ACAMS CAMS-FCI Advanced CAMS-Financial Crimes Investigations Exam Practice Test

The analyst should clarify discrepancies noted in the customer’s declared profile given the downstream impact on the risk assessment. This is because discrepancies between the customer’s nature of business and the information on the business registry may indicate that the customer is not operating a legitimate business or is trying to conceal its true activities. The analyst should verify the customer’s identity, source of funds, and purpose of transactions to ensure that the customer’s risk profile is accurate and consistent with the Fl’s risk appetite.

References: Leading Complex Investigations Certificate, Module 2, page 9.

If the investigator uncovers evidence that foreign nationals are involved in this activity, they should also note the possible presence of human smuggling (D). This is because human smuggling is the illegal movement of people across borders, often facilitated by criminal networks that exploit vulnerable migrants. According to the FATF and Egmont Group report on Financial Flows from Human Trafficking2, “human smuggling can be closely linked to human trafficking, as smuggled migrants may become victims of trafficking along their journey or at their destination” (p. 9). The report also states that some indicators of human smuggling are similar to those of human trafficking, such as:

• Frequent cash deposits or withdrawals in different locations
• Use of false or fraudulent identification documents
• Expenses related to travel and accommodation
• Involvement in online platforms that advertise sexual services

The other options are not as relevant or specific as option D. Tax fraud (A) is the evasion of taxes by individuals or businesses, which may or may not be related to human trafficking or smuggling. Black market peso exchange (B) is a money laundering scheme that involves exchanging illicit proceeds in one currency for another currency at a discounted rate, which is more commonly associated with drug trafficking or trade-based laundering. Trade-based laundering © is the manipulation of trade transactions to disguise the origin and ownership of illicit funds, which is also more likely to be linked to drug trafficking or other types of fraud.

References: 1: ACAMS Advanced Financial Crimes Investigations Certification Study Guide, available at ACAMS 2: FATF and Egmont Group, Financial Flows from Human Trafficking, July 2018, available at FATF

Verified Answer: D The recommendation that the AMLO should make is to conduct an in-depth investigation into accumulated remittance information in the past year to find the trend of such transactions. This is because the regular and increasing remittances from a country with high piracy activity may indicate a possible link to illicit funds derived from piracy or other criminal activities. According to the World Bank, remittances are often used as a channel for money laundering and terrorist financing, especially when they originate from or are destined to high-risk jurisdictions1. Therefore, the AMLO should analyze the remittance data to identify the sources, destinations, amounts, frequencies, and purposes of the transactions, and compare them with the customer profiles, expected activities, and risk ratings. The AMLO should also review any relevant information from external sources, such as media reports, sanctions lists, or law enforcement alerts, to determine if there are any red flags or indicators of suspicious activity. If the investigation reveals any evidence or suspicion of money laundering or terrorist financing, the AMLO should file a SAR/STR to the appropriate AML authority.

References:

Remittances data - Migration data portal

According to the Certified Anti-Money Laundering Specialist (the 6th edition), the financial institution (Fl) should take the following actions:

A. Review the client's activity, determine if suspicious activity exists, and report accordingly. The Fl should assess the risk of the situation and determine if there is any suspicious activity that needs to be reported to the appropriate authorities. This would involve conducting a review of the client's account activity and transactions to determine if there are any indicators of money laundering or terrorist financing.

D. Inform local LEA and regulator of the request for awareness. The Fl should inform the local law enforcement agency and regulator of the request from the foreign jurisdiction to raise awareness of the situation and determine if any further actions need to be taken.

The best information to share at the very beginning of a well-written SAR/STR narrative is the purpose of the SAR/STR narrative and a general description of the known or alleged violation. This is because this information provides an overview of why the SAR/STR is being filed and what type of suspicious activity or transaction is involved. It also helps to capture the attention of the reader and set the tone for the rest of the narrative.

References: Reporting Suspicious Activity Certificate, Module 4, page 7.

