Feb 27, 2025 Step by Step Guide to Prepare for CAMS Exam BrainDumps
CAMS Certification CAMS Real Exam Questions and Answers FREE Updated on 2025
NEW QUESTION # 181
A bank account is established for a new business customer. The business was established five years ago with an address in another state. The business website contains few details other than stating it is a real estate business.
One principal has an international telephone number and appears to be living in another country. The other principal works out of a recreational vehicle.
What warrants enhanced due diligence in this scenario?
- A. Politically exposed person
- B. Shell company
- C. Human trafficker
- D. Money laundering through real estate
Answer: D
Explanation:
Money laundering through real estate is a common method of disguising the source and ownership of illicit funds. Real estate transactions often involve large amounts of money, complex legal structures, and cross-border transfers, which can obscure the true nature and origin of the funds. The new business customer in this scenario raises several red flags that warrant enhanced due diligence, such as:
The business was established five years ago but has a vague website and no physical presence in the state where it is registered.
One of the principals has an international phone number and lives abroad, which could indicate a foreign shell company or a politically exposed person.
The other principal works out of a recreational vehicle, which could suggest a lack of legitimate business activity or income.
The business claims to be a real estate business, but does not provide any details about its projects, clients, or partners.
These factors suggest that the business may be involved in money laundering through real estate, either by purchasing properties with illicit funds, using properties to generate illegal income, or selling properties to launder money. Therefore, the financial institution should conduct enhanced due diligence to verify the identity, background, and source of funds of the business and its principals, as well as the purpose and nature of the account relationship.
References:
ACAMS Study Guide for the CAMS Certification Examination - 6th Edition, Chapter 2: Money Laundering Risks and Methods, pp. 46-47 Enhanced Due Diligence in Construction and Real Estate, by James Swenson, Ethixbase 360 Due Diligence & Legal Considerations in Commercial Real Estate, by Justia
NEW QUESTION # 182
A U.K. real estate agent has three foreign clients interested in purchasing an apartment building, valued at £30 million, in the outskirts of London as an investment property. The clients are not willing to have their names provided to the bank. The clients want to purchase to be made in the names of three private companies for privacy reasons. The plan is to wire the funds into an account held in the name of another private company at a bank in London.
Which red flag should stop the agent from discussing this potential purchase further?
- A. The clients want to purchase to be made in the names of the private companies
- B. The clients have the funds necessary to fund a £30 million purchase
- C. The clients are foreign
- D. The clients are not willing to have their names provided to the bank
Answer: D
Explanation:
The clients are not willing to have their names provided to the bank is a red flag that should stop the agent from discussing this potential purchase further, as this could indicate that the clients are trying to evade customer due diligence (CDD) or know your customer (KYC) requirements, or hide their beneficial ownership or source of funds. According to the U.K. Money Laundering Regulations 2017, real estate agents must conduct CDD on their customers and any beneficial owners, and verify their identity and address1. The
U.K. also has a register of people with significant control (PSC) over companies, which requires companies to disclose their beneficial owners2. The use of private companies and wire transfers could also be a sign of layering, a money laundering technique that involves moving funds through multiple accounts or entities to obscure their origin3.
References:
1: U.K. Government, Money Laundering Regulations 2017, Part 2: Customer Due Diligence, Section 5-6 2: U.
K. Government, People with significant control (PSC) register, Overview 3: ACAMS CAMS Certification Study Guide, 6th Edition, Chapter 1: Risks and Methods of Money Laundering and Terrorist Financing, Page
19
NEW QUESTION # 183
Which three actions should employees be instructed to do during an internal investigation?
- A. Make copies of all documents provided to law enforcement
- B. Provide corporate documents directly to law enforcement
- C. Inform counsel of all request for documentation
- D. Keep a log of the documents requested
Answer: A,C,D
Explanation:
During an internal investigation, employees should be instructed to do the following actions:
* Inform counsel of all request for documentation: This is to ensure that the legal rights and obligations of the organization and the employees are protected and respected. Counsel can also advise on the scope, relevance, and confidentiality of the requested documents1.
