates

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

Regulation (EU) 2024/1624 of the European Parliament

Collaborative Sharing of Money Laundering/Terrorism Financing (ML/TF) Information & Cases (COSMIC)

USA Patriot Act Section 314(a)

USA Patriot Act Section 314(b)

Memorandum of Agreement.

Declaration of Understanding.

Memorandum of Understanding.

Mutual Legal Assistance Treaty.

Request for Urgent Information.

A check returning a mortgage overpayment made in error

A payment made to a mixer platform

A regular standing order to a high-interest savings account

A bill payment made to a friend after splitting a dinner bill

Allow beneficial owners to provide proxies lot voting on corporate decisions

Obscure beneficial ownership

Allow domicile in the nominee's jurisdiction

Derail investigations

It produces outputs that include a range of intermediate possibilities between "Yes" and "No"

It is an advanced analytics tool widely used to implement AFC controls

It allows for a greater number of exact matches, reducing the need for manual review

It is a new technique for enhancing the quality of alerts for review

Narrow the media sources to avoid unrelated articles

Rely on manual filtering by investigators

Increase the frequency of updates to media sources

Adjust AI/ML models to focus on high-risk keywords/phrases from reputable media sources

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.

The institution has observed an increase in customer demand for large-denomination banknotes.

The institution maintains a sequentially numbered log of the monetary instruments it sells.

The institution has observed a reduced settlement time in the transaction services that support the rapid movement or remittance of funds.

The institution has observed an increase in the adoption of its digital products and services.

Ensuring sanctions compliance by relying solely on international bodies like the UN because there is no requirement to adhere to local laws

Ensuring group policies and procedures prioritize adherence to US regulations because they are the most influential worldwide

Applying global AFC and sanctions policies to ensure consistency without the need to adapt to local regulations

Ensuring group policies cater to compliance with each country's specific AML and sanctions regulations

Make copies of the customer's documents and submit the originals to the enforcement agency

Notify the customer being investigated before submitting documents

Keep the customer's accounts open at the enforcement agency's verbal request

Have the institution's assigned legal counsel review the subpoena

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

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

Open source information

Customer profile

Adverse media search

Account activity

An RAS defines the amount and type of risk an organization is willing to take to achieve its objectives and should be communicated clearly to all stakeholders with corresponding controls implemented

An RAS is a detailed plan for managing operational risks and does not cover strategic or financial risks

An RAS is a formal document meant for regulatory compliance that does not influence day-to-day risk management practices within the organization

An RAS is used to outline the risk tolerance limits to external stakeholders and does not need to be communicated within the organization

often do not understand and are not covered by money laundering laws and regulations, unwittingly allowing criminals to enter the legitimate economy.

are an entry point to the financial system and a first line of defense against the infiltration of illicit funds into the legitimate economy.

are required under money laundering laws and regulations in all jurisdictions to stop any criminals from being able to integrate illicit funds into the legitimate economy.

are high-risk actors who can deliberately allow criminals to enter the legitimate economy.

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

The bank is likely to face secondary sanctions from global financial institutions despite addressing many of the previous concerns.

The bank may face civil or criminal penalties if it is unable to demonstrate sustained improvement in addressing the previous concerns.

The bank may face the risk of regulatory orders to remediate its AML program despite addressing many of the previous concerns.

The bank is protected from reputational risk arising from any regulatory action because regulatory orders must remain confidential.

The regulatory agency may require the bank's board of directors to publicly share the actions taken to address the previous concerns in order to limit its reputational risk.

It reduces the overall cost of compliance programs.

It eliminates the need for periodic audits of low-risk customers.

It ensures focus on high-risk areas while maintaining operational efficiency.

It standardizes compliance processes across all regions.

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 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.

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

Types of payment messages

Customers

Third-party service providers

Customer spouses

ensure that all adverse media sources are comprehensively analyzed without the need for human review.

significantly reduce human errors arising from repetitive tasks by delivering consistent and highly accurate analysis.

instantly identify intent behind media articles, allowing for more effective risk scoring.

automate the process of identifying new information and distinguishing it from previously encountered data.

cover multiple languages and scripts, surpassing the limitations of human linguistics.

Inviting prospective customers for an onboarding interview

Rejecting any politically exposed persons (PEPs) as customers

Understanding the source and origin of assets

Performing negative news checks of prospective customers

Producing financial stability reports on interesting customers

Short position

Reverse flip

Bid-ask spread

Wash trading

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.