The primary purposes of Financial Action Task Force (FATF)-Style Regional Bodies are to promote effective implementation of FATF recommendations and to provide expertise and input in FATF policy-making. (CAMS Manual, 6th Edition, Page 180)

The bank is out of compliance with CIP regulations because it did not obtain the minimum identifying information from the customer prior to opening the account, as required by 31 CFR § 1020.220(a)(2)(i)(A). The bank should have obtained the name, date of birth, address, and identification number of the customer, as well as verified the identity of the customer to the extent reasonable and practicable. The lack of ownership data may also indicate a violation of beneficial ownership regulations, but that is not the primary issue in this case.

According to the Certified Anti-Money Laundering Specialist (CAMS) Manual , 6th edition, if a bank's transaction surveillance system triggers an alert for a deposit of 250.000 USD into a client's account, the bank should take the following actions:

• Request information and documentation from the client on the background of the transaction (CAMS Manual, 6th edition, page 46).
• Contact the client advisor to learn if he has any insight on the transaction background (CAMS Manual, 6th edition, page 47).
• Review the transaction background in the bank's transaction platform (CAMS Manual, 6th edition, page 47).

Discarding the alert as a false positive hit and reviewing the alert if the deposit is made in cash should not be done.

The bank should request additional information and documentation from the client to better understand the nature of the transaction. Additionally, the bank should reach out to the client advisor to learn if they have any insight on the transaction background. Finally, the bank should review the transaction background in the bank's transaction platform to determine if any additional alerts or anomalies are present. (CAMS Manual, 6th Edition, Pages 117-118)

The actions that the investigator should recommend to mitigate risk are conducting enhanced due diligence (D) and re-evaluating the customer risk profile (E). These actions are appropriate and prudent, as they allow the investigator to obtain more information and evidence about the nature and purpose of the transactions, the source and destination of the funds, and the identity and legitimacy of the parties involved. According to the ACAMS Advanced Financial Crimes Investigations Certification Study Guide1, “the FI should conduct enhanced due diligence on all parties involved in the investigation, including checking various sources of information, such as watch lists, sanctions lists, negative news, and official registries” (p. 24). The FI should also “re-assess the customer risk profile based on any new information obtained during the investigation, and adjust the customer due diligence and monitoring requirements accordingly” (p. 25).

The other options are not as appropriate or effective as options D and E. The investigator should not recommend exiting the relationship with the customer (A), as this could be premature or disproportionate, as well as potentially discriminatory or illegal. The investigator should not recommend documenting and maintaining a file with the investigative findings (B), as this is not an action to mitigate risk, but rather a standard procedure for any investigation. The investigator should not recommend discussing the investigation findings with the customer ©, as this could compromise the integrity and objectivity of the investigation, as well as expose the FI to legal or regulatory risks.

References: 1: ACAMS Advanced Financial Crimes Investigations Certification Study Guide

According to U.S. law, money mules can be prosecuted even if they were unaware that money was transferred, as long as they acted with reckless disregard of the source of the funds or the purpose of the transaction1. This is because money mules are considered to be aiding and abetting money laundering, which does not require proof of specific intent2.

References: 1: Money Mule Awareness Booklet, page 8 2: Money Laundering: An Overview of 18 U.S.C. § 1956 and Related Federal Criminal Law, page 7

According to the Certified Anti-Money Laundering Specialist (CAMS) study guide, 6th edition, page 105, the correct answer is C. It can be difficult to determine if there is negative media associated with counterparties solely from the customer's account activity and KYC file.

The study guide explains that negative media can include news articles, government sanctions lists, and other sources of public information that may indicate that a counterparty is involved in illicit activities. However, this information may not be readily available in a customer's account activity or KYC file, and may require additional research or investigation.