* Make copies of all documents provided to law enforcement: This is to maintain a record of the information that has been disclosed and to prevent any loss or alteration of the original documents. Copies should be made before the documents are handed over to law enforcement2.
* Keep a log of the documents requested: This is to track the progress and status of the investigation and to avoid any duplication or omission of the requested documents. The log should include the date, time, description, and location of the documents, as well as the name and contact details of the person who requested and received them3.
Providing corporate documents directly to law enforcement, on the other hand, is not an action that employees should be instructed to do during an internal investigation. This is because law enforcement may not have the legal authority or the proper warrant to access the documents, and doing so may violate the privacy or confidentiality of the organization or the employees. Employees should consult with counsel before providing any documents to law enforcement4.
References:
1: Internal money laundering reporting | The Law Society5 2: How to Conduct Effective AML Investigations
- Blog | Unit212 3: What Is The Importance Of An Internal Investigation?4 4: Anti-Money Laundering: 5 Steps to Conduct an Audit3
NEW QUESTION # 184
The Wolfsberg Group has issued a number of documents since its inception aiming to:
- A. provide a standardized process amongst its bank members for combatting money laundering and terrorist financing in private banking.
- B. provide financial institutions with an industry perspective on effective financial crime risk management.
- C. prevent money laundering or terrorist financing by establishing consistent regulatory standards across the EU.
- D. provide advice to regulators around the world on the due diligence requirements for politically exposed persons.
Answer: B
Explanation:
The Wolfsberg Group is an association of thirteen global banks that aims to develop guidance and standards for the management of financial crime risks. The Group has issued a number of documents since its inception to provide financial institutions with an industry perspective on effective financial crime risk management.
NEW QUESTION # 185
A potential client calls a broker-dealer wishing to purchase securities. The client does not appear to be concerned with any fees associated with the account or price of the securities. Further information provided by the potential client indicates the individual may have relatives working for a company in which the potential client wants to invest. Which type of activity is the potential client attempting to commit?
- A. Usage as a deposit account
- B. Transfer funds to a third-party
- C. Transfer of value to relatives
- D. Usage of insider information
Answer: D
Explanation:
The potential client is attempting to commit the illegal activity of using insider information to trade securities.
Insider information is any material, non-public information that could affect the price or value of a security, such as earnings reports, mergers, acquisitions, or regulatory actions. Insider trading is the act of buying or selling securities based on insider information, which gives the trader an unfair advantage over other investors who do not have access to such information. Insider trading violates the principles of market integrity, fairness, and transparency, and can undermine investor confidence and trust. Insider trading is also a form of market abuse and financial crime, and is subject to civil and criminal penalties.
References:
ACAMS Study Guide for the CAMS Certification Examination - 6th Edition, Chapter 1: Risks and Methods of Money Laundering and Terrorism Financing, Section 1.3: Financial Crime, Subsection
1.3.3: Market Abuse, pp. 25-26
ACAMS CAMS Certification Video Training Course, Module 1: Risks and Methods of Money Laundering and Terrorism Financing, Lesson 1.3: Financial Crime, Sublesson 1.3.3: Market Abuse, Video Time: 2:00-3:30 Exam CAMS: Certified Anti-Money Laundering Specialist (the 6th edition), Question 12, Answer C
NEW QUESTION # 186
Law enforcement submitted a request to a bank for information regarding one of its customers.
How should the bank respond according to Financial Action Task Force Guidance?
