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

Formal assessment

Regulatory overview

Technical analysis

Mutual evaluation

National Risk Assessment

Regulatory guidance or publications

Government or state-run newspapers

Guidance issued by international bodies

Policies and procedures developed by other banks

Periodic review of suspicious activity reports (SARs) filed with FinCEN to determine whether any should be withdrawn.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

The first line

The second line

Senior management

The third line

Using brokerage accounts like deposit accounts

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

Allowing fixed income securities to mature

Engaging in transactions involving nominees or third parties

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

directly contact financial institutions in another country and share information pertinent to the investigation.

directly contact other FlUs in another country and share information pertinent to the investigation.

deputize its law enforcement investigators to assist in a material ongoing investigation in another country

assist law enforcement in another country with a material ongoing investigation.

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

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

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.

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

simultaneous encryption and decryption for underlying data.

full access to underlying data with full and uninterrupted calculations made on the data.

secure processing of data while it remains encrypted.

transfer, decryption and storage of data by the data processor.

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.

Defining a common communication approach and language between all involved parties.

Delays in the investigation due to a foreign FIU awaiting the results of queries performed by third parties.

Conducting an investigation in all countries through which ML funds were transferred when one or more of the countries do not have an FIU.

Investigations which involve high-ranking politicians, who often have influence over the local FIU.

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

Providing clear procedures to ensure compliance with local tax regulations

Using trusts to obscure the identity of beneficial owners

Promoting the use of complex corporate structures

Maintaining accurate and updated beneficial ownership details for all customers registered for their services

Establishing shell companies for holding financial assets

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.

Memorandum of Agreement.

Declaration of Understanding.

Memorandum of Understanding.

Mutual Legal Assistance Treaty.

Request for Urgent Information.

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.

Gatekeepers have specialized knowledge that can be abused to facilitate the movement of illicit funds and conceal the Involvement of their clients in illicit schemes.

Gatekeeper positions ate of a secretive nature, often making it difficult to verify (heir source of wealth.

Gatekeepers have unique relationship structures, making it difficult to determine beneficial ownership

Gatekeepers are entrusted with prominent functions and code of conduct that can assist laundering Illicit funds.

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

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

Helping overcome data protection and information sharing limitations

Enhancing the quality of reporting and additional informational input

Helping to alleviate the financial cost burden on law enforcement

Helping to design common approaches and identify desired deliverables

Offering flexibility, agility, and opportunities to adjust to the ML/TF threat environment

Analyzing customer sentiment through feedback and surveys

Identifying individuals or entities linked to criminal activities or sanctions

Periodically monitoring regulatory updates and enforcement actions for associated entities

Scanning publicly available news articles and regulatory alerts

Monitoring changes in credit scores of individuals or entities

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.

Challenge-response

Fingerprint

Security token

Passphrase

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

Allowing clients lo transact anonymity-enhanced tokens

Onboardlng of clients who are residents abroad. Including those with politically exposed person (PEP) status

Enabling transfer of tokens from one blockchain to another

Offering services to VASPs established in jurisdictions that are not FATF compliant

Operating a network of crypto ATMs charging high fees

Lack of adequate IP address tracking capabilities

imposes economic sanctions on jurisdictions with lax AML controls to force them to strengthen their controls.

conducts on-site inspections of financial institutions in jurisdictions with lax AML controls to identify deficiencies and recommend improvements.

publishes annual reports ranking all member jurisdictions based on their self-assessment of AML controls.

conducts a peer review process whereby member countries assess the AML controls of other jurisdictions and provide recommendations for improvement.

Buying property allows for the movement of large amounts of funds in a single transaction

Criminal networks could purchase real estate for use as supply houses or locations to grow, manufacture, or distribute illicit narcotics

Markets can be volatile, and buyers may not achieve a strong return on their investment

Beneficial ownership information might be opaque, and criminals may abuse arrangements like shell companies and trusts

Real estate transactions often involve financial institutions and other professional gatekeepers

The high value of properties may require multiple types of financing, which can make it more difficult to identify the source of funds

Wolfsberg Group

Transparency International

Financial Action Task Force (FATF)

Tax Justice Network

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

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

Investment advisor

Relationship manager

Operations manager

Compliance officer

Short position

Reverse flip

Bid-ask spread

Wash trading

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.

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

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

When using network analysis data to fight money laundering and financial crime, data protection and privacy can be disregarded because fighting crime takes precedent

Network analysis tools are an efficient means of generating relevant results because they only need a limited amount of data and computation power and artificial intelligence (Al) allows less-skilled people to quickly learn to use these systems

When using artificial intelligence (Al) with network analysis tools, it must be ensured that the algorithms used are not biased towards social criteria, such as race, gender, or religion

Network analysis allows for the identification of individuals or entities in a network by analyzing connections or links between them and can be used to study a wide range of systems, such as social or transportation networks

Analyzing relationships between individuals in a social network allows for the identification of hierarchies, the detection of behaviors and geographical movements, or an understanding of how groups are organized

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

Ongoing monitoring

Risk assessment

Policies and procedures

Suspicious activity reporting

Customer due diligence

A lack of professional body oversight or required use of accounting and auditing standards in the country of incorporation of the entity