A more robust supervisory approach is needed by regulators when overseeing small- and medium-sized MSBs compared to larger MSBs for combatting TF because small- and medium-sized MSBs are more at risk of allowing transactions linked to TF due to the lack of skilled compliance resources. Small- and medium-sized MSBs may face challenges in implementing effective AML/CFT controls, such as conducting risk assessments, applying customer due diligence measures, monitoring transactions, detecting suspicious activities, and reporting to the authorities. They may also have limited access to training, guidance, and tools to enhance their compliance capabilities. Therefore, regulators need to provide more supervision and support to small- and medium-sized MSBs to ensure that they comply with the AML/CFT requirements and mitigate the TF risks.

References:

• Sustainable Growth for Small and Medium-Sized Enterprises … - MDPI
• Lessons on Resilience for Small and Midsize Businesses - HBR

The correct answer is A and B because human smuggling/trafficking and terrorist financing are both predicate offenses for money laundering that could be related to the client’s activities. Option C is incorrect because there is no indication of narcotics trafficking in the scenario. Option D is incorrect because there is no indication of antiques smuggling in the scenario. Option E is incorrect because there is no indication of tax evasion in the scenario.

References: Advanced CAMS-FCI Certification Handbook, page 10; Financial Crime Typologies - Intermediate Certificate, Module 2.

The activity type that the FI should target for creating an automated alert for human trafficking money laundering is multiple deposits between midnight and 4:00 AM (B). This is because this pattern is consistent with the indicators of human trafficking identified by the Financial Action Task Force (FATF) and the Egmont Group1, which include:

• Frequent cash deposits, often in round amounts, outside of normal business hours
• Deposits made at different branches or ATMs in various locations
• Lack of information about the nature and purpose of the business
• Involvement in online platforms that advertise sexual services
• Expenses related to travel and accommodation
• The other options are not as relevant or specific as option B. Payments made to multiple hotels in the same city (A) could be a legitimate business expense or a sign of other types of money laundering, such as tax evasion or fraud. Deposits made within days of major sporting events © could also be explained by other factors, such as increased tourism or gambling. Payments made for virtual currency (D) are not directly related to human trafficking, although they could be used to facilitate money laundering in general.

References: 1: FATF and Egmont Group, Financial Flows from Human Trafficking, July 2018, available at FATF

The threat of US sanctions against foreign individuals and entities continues to exist despite the absence of a US nexus. This is stated in the Certified Anti-Money Laundering Specialist (the 6th edition) manual on page 591, which states: “It is important to note that the threat of US sanctions against foreign individuals and entities continues to exist even when there is no direct US nexus (i.e., no US persons or assets involved).”

The condition that should be met to satisfy the regulator is that the program is drafted using a risk-based approach to avoid the FI being used as a conduit for criminal activities. A risk-based approach means that the FI identifies, assesses, and understands its exposure to financial crime risks and applies appropriate measures to mitigate them. This is consistent with the international standards and best practices for anti-financial crime compliance. The program being aligned with the financial industry’s anti-financial crime priorities, meeting the minimum requirements of anti-financial crime standards published by a financial industry association, or having no high-severity issues in internal auditing results are not sufficient to satisfy the regulator, as they do not necessarily reflect the specific risks faced by the FI or demonstrate its effectiveness in preventing and detecting financial crimes.

References: [Advanced CAMS-FCI Study Guide], page 14-15; [FATF Guidance on Risk-Based Approach for Effective Supervision], page 7-8.

The SAR/STR narrative should include the suspicious accounts and transactions identified, as well as the reasons why they are considered suspicious. The narrative should provide a clear and concise description of the activity, the parties involved, the dates, amounts, and frequencies of the transactions, and any other relevant information that would assist law enforcement in understanding the nature and purpose of the activity. The narrative should not include the investigator’s subjective opinion, personal tax records, or supporting documentation that is not essential to explain the suspicious activity. Supporting documentation can be attached separately to the SAR/STR form or provided upon request by law enforcement.