- A. Provide all information requested to support the investigation
- B. Ensure the information is necessary to the investigation before responding to the request
- C. Contact the customer informing the person of the investigation to ensure the bank provides correct information
- D. Ensure that the request will not violate any local privacy regulations or legislation
Answer: D
Explanation:
According to the ACAMS Study Guide 6th Edition, Chapter 2, page 37, one of the red flags of money laundering or terrorist financing is the use of nominees, trusts, or third parties to hide the identity, ownership, or control of the funds or assets involved in the transaction. Nominees are individuals or entities that act on behalf of the actual or beneficial owners of a company, trust, or account, and may be used to conceal the source, destination, or purpose of the funds or assets. Nominees may also be used to evade taxes, sanctions, or regulatory requirements.
In this case, the compliance officer is unable to verify the identity of the beneficial owners of the company, and only information on the nominee owners was provided. This raises the suspicion that the company may be involved in money laundering or terrorist financing activities, and that the nominee owners may be acting as fronts or intermediaries for the actual or beneficial owners. The compliance officer should conduct further due diligence on the company, the nominee owners, and the beneficial owners, and report any suspicious or unusual activity to the relevant authorities.
References:
ACAMS Study Guide 6th Edition, Chapter 2, page 37
Beneficial Ownership Meaning and Regulation - Investopedia
What is a nominee shareholder? | LawBite
NEW QUESTION # 187
What is true regarding disclosure to a law enforcement agency by a financial institution of the supporting documentation for a suspicious transaction report?
- A. The financial institution may notify the account holder of the request
- B. A copy of all the documentation released must also be provided to the account holder's attorney
- C. Documentation must be provided as quickly as possible using email
- D. Confirm that the request originated from a representative of the law enforcement agency
Answer: D
Explanation:
Before disclosing any supporting documentation for a suspicious transaction report (STR) to a law enforcement agency, the financial institution should confirm that the request is legitimate and authorized by verifying the identity and credentials of the requester1. This is to prevent unauthorized access or misuse of the confidential information by impostors or fraudsters. The other options are not true, as they may either compromise the security, integrity, or timeliness of the disclosure, or violate the confidentiality or privacy rights of the customer.
References:
* ACAMS, CAMS Examination Study Guide, 6th Edition, Chapter 4, p. 117
* FATF Guidance: The Role of Hawala and Other Similar Service Providers in Money Laundering and
* Terrorist Financing, October 20132, p. 20
* Basel Committee on Banking Supervision, Sound management of risks related to money laundering and financing of terrorism, June 20173, p. 11 Reference: https://www.sec.gov/about/offices/ocie/aml2007/fin-2007-g003.pdf
NEW QUESTION # 188
Which three criteria does a shell bank meet according to the Wolfsberg Principles on Correspondent Banking?
Choose 3 answers.
- A. It is not subject to inspection by the banking authority that licensed it to conduct banking activities
- B. It does not conduct business at a fixed address in a jurisdiction in which it is authorized to conduct business.
- C. It does not employ one or more individuals at its fixed address where it is authorized to conduct business or maintain operating records at that address
- D. It is not subject to AML laws that require it to implement an AML program
Answer: B,C,D
NEW QUESTION # 189
Which methods are typically used to launder money using insurance companies? (Choose two.)
- A. The policy holder uses an offshore company to pay the insurance installments.
- B. The policy holder is strongly interested in how many costs are incurred when taking out an insurance policy.
- C. The policy holder overpays the policy and moves the funds out of the policy despite paying early withdrawal penalties.
- D. The policy holder purchases a bond and redeems it at a discount prior to its full term.
- E. The policy holder enters a sibling as a beneficiary of the insurance policy rather than themselves.
Answer: A,C
Explanation:
The methods that are typically used to launder money using insurance companies are:
* The policy holder overpays the policy and moves the funds out of the policy despite paying early withdrawal penalties. This method involves placing large amounts of illicit funds into an insurance policy, usually a life insurance or an annuity, and then requesting a refund or a surrender of the policy.
The policy holder may incur some fees or penalties for the early withdrawal, but they will receive a check or a wire transfer from the insurance company that appears to be a legitimate source of income.
This method allows the launderer to layer and integrate the funds into the financial system.