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.

maintain compliance with the AFC and sanctions requirements of all countries where the F1 operates or has business relationships and to avoid penalties for violations in foreign jurisdictions.

ensure that sanctions regimes are applied selectively based on the regulatory standards of the countries where business activities occur, focusing primarily on aligned jurisdictions

compensate for the limited applicability of AFC and sanctions regulations on cross-border transactions and their reduced relevance for domestic operations in other jurisdictions.

ensure the F1 can manage business relationships in jurisdictions with stricter or more lenient regulations than their home country, allowing for operational flexibility

Ensuring the tools are compatible and integration with current systems is possible

Assessing whether internal staff members can provide training on the tools

Assessing the cost of implementation and cost of maintaining the tools

Basing business requirements on the features offered by the vendor's tools

Financial crime does enormous damage to society, undermining market integrity and consumers' and market participants' confidence

Financial crime risk incidents always result in fines and losses for the financial firm

Financial crime prevention processes make the onboarding process for clients unnecessarily burdensome and complex but create work

Financial crime prevention is important as it reduces costs and improves customer services.

Accepts to participate in an off-cycle FATF mutual evaluation to be held within the next 12 months.

Must pay a fine to be removed from the list before the next FATF plenary.

Has committed to swiftly resolving the deficiencies identified in a FATF mutual evaluation.

Poses a high money laundering, terrorist financing and proliferation financing risk and must be restricted from accessing the international financial system.

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

Forming a trust on behalf of a customer with a complex setup and acting as a nominee director

Auditing a firm that provides payroll software to large corporate customers

Preparing financial statements for a listed or a privately owned firm

Providing tax advice to an international customer hoping to move their assets out of their home country

Assisting an offshore corporation from a jurisdiction with no available beneficial owner information to buy property in the UK

Obtaining prior senior manager approval for all related transactions

Understanding the purpose of the business relationship

Performing adverse media searches on the customer

Identifying and verifying the customer's identity

Raise transaction monitoring thresholds for PEP accounts in automated systems to account for higher transaction values and complex legal vehicles and financial structures

Require approval from the prudential regulator for entering into or continuing the business relationship

Subscribe to commercial databases to assist in the detection of PEPs

Establish processes to understand the PEP's source of wealth and the source of funds, and to refresh that understanding on a regular basis

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.

Enhanced due diligence (EDD)

Transaction monitoring

Customer risk assessment

Sanctions screening

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.

Review the transaction history of the account to identify patterns, including the frequency, destination, and purpose of the wire transfers

Notify senior management and suggest account closure due to potential risks

Immediately file a suspicious activity report (SAR) based on the employee's report of suspicious behavior

Contact the customer directly to ask for clarification on the reason for the large cash withdrawal

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.

Escalate the matter to the institution's high-risk client committee, presenting the investigation findings and recommending offboarding while also acknowledging the relationship manager's concerns

Proceed with offboarding the customer unilaterally based on their investigation findings and anti-money laundering (AML) concerns

Attempt to persuade the relationship manager to agree with the offboarding recommendation by highlighting the potential reputational and regulatory risks associated with maintaining the relationship

Delay the offboarding decision and continue monitoring the customer's activities, waiting for further evidence to solidify the case for termination

Cryptoassets can be transferred across borders quickly, but the volatility of their value still makes them less attractive for money laundering compared to traditional assets

Mandatory reporting requirements have been implemented for certain types of crypto transactions, but gaps in regulation and enforcement still leave room for money laundering activities.

The transparency of blockchain technology helps law enforcement trace transactions, but it can also provide criminals with ways to obscure their financial activities through complex layering techniques.

The pseudonymous nature of transactions allows criminals to hide their identities while transferring large sums of money globally, making it difficult to trace the ultimate beneficial owner.

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.

Securely share sensitive information in the fight against money laundering and the financing of terrorism

Establish an environment to foster trust amongst countries

Sign memoranda of cooperation that recognize and allow room for case-by-case solutions to specific problems

Improve global cooperation between FIUs

Propose legislation to combat financial crime, including money laundering and the financing of terrorism

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

Work with the front-line to understand their strategic growth targets specifically aimed at increasing their market share around military technology and dual-use products

Review the organization's sanction risk assessment to better understand the potential for exposure to Russia and the Democratic People's Republic of Korea

Read and analyze the most recent National Proliferation Financing Risk Assessment produced by the relevant body of the organization's jurisdiction

Undertake a detailed review of all payment-related transactions to any clients identified as defense contractors, paying special attention to the beneficial owners of those clients

The employee was originally from a high-risk jurisdiction

The employee had friends in high-risk industries

The employee had a lavish lifestyle for her income

The employee was constantly evasive about the reasons for leaving her previous corporate finance job