The FI is required to ensure that the request includes an end date © when it receives a keep open letter from LE for the identified account. This is because the FI has to balance its legal obligations to cooperate with LE and to protect its customers’ privacy and rights. According to the ACAMS Advanced Financial Crimes Investigations Certification Study Guide1, “the FI should request a written confirmation from LE that includes a specific end date for the request, as well as a point of contact for any questions or concerns” (p. 35). The FI should also document the request and its compliance with it, and continue to monitor the account for any suspicious activity.

The other options are not correct. The FI should not contact the client for information relating to the account (A), as this could compromise the LE investigation or alert the client of the suspicion. The FI should not stop filing SAR/STR reports on the account and/or customer (B), as this could violate its regulatory obligations and expose it to legal risks. The FI should not notify LE immediately after new transactions (D), as this could also interfere with the LE investigation or tip off the client. The FI should follow the instructions of LE regarding when and how to share information.

The correct answer is C because reviewing the structure of the transactions to the three entities can help the investigator to identify any red flags or indicators of fraud, such as unusual amounts, frequency, destinations, or beneficiaries. The other options are not as relevant or effective in this scenario. Option A is not necessary because the investigator already knows the source of funds for the customer. Option B is not advisable because contacting the customer directly may alert them to the investigation and compromise its integrity. Option D is not helpful because inspecting electronic banking login records does not provide any information about the nature or purpose of the transactions.

References:

• Advanced CAMS-FCI Study Guide, page 281
• Financial Crime Typologies - Intermediate Certificate Course, Module 32

The investigator should take the following investigative actions concerning the 100,000 USD wire transfer:

• Review the wire transfer protocols for this customer. This will help the investigator to determine if the wire transfer is consistent with the customer’s normal business activity and risk profile, or if it deviates from the established patterns or thresholds.
• Review regulations applicable to foreign currency trading transactions. This will help the investigator to assess if the wire transfer violates any laws or regulations related to currency exchange, such as reporting requirements, licensing requirements, or sanctions compliance.
• Locate and review licenses, registrations, and account operating agreements associated with the MTB account. This will help the investigator to verify if the MTB has the necessary authorization and documentation to conduct currency exchange transactions and if it has disclosed this activity to the FI. References: Advanced CAMS-FCI Study Guide, pages 32-33.

The Fl should review the corporate account’s activity and transactions. This is because a grand jury subpoena is a legal request for information or testimony that may be used in a criminal investigation or prosecution. The Fl should review the account for any suspicious or unusual activity that may be related to the subpoena or indicate money laundering, terrorist financing, or other financial crimes. The Fl should also document its review and retain any relevant records.

References: Leading Complex Investigations Certificate, Module 3, page 14.

Some of the negative impacts of illegal wildlife trade and environmental crimes are loss of potential tax proceeds and threats to biodiversity. Loss of potential tax proceeds occurs when illegal wildlife trade and environmental crimes evade taxation and customs duties, depriving governments of revenues that could be used for public services and development. Threats to biodiversity occur when illegal wildlife trade and environmental crimes endanger species, habitats, and ecosystems, reducing their resilience and ability to provide essential services for human well-being. Public health consequences and threats to a country’s political stability are not directly related to illegal wildlife trade and environmental crimes, but rather to other types of financial crimes such as money laundering, terrorism financing, or corruption.

References: [Advanced CAMS-FCI Study Guide], page 68-69; [FATF Report on Money Laundering from Environmental Crime], page 9-10.

The correct answer is A because this scenario describes a possible case of human trafficking, which is a crime where people are exploited for labor or sexual services against their will. Human traffickers may use bank accounts to launder their proceeds and pay their victims, and they may use fake or stolen identities to avoid detection. The other options are not likely because they do not explain why multiple deposits from the same employer under different employees’ names would occur, nor why cash withdrawals would follow each deposit.