* The policy holder uses an offshore company to pay the insurance installments. This method involves setting up a shell company or a trust in a jurisdiction with low or no tax and weak or no anti-money laundering regulations. The launderer then uses the offshore entity to purchase an insurance policy or a
* bond from a reputable insurance company. The offshore entity pays the premiums or the installments using the illicit funds, and the launderer can claim the benefits or the returns from the policy or the bond as clean money. This method allows the launderer to hide the true ownership and origin of the funds.
The other options are not typical methods of money laundering using insurance companies, because:
* The policy holder enters a sibling as a beneficiary of the insurance policy rather than themselves. This method does not involve any movement or disguise of the illicit funds, and it does not generate any income or return for the launderer. The beneficiary of the policy will only receive the payout upon the death of the policy holder, and the insurance company will conduct due diligence on the beneficiary before releasing the funds.
* The policy holder purchases a bond and redeems it at a discount prior to its full term. This method does not make sense for a money launderer, because it involves losing money rather than gaining money. A bond is a fixed-income instrument that pays a regular interest and a principal amount at maturity. If the bond is redeemed before its full term, the bond holder will receive less than the face value of the bond, and will also forfeit the future interest payments. This method does not help the launderer to conceal or legitimize the source of the funds.
* The policy holder is strongly interested in how many costs are incurred when taking out an insurance policy. This method does not indicate any money laundering activity, but rather a prudent and rational behavior of a potential customer. The policy holder may want to compare different insurance products and providers, and to understand the fees, charges, commissions, and taxes associated with the policy.
This method does not involve any placement, layering, or integration of the illicit funds.
References:
* ACAMS Study Guide for the CAMS Certification Examination - 6th Edition, Chapter 1: Risks and Methods of Money Laundering and Terrorism Financing, Section 1.2: Methods of Money Laundering, Subsection 1.2.5: Insurance Products, pp. 19-20
* AML in Insurance: How to Detect & Combat Money Laundering, Section: Common Money Laundering Methods in Insurance, Paragraphs 1-3
* Discuss Acams CAMS Exam Topic 1 Question 43, Suggested Answer by Deeanna at May 04, 2022,
10:16 PM
NEW QUESTION # 190
The Wolfsberg Anti-Money Laundering Principles for Private Banking require new clients to be approved by whom?
- A. At least one person other than the private banker
- B. The board of directors
- C. The private banker's supervisor
- D. Only the private banker
Answer: A
Explanation:
The Wolfsberg Anti-Money Laundering Principles for Private Banking require new clients to be approved by at least one person other than the private banker. This is because the private banker may have a conflict of interest or be influenced by the client's wealth or reputation. The approval process should involve a senior manager or a compliance officer who can independently assess the client's risk profile and suitability for the institution's services12.
References:
1: CAMS Certification Package - 6th Edition | ACAMS, Chapter 2: Money Laundering Risks and Methods, p. 37 2: The Wolfsberg Group, The Wolfsberg Anti-Money Laundering Principles for Private Banking, June
2000, p. 3,
https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/Wolfsberg-AML-Principles-for-Private-Bankin Reference: https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/wolfsberg-standards/10.%
20Wolfsberg-Private-Banking-Prinicples-May-2012.pdf (04)
NEW QUESTION # 191
To understand if the customer operates in line with the firm's risk appetite for a specific industry segment, a financial institution must:
- A. obtain the name, date of birth for an individual, address and identification number from each customer before opening the account.
- B. obtain identifying information for beneficial owners through a completed certification form from the individual opening the account on behalf of the legal entity customer.
- C. obtain the name and address, country identification number and date of birth of a non-customer who purchases a monetary instrument.
- D. obtain sufficient customer information to understand the nature and purpose of customer relationships for the purpose of developing a customer risk profile.
Answer: D
Explanation:
Customer due diligence (CDD) is a key component of anti-money laundering (AML) and counter-terrorism financing (CTF) compliance. CDD helps financial institutions identify and verify their customers, assess their risk levels, and monitor their transactions for suspicious activity.