A low-priced security sees a sudden spike in investor demand with a rising price

A trading customer maintains a portfolio of securities concentrated in one specific emerging market

A firm sees an unexpected increase in demand for electronically traded funds

A security sees a transactional pattern of a steady decrease in both trading volume and prices

Mandatory participation in all regulatory inspections

Mandatory attendance and review of alt financial crime trainings

Setting clear criteria for escalations to senior management

Setting tone from the top

Account opening staff

Middle management

Senior management

First-level management

dictating what predicate offences must be considered in the Fl's risk assessment.

providing guidance on the types of customers and transactions that pose the highest risk.

defining exactly what policies and procedures must be implemented.

determining the maximum fines that can be imposed for AML violations.

Understanding why a customer has selected a particular financial institution for banking

Verifying the identity of a customer with reputable online source documentation

Limiting the online activities of a new customer during the first two months

Understanding the nature and purpose behind a new business opening an account at the bank

buy in-game items with virtual in-game currencies.

exchange in-game items with other players.

trade in-game items with other players that can be exchanged for fiat currency

obtain in-game materials by performing in-game activities.

Customer loyalty program tracking

Product usage analysis

Customer satisfaction surveys

Customer support ticket tracking

Credit risk assessment

Guaranteeing 100% accuracy in regulatory compliance across all jurisdictions

Improving customer satisfaction by offering personalized recommendations

Reducing identity theft effectively

Providing reliable customer authentication to enhance trust

Decreasing the time required for customer authentication

Performing a comprehensive risk assessment to identify customer, transaction, and geographic risks

Focusing monitoring primarily on previously flagged customers while using standard controls for others

Choosing and applying effective controls that align with the identified risk levels

Determining detailed risk profiles for customers based on their activities and relationships

Allocating resources equally across all customer segments to ensure fairness

account activity that is not consistent with the purpose of the account

bills of lading matching the description of goods, quantities, and values with transshipment details justified

transaction structures that appear unnecessarily complex

trade documents, such as invoices and letters of credit, that are not clearly worded or are in foreign languages

invoices with prices that are much higher than market price

fluctuations in the pricing of standard goods and services

Enterprise-wide risk assessments and the employee handbook for any limitations on sharing commercially sensitive customer data

The risk rating of the customers to avoid sharing data relating to higher risk customers

The organization's AML compliance policies to ensure that customer data can be easily shared internally and internationally

Applicable data privacy laws in relevant jurisdictions and the organization's data security and privacy policies for any limitations

Receiving securities into an existing brokerage account following the death of a spouse

Allowing fixed income securities to mature

Using brokerage accounts like deposit accounts

Engaging in transactions involving nominees or third parties

collecting complete customer information.

ongoing screening of customers.

suspicious activity and sanctions reporting.

evaluating the effectiveness of compliance controls.

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 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

Who made the decision not to file the SAR

Why the officer deemed that the case did not merit filing a SAR

How much money was involved in the case

How the money flowed through the institution

When the unusual activity occurred

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

waste management sector companies based in high-risk jurisdictions with payments or trade invoices tor types of waste aligned with those they are authorized to process.

frequent payments from companies in the logging. milling, or waste trade sectors to individuals or beneficiaries unrelated to the legal parson activity or business.

unexplained wealth and cash transfers involving senior officials or politically exposed persons for their family members) with a position of responsibility related to the management or preservation of natural resources.

small cash transfers from cash-Intensive businesses to beneficiaries in areas known as a source of gold mining, illegal logging, and Illegal land clearing.

Use a static risk assessment model that remains unchanged until a significant regulatory update occurs to ensure consistency in the evaluation process over time

Delegate the risk assessment process to individual business units to conduct independently and allow for specialized assessments tailored to each unit's specific activities

Conduct a periodic enterprise-wide risk assessment that includes identifying inherent risks, evaluating the effectiveness of existing controls, and determining residual risks

Focus primarily on AML risk assessments, as these are typically the most scrutinized by regulators, while addressing other financial crime risks only when issues are identified

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

Politically exposed persons (PEPs)

Capital flight risk

Anti-bribery and corruption risk

Tax evasion

Be consistent with the head office audits

Be tailored to the higher of standards between the jurisdictions.

Conform to the foreign jurisdiction policies to align with the head office policies.

Provide all foreign jurisdiction reports to the head office for approval.

All the financial institutions where the new customer currently banks or banked previously

The type of business the corporate customer is engaged in

The employment profiles and information of all employees of the new customer

The country or location where the customer is from or conducts business

The identity of senior managing officials and all individuals authorized to operate the account

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