References: : Human Trafficking, : Human Trafficking Red Flags

Financial institutions should perform the following actions to ensure proper data governance:

Establish an appropriate data management method for collecting and storing information. This is important to ensure that the data is consistent, reliable, and accessible for various purposes, such as risk assessment, compliance reporting, and customer service. Data management methods may include defining data standards, policies, and procedures; implementing data quality controls and validation checks; and using appropriate data storage systems and formats.

Ensure the accuracy of customer identification records and transaction records and appropriately manage data as a prerequisite for the effective use of IT systems. This is important to comply with the anti-money laundering and counter-terrorist financing (AML/CFT) requirements, such as customer due diligence, transaction monitoring, and suspicious activity reporting. Accurate and complete customer and transaction data also enables financial institutions to use IT systems more effectively for data analysis, risk management, and decision making.

Periodically validate integrity and accuracy of information used for IT systems such as customer information, customer identification records, and transaction records. This is important to ensure that the data remains up-to-date, relevant, and reliable over time. Data validation may include verifying the source and quality of the data; identifying and correcting any errors or inconsistencies; and updating or deleting any obsolete or redundant data.

References:

• Data Governance for Financial Institutions - Capgemini
• Small and Medium-Sized Deposit-Taking Institutions (SMSBs) Capital and Liquidity Requirements - OSFI

The correct answer is A because this scenario describes a possible case of ticket laundering, which is a form of money laundering where criminals use gambling tickets to disguise the source of their illicit funds. The customers who deposit the tickets are either complicit or unaware of the scheme, and they receive a commission or a fee for their service. The other options are not likely because they do not explain why the customers would deposit multiple tickets from the same gambling company and withdraw cash the next day.

References: : Ticket Laundering: A Money Laundering Method

The correct answer is B because the FATF recommendations state that financial institutions should provide feedback to the FIU as quickly as possible, especially in cases involving the financing of terrorism that could imply an imminent threat to the country. Option A is incorrect because requesting an official court subpoena would delay the response and might not be necessary for the FIU to access the information. Option C is incorrect because establishing a committee would also delay the response and might not be in compliance with the FIU’s request. Option D is incorrect because informing the public relations department is irrelevant to the question and might compromise the confidentiality of the investigation.

References: FATF Recommendations, Recommendation 29; Leading Complex Investigations Certificate, Module 4.

Weaker cybersecurity controls are a main vulnerability that has led to an increase in ransomware attacks on small businesses, as they make them easier targets for cybercriminals who can exploit their systems and demand payment for restoring access to their data. The other options are not relevant to the vulnerability, as they relate to the consequences or responses of the victims.

The identification details of the beneficial owner and authorized signatory are key for law enforcement’s physical surveillance of cash activity, as they would help identify the person who controls and operates the company and who is responsible for its financial transactions. The company’s operating address is also key, as it would help locate the premises where the cash activity takes place and observe any suspicious movements or behaviors. The identification details of the nominee shareholder and directors are not relevant, as they are not involved in the management or operation of the company. The company’s registered address is also not relevant, as it is likely to be a shell or mailbox address that does not reflect the actual location of the business.

References: Advanced CAMS-FCI Study Guide, page 44-45; [FATF Guidance on Transparency and Beneficial Ownership], page 12-13.

A product of analysis is a conclusion or inference that is derived from facts or judgments, using analytical techniques or tools. Option B is a product of analysis because it implies that the investigator has used a tool or technique, such as a threshold analysis, to identify a pattern of structured cash deposits that may indicate an attempt to evade reporting requirements. The other options are facts or judgments that can be verified by evidence or observation.

References: Advanced CAMS-FCI Certification Handbook, page 23.

An investigator should avoid escalating a suspicious event to the chief compliance officer if there is a potential conflict of interest, such as when a close family member of the officer is involved in the transaction. In such a case, the investigator should pursue other channels, such as reporting to a higher authority or an independent committee. The other options do not present a conflict of interest and should be escalated to the chief compliance officer as part of the normal procedure.

References: Advanced CAMS-FCI Certification Handbook, page 18.