One of the main objectives of CDD is to understand the nature and purpose of customer relationships, which involves collecting and analyzing relevant information about the customer's business activities, expected transaction patterns, source and destination of funds, and beneficial ownership. This information helps financial institutions develop a customer risk profile, which is a tool to measure and manage the risk exposure of each customer.
A customer risk profile reflects the financial institution's risk appetite, which is the level and type of risk that the institution is willing and able to accept. By comparing the customer's risk profile with the institution's risk appetite, the institution can determine if the customer operates in line with the firm's expectations and requirements for a specific industry segment. For example, if the institution has a low risk appetite for customers involved in high-risk sectors such as gambling, cryptocurrency, or arms trade, it can use the customer risk profile to identify and mitigate any potential risks associated with such customers.
Therefore, to understand if the customer operates in line with the firm's risk appetite for a specific industry segment, a financial institution must obtain sufficient customer information to understand the nature and purpose of customer relationships for the purpose of developing a customer risk profile.
References:
A Guide to Customer Due Diligence for Financial Institutions
Customer Due Diligence Guide: Main Requirements, Best Practices & Checklist Financial Crimes Enforcement Network Issues New Frequently Asked Questions on Customer Due Diligence Requirements ACAMS CAMS Certification Study Guide 6th Edition
NEW QUESTION # 192
Which practices are dealers in antiques, precious metals, precious stones, jewelry, and art advised to follow to reduce the element of money laundering risk? Choose 3 answers
- A. Verify the identities of all new vendors and customers and conduct due diligence on them
- B. Insist on all vendors signing a declaration that the item placed by them for sale was not stolen or acquired through illegitimate means
- C. Insist all vendors submit an appropriate license issued by enforcement agencies authorizing the sale
- D. Avoid accepting cash payment from the buyers
Answer: A,B,D
NEW QUESTION # 193
In the FATF 40 recommendations, the focus of AML efforts has been expanded beyond Financial Institutions.
Which three businesses and/or professions are covered? Choose 3 answers
- A. Trust and company service providers
- B. Dealers in art, when they engage in any cash transaction with a customer at or above a designated threshold
- C. casinos, when customers engage in financial transactions equal to or above a designated Threshold
- D. Real estate agents when they are involved in transactions for clients concerning buying and selling properties
Answer: A,C,D
Explanation:
According to the FATF 40 recommendations, the focus of AML efforts has been expanded beyond financial institutions to include other businesses and professions that are vulnerable to money laundering and terrorist financing risks. These include:
* Casinos, when customers engage in financial transactions equal to or above a designated threshold.
Casinos are required to identify and verify the identity of their customers, keep records of transactions, report suspicious transactions, and implement internal controls and compliance programs to prevent money laundering and terrorist financing. The designated threshold is USD/EUR 3,000 or more1.
* Real estate agents, when they are involved in transactions for clients concerning buying and selling properties. Real estate agents are required to identify and verify the identity of their customers and beneficial owners, keep records of transactions, report suspicious transactions, and implement internal controls and compliance programs to prevent money laundering and terrorist financing. Real estate transactions can involve large amounts of money and complex legal arrangements that can be used to conceal the source or destination of illicit funds2.
* Trust and company service providers, when they prepare for or carry out transactions for a client concerning the creation, operation or management of legal persons or arrangements. Trust and company service providers are required to identify and verify the identity of their customers and beneficial owners, keep records of transactions, report suspicious transactions, and implement internal controls and compliance programs to prevent money laundering and terrorist financing. Trust and company service providers can facilitate the misuse of legal persons or arrangements, such as shell companies or trusts, to hide the true ownership and control of assets or funds3.
The other option, dealers in art, when they engage in any cash transaction with a customer at or above a designated threshold, is not covered by the FATF 40 recommendations. However, dealers in precious metals and stones are covered when they engage in any cash transaction with a customer at or above a designated threshold of USD/EUR 15,000 or more. Dealers in art may be subject to national or regional regulations that impose AML obligations on them, depending on the jurisdiction.