Criminals posing as individuals seeking financial advice to place assets out of reach to avoid future liabilities

Incomplete records being provided during bookkeeping, making them difficult to audit

Accountants being used as intermediaries to introduce criminals to financial institutions

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

Establishing BSA/AML compliance staff reporting to the management of the business line in the first line of defense

Ensuring BSA/AML compliance staff is primarily outsourced

Providing BSA/AML compliance staff a reporting line to compliance or other second line of defense internal control function

Providing BSA/AML compliance staff with a reporting line to the chief financial officer

Setting tone from the top

Mandatory participation in all regulatory inspections

Mandatory attendance and review of all financial crime trainings

Setting clear criteria for escalations to senior management

include all documents or records that assisted the Fl in making the determination that the activity required a filing.

always be limited to account name, account details, and transaction records.

have written policies and procedures to maintain supporting documentation.

be saved in a single separate file with hard copies stored in a fireproof cabinet.

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.

Establishing risk controls

Assessing risk controls

Ongoing risk monitoring

Conducting a risk assessment

allows Financial Intelligence Units (FlUs) to enact sanctions against perpetrators of financial crime

promotes financial transparency and protects the integrity of the financial systems

needs to be approved by the Financial Intelligence Unit (FIU) before sharing between financial institutions

helps financial institutions to be more effective in fighting crime with data analysis

Accountants can prepare ledgers and spreadsheets, draft annual returns and make payments to government offices

Accountants can advise on the structuring of companies as well as ensure compliance with local tax regulations

Accountants are knowledgeable about financial management, including what to record over the course of the accounting year

Accountants are able to create and structure companies, falsify accounts and manipulate financial statements

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

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

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.

Prioritizing resources towards lower-risk areas to reduce workload

Regularly reassessing risks to adjust resource allocation

Allocating more resources to areas with higher financial crime risk

Providing equal resources to all departments to maintain consistency

Using a fixed resource allocation plan without adjustments

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

Allow beneficial owners to provide proxies lot voting on corporate decisions

Obscure beneficial ownership

Allow domicile in the nominee's jurisdiction

Derail investigations

applying uniform controls to all customers, regardless of their risk profile

allocating resources and implementing controls based on the level of identified risks

prioritizing regulatory compliance over customer experience and operational efficiency

relying on automated systems to detect and mitigate AFC risks

Customer loyalty program tracking

Product usage analysis

Customer satisfaction surveys

Customer support ticket tracking

Credit risk assessment

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

Engage in the PPP without strict data sharing protocols, allowing for open and unrestricted flow of information between the bank, FIUs, and other financial institutions

Rely solely on the intelligence provided by government agencies through the PPP because they have the most comprehensive data on suspicious activities

Establish a clear framework within the PPP that outlines data privacy protections and ensures that information sharing complies with legal and regulatory requirements in all jurisdictions involved

Prioritize the bank’s internal data sources over external intelligence from PPPs, as internal data is easier to control and does not present data privacy challenges

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.

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

ML undermines the integrity and stability of financial systems and makes them vulnerable to illegal activity. This can erode investor confidence and hinder economic growth.

When a financial institution (FI) is found to be promoting ML or violating AFC regulations, this can lead to a loss of confidence in the institution and a loss of customers. Interestingly, this scenario might sidestep any legal consequences for the Fl.

When laundered funds flow into legitimate economies, they can be used for illegal purposes, such as funding terrorist activities or organized crime. This distorts resource allocation and undermines development.

Jurisdictions perceived as having insufficient ML measures might be identified as uncooperative or high-risk, potentially facing restricted access to international markets, though economic sanctions by other countries are an unlikely outcome.

Reputational risk

Operational risk

Sanctions risk

Compliance risk

Lending risk

Money services business (MSB)

Multinational corporations

Individual foreign customers

Non-profit organizations with international operations

evidence that the increased residual risk arising from the change is within the bank's risk appetite.

approval by money-laundering reporting officer for the proposal.

how many resources are spent on the less productive lower threshold and the associated costs.

the number of cases that will not be filed and the resources that can be freed up for other tasks.

minutes of meeting held with the regulator where agreement was obtained that the higher threshold was justified.

historical analysis proving that the current scenario generates a disproportionate number of false positives.

generative copilots.

small language models.

privacy coins.

crypto-mixers.

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

Allows the appropriate federal banking agency to require a financial organization to produce, within 120 hours, records or information related to the organization's AML compliance or related to a customer of the organization or any account opened, maintained, administered, or managed in the U.S. by the financial organization.

Provides the U.S. Department of Treasury with the authority to apply graduated, proportionate measures against a foreign jurisdiction, foreign financial organization, type of international transaction, or type of account.

Permits the U.S. Government to seize funds from a correspondent bank account in the U.S. that has been opened and maintained for a foreign bank in the same amount as has been deposited with the foreign bank.

Requires due diligence, and in certain situations enhanced due diligence (EDD), for foreign correspondent accounts, which includes virtually all account relationships that organizations can have with a foreign financial organization and private banking for non-citizens of the U.S.