References:
* FATF Recommendation 22: Designated Non-Financial Businesses and Professions: Customer Due Diligence
* FATF Recommendation 23: Designated Non-Financial Businesses and Professions: Other Measures
* FATF Recommendation 24: Transparency and Beneficial Ownership of Legal Persons
* [FATF Recommendation 25: Transparency and Beneficial Ownership of Legal Arrangements]
NEW QUESTION # 194
What are two requirements with respect to supporting documentation that is used to identify potentially suspicious activity, according to Financial Action Task Force? (Choose two.)
- A. It must be retained for at least seven years
- B. It must be kept in a manner so that it can be provided promptly
- C. It must be retained for at least five years
- D. It must only be released to the government through a subpoena process
Answer: B,C
Explanation:
Reference: https://www.fatf-gafi.org/media/fatf/documents/recommendations/pdfs/FATF%
20Recommendations%202012.pdf
NEW QUESTION # 195
A U.K. real estate agent has three foreign clients interested in purchasing an apartment building, valued at £30 million, in the outskirts of London as an investment property. The clients are not willing to have their names provided to the bank. The clients want to purchase to be made in the names of three private companies for privacy reasons. The plan is to wire the funds into an account held in the name of another private company at a bank in London.
Which red flag should stop the agent from discussing this potential purchase further?
- A. The clients want to purchase to be made in the names of the private companies
- B. The clients have the funds necessary to fund a £30 million purchase
- C. The clients are foreign
- D. The clients are not willing to have their names provided to the bank
Answer: D
Explanation:
The clients are not willing to have their names provided to the bank is a red flag that should stop the agent from discussing this potential purchase further, as this could indicate that the clients are trying to evade customer due diligence (CDD) or know your customer (KYC) requirements, or hide their beneficial ownership or source of funds. According to the U.K. Money Laundering Regulations 2017, real estate agents must conduct CDD on their customers and any beneficial owners, and verify their identity and address1. The
U.K. also has a register of people with significant control (PSC) over companies, which requires companies to disclose their beneficial owners2. The use of private companies and wire transfers could also be a sign of layering, a money laundering technique that involves moving funds through multiple accounts or entities to obscure their origin3.
References:
1: U.K. Government, Money Laundering Regulations 2017, Part 2: Customer Due Diligence, Section 5-6 2:
U.K. Government, People with significant control (PSC) register, Overview 3: ACAMS CAMS Certification Study Guide, 6th Edition, Chapter 1: Risks and Methods of Money Laundering and Terrorist Financing, Page
19
NEW QUESTION # 196
Which type of sanctions are most likely to be used in order to avoid escalating violent conflicts and/or proliferation of weapons?
- A. Arms and related materials embargo
- B. Asset freeze
- C. Financial prohibitions
- D. Export and import restrictions
Answer: B
NEW QUESTION # 197
A company service provider in Country A sets up a corporate structure for a client from Country B, which is known for corruption. The corporate structure includes a holding company in Country A with a bank account in one of the international banks located there. During on-boarding, the client's wealth was estimated at 7.52 million USD. Shortly thereafter, the client's father became president of Country B During a routine client review two years later, it was identified that the client's wealth had grown to 510 million USD. Which are two red flags that indicate money laundering or financial terrorism? (Select Two.)
- A. The client is from a country known for corruption.
- B. The holding company is in Country A with a bank account in one of the international banks.
- C. The client is a family member of a politically exposed person from a country known for corruption.
- D. The substantial growth in wealth during a short period of time.
- E. The clients account has not been reviewed for 2 years.
Answer: C,D
Explanation:
Explanation
According to the Financial Action Task Force (FATF), substantial growth in wealth during a short period of time is a red flag for money laundering or terrorist financing. Additionally, when a client is a family member of a politically exposed person (PEP) from a country known for corruption, it raises concerns about the potential for corruption, bribery, or influence peddling. In this case, the client's father became the president of Country B, which makes him a PEP.
Reference: Certified Anti-Money Laundering Specialist (CAMS) Study Guide, 6th Edition, page 185-186.
NEW QUESTION # 198
Which are social/economic consequences of money laundering? (Choose two.)
- A. Increase in tax revenue
- B. Weakening of the country's infrastructure
- C. Civil war
- D. Increase in corruption and organized crime
- E. Weakening financial institutions
Answer: D,E
Explanation:
Money laundering has severe social and economic impacts, including increased crime rates, corruption and erosion of public trust. Money laundering fuels criminal activities by providing the necessary financial resources for criminals to continue their operations. As illicit funds circulate within the financial system, they enable the growth of criminal organizations and contribute to an increase in crime rates, including organized crime1. Money laundering also facilitates corruption and undermines public trust in financial institutions and the wider economy. This erosion of public trust is exacerbated by trade-based money laundering, which involves the manipulation of international trade transactions to disguise the origins of illicit funds2. Money laundering also weakens financial institutions by exposing them to reputational, operational, legal and regulatory risks. Money launderers exploit the vulnerabilities of financial systems and compromise their integrity and stability. Money laundering can also distort the allocation of resources, create inflationary pressures, and undermine the effectiveness of monetary policy3.
References:
1: Consequences Of Money Laundering Are: Understanding The Social, Economic, and Penalties Impacts1
2: Consequences of Money Laundering and Financial Crime2
3: Money laundering, its impact and consequences3
Reference:
https://www.fatf-gafi.org/faq/moneylaundering/#:~:text=As%20for%20the%20potential%20negative,and%20ex
NEW QUESTION # 199
What correspondent banking risk factor increases the risk for a Correspondent Bank?
- A. Offers international funds transfer to customers
- B. Limited product offering to customers in high-risk jurisdictions
- C. Multi-national financial institution with global operations
- D. Major service provider to money service businesses
Answer: D
Explanation:
Correspondent banking is a service that allows banks to access financial services in different jurisdictions through intermediary banks, known as correspondent banks. Correspondent banking can facilitate cross-border transactions, foreign exchange, and other financial activities for banks and their customers. However, correspondent banking also poses various risks, such as money laundering, terrorist financing, fraud, corruption, tax evasion, and sanctions evasion. Correspondent banks may have no direct relationship with the customers of the respondent banks, making it difficult to verify their identity and monitor their transactions.
Correspondent banks may also rely on the compliance programs of the respondent banks, which may not meet the standards of the correspondent banks' jurisdictions.
One of the risk factors that increases the risk for a correspondent bank is being a major service provider to money service businesses (MSBs). MSBs are entities that provide money transmission, currency exchange, check cashing, prepaid cards, and other similar services. MSBs are often considered high-risk customers, because they may serve as conduits for illicit funds, especially if they operate in jurisdictions with weak anti-money laundering regulations or oversight. MSBs may also have a large and diverse customer base, making it challenging to conduct customer due diligence and transaction monitoring. Therefore, correspondent banks that provide services to MSBs may face higher exposure to money laundering and other financial crimes, and may need to apply enhanced due diligence and risk mitigation measures.
References:
Understanding Risk in Correspondent Banking
GUIDANCE ON CORRESPONDENT BANKING SERVICES
Correspondent Bank: Definition and How It Works
Correspondent banking - why it's important to understand the risks
Reference:
https://www.fatf-gafi.org/media/fatf/documents/reports/Guidance-Correspondent-Banking-Services.pdf
NEW QUESTION # 200
In relationship to life insurance business, the third European Directive states that Member States may allow the identity verification of the beneficiary under the policy after the business relationship has been established, but before which events?
- A. At or before the time of payout or before the beneficiary intends to exercise rights vested under the policy
- B. At or before the policy is issued to the beneficiary by the insurance company
- C. At or before 30 days of the relationship being established under the policy
- D. At or before a premium payment has been accepted for the policy purchased
Answer: A
NEW QUESTION # 201
The Office of Foreign Assets Control requirements have an extraterritorial reach because compliance is required by:
- A. intermediaries of a transaction with a US nexus.
- B. foreign financial intelligence units.
- C. US persons in the US.
- D. entities registered in the US.
Answer: A
Explanation:
The Office of Foreign Assets Control (OFAC) is the U.S. Treasury Department's agency that administers and enforces economic sanctions programs against countries, groups, and individuals that pose a threat to the national security, foreign policy, or economy of the U.S. OFAC's requirements have an extraterritorial reach because they apply not only to U.S. persons (citizens, permanent residents, entities, and those physically present in the U.S.), but also to any person or entity that engages in a transaction that has a connection to the
U.S., such as using the U.S. financial system, U.S. goods, or U.S. persons. This means that intermediaries of a transaction with a U.S. nexus, such as foreign banks, brokers, or agents, are required to comply with OFAC's regulations and may face penalties for violating them. OFAC's jurisdiction does not depend on the registration or incorporation of an entity in the U.S., nor does it extend to foreign financial intelligence units, unless they are involved in a transaction with a U.S. nexus.
References:
The Aggressive Extraterritorial Reach of U.S. Economic Sanctions: Foreign Company Exposure to OFAC Enforcement OFAC Consolidated Frequently Asked Questions The global reach of OFAC sanctions Which three circumstances are U.S. banks required to block transactions?
NEW QUESTION # 202
A local law enforcement officer, who is conducting a criminal investigation, requests information about a customer.
Which two actions should the bank take? (Choose two.)
- A. File a suspicious transaction report
- B. Close the account immediately
- C. Monitor the account for suspicious activity
- D. Review the money laundering risk posed by the account
Answer: A,C
Explanation:
According to the Anti-Money Laundering Specialist (the 6th edition) study guide, when a financial institution receives a law enforcement inquiry, it should cooperate as much as possible and respond to all formal requests for information, unless there is a valid objection that can and should be made1. The institution should also file a suspicious transaction report (STR) if the inquiry or the customer's activity triggers any red flags or indicators of money laundering or other financial crimes2. Additionally, the institution should monitor the account for suspicious activity and review the money laundering risk posed by the account, as these are part of the ongoing due diligence and risk assessment processes3. Closing the account immediately is not a recommended action, as it may alert the customer or interfere with the investigation4.
References:
1: ACAMS, CAMS Certification Package - 6th Edition, Chapter 4, page 121
2: ACAMS, CAMS Certification Package - 6th Edition, Chapter 4, page 122
3: ACAMS, CAMS Certification Package - 6th Edition, Chapter 4, page 123
4: ACAMS, CAMS Certification Package - 6th Edition, Chapter 4, page 124
NEW QUESTION # 203
Which are red-flag indicators of possible money laundering through online gambling? (Choose two.)
- A. The customer uses their credit card to fund an online gambling account.
- B. The player is identified as a Politically Exposed Person (PEP).
- C. The player deposits small amounts of funds into their online gambling account.
- D. The customer logs on to the account from multiple countries.
- E. The player opens several accounts under the same name using different IP addresses.
Answer: C,D
NEW QUESTION # 204
Which two steps should a financial institution take when it receives a law enforcement request to keep an account open that may be associated with suspicious or criminal activity? (Choose two.)
- A. Ask for a written request from the law enforcement agency that defines the duration
- B. File a suspicious transaction report on the account owner(s)
- C. Stop filing suspicious transaction reports because law enforcement will be monitoring the account
- D. Maintain account records for at least five years after the request expires
Answer: A,D
Explanation:
Explanation
https://www.fincen.gov/resources/statutes-regulations/guidance/requests-law-enforcement-financial-institutions-
NEW QUESTION # 205
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