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NEW QUESTION # 140
In performing a risk analysis, which factor(s) should a financial institution review?
- A. The level of its gross revenue
- B. Its customer base, location, products and services
- C. Recent regulatory actions against financial institutions of comparable size
- D. The adequacy and completeness of its STR filings
Answer: B
Explanation:
these are the main factors that determine the inherent money laundering risk of a financial institution. The customer base, location, products and services of a financial institution affect the type, volume, and complexity of transactions that it processes, as well as the exposure to high-risk customers, jurisdictions, and activities12. A financial institution should review these factors regularly and conduct a comprehensive risk assessment to identify, measure, and mitigate its money laundering risk34.
References:
Anti Money Laundering Risk Assessment - Financial Crime Academy1
Anti-Money-Laundering (AML) Risk Approach Explained | Okta2
Anti-Money Laundering (AML) Risk Assessment | ACAMS4
2024 National Money Laundering Risk Assessment (NMLRA)5
NEW QUESTION # 141
An anti-money laundering audit identifies a significant weakness in how transaction monitoring alerts are cleared. Audit sampling identified potentially suspicious activity that was cleared as not suspicious.
Management accepts the audit finding and develops a remediation plan.
What is the role of the auditor during the correction phase?
- A. Providing training to the alert clearing department on the importance of effective alert clearing
- B. Developing procedures to provide sufficient risk-based documentation for clearing alerts
- C. Directing the remediation of the deficiency in a timely manner
- D. Validating the successful remediation of the issue once management indicates the issue is resolved
Answer: D
Explanation:
The audit function should report to the audit committee of the board of directors (or similar oversight body) and independently evaluate the risk management and controls of the bank through periodic assessments, including the adequacy of the bank's controls to mitigate the identified risks, the effectiveness of the bank's staff's execution of the controls, the effectiveness of the compliance oversight and quality controls and the effectiveness of the training.
NEW QUESTION # 142
Which principles should be included in a FATF-Style Regional Body (FSRB) update? (Choose two.)
- A. Address AML/CFT technical assistance of individual members
- B. Establish AML/CFT standards and typologies
- C. Issue country-specific Mutual Evaluation reports
- D. Identify jurisdictions with weak AML/CFT regimes
- E. Protect the reputation and standing of FATF
Answer: B,C
Explanation:
Reference:
https://www.fatf-gafi.org/media/fatf/documents/High-Level%20Principles%20and%20Objectives%20for%20FA
NEW QUESTION # 143
In its paper. Customer Due Diligence for Banks, the Basel Committee on Banking Supervision identified which risks on banking institutions as a result of an inadequate KYC program?
- A. Credit, operational, market, concentration
- B. Legal, reputational, operational, concentration
- C. Outsourcing, legal, concentration, reputational
- D. Security, information, local, operational
Answer: B
Explanation:
Explanation
The Basel Committee on Banking Supervision identified four risks to banking institutions as a result of an inadequate KYC program: legal, reputational, operational, and concentration. Legal risks include the potential for fines or sanctions for non-compliance with applicable laws and regulations. Reputational risks include the loss of customer confidence due to the institution's involvement in illicit activities. Operational risks include the potential for fraudulent or suspicious activity to go undetected. Finally, concentration risks involve the potential for a single customer or group of related customers to dominate the institution's operations.
NEW QUESTION # 144
The marketing department presents a business plan targeting individuals holding important public positions. What are some steps the financial institution should implement as part of the plan to target such individuals?
- A. Determine if the client appears on the Basel Committee on Banking Supervision's list of publicofficials
- B. Take all reasonable steps to check the background of the individual based on public information
- C. Determine the purpose of the account
- D. Investigate the source of funds
Answer: B,C,D
NEW QUESTION # 145
Which of the following is the best action to take regarding a particular account once suspicious activity is reported by the institution?
- A. Immediately close the account.
- B. Freeze the funds pending notification from the competent authority.
- C. Secure all supporting documentation.
- D. Notify the client that the transaction has been reported.
Answer: C
Explanation:
According to the BSA/AML Manual1, once a financial institution files a SAR, it should maintain a copy of the SAR and the original or business record equivalent of any supporting documentation for a period of five years from the date of filing the SAR. The supporting documentation should be identified and maintained by the financial institution as such, and be deemed to have been filed with the SAR. The financial institution should make all supporting documentation available to FinCEN or any federal, state, or local law enforcement agency, or any federal regulatory authority that examines the financial institution for compliance with the BSA, upon request. Therefore, the best action to take regarding a particular account once suspicious activity is reported by the institution is to secure all supporting documentation, as it may be needed for further investigation or examination.
References:
BSA/AML Manual1
Suspicious Activity Reporting - Overview2
Suspicious Activity Report (SAR) Basics3
NEW QUESTION # 146
Which function provided by lawyers can be useful to a potential money launderer as documented by FATF in its typology report 2000-2001? Choose 3 answers
- A. Performing financial transactions on behalf of a client
- B. Creating complex legal arrangements
- C. Buying and selling property
- D. Providing legal advice
Answer: A,B,C
NEW QUESTION # 147
When using virtual assets such as Bitcoin to finance terrorism, which tactic may be used to ensure that the virtual assets are not easily seized by law enforcement?
- A. Forming relationships with virtual asset service providers that have strong KYC processes in place to avoid suspicion
- B. Using the same donation address across multiple donation campaigns and media types
- C. Posting donation addresses that are linked to accounts at centralized virtual asset service providers
- D. Using self-hosted wallets to create many different donation addresses that are updated continuously
Answer: D
Explanation:
Using self-hosted wallets, or wallets that are stored on the user's computer, is one of the tactics that may be used to finance terrorism with virtual assets such as Bitcoin. By creating many different donation addresses that are updated continuously, law enforcement will have a harder time tracing transactions. It is also important to note that using the same donation address across multiple donation campaigns and media types, as well as forming relationships with virtual asset service providers that have strong KYC processes in place, can draw attention from law enforcement and should be avoided.
NEW QUESTION # 148
As a result of an audit, a policy exception was identified that had been approved by the compliance officer.
The auditor determined that the policy exception is a violation of a regulatory requirement.
What should the auditor do?
- A. Include the regulatory violation in the audit report and report it to the board of directors.
- B. Consult with legal counsel to determine if the approval of the policy exception was acceptable.
- C. Include the regulatory violation in the audit report and recommend the compliance officer be subject to disciplinary action by the board of directors.
- D. Advise the compliance officer on how to appropriately respond to policy exceptions.
Answer: A
Explanation:
The auditor should include the regulatory violation in the audit report and report it to the board of directors.
This is because the auditor has the responsibility to report any findings of non-compliance or material weaknesses in the institution's internal controls, policies, and procedures. The auditor should also provide recommendations for corrective actions and follow-up on their implementation. The board of directors has the ultimate oversight and accountability for the institution's compliance program and should be informed of any significant issues or risks that may affect the institution's reputation, operations, or regulatory status12.
References:
1: CAMS Certification Package - 6th Edition | ACAMS, Chapter 6: Developing an Effective Anti-Money Laundering Program, p. 125-126 2: The Wolfsberg Group, The Wolfsberg Anti-Money Laundering Principles for Correspondent Banking, October 2014, p. 7,
https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/Wolfsberg-Correspondent-Banking-Principles-
NEW QUESTION # 149
Which of the following represents the first Financial Action Task Force initiative?
- A. The Special Recommendations on Terrorist Financing
- B. The Report on Non-Cooperative Countries and Territories
- C. The 40 Recommendations on Money Laundering
- D. The Report on Money Laundering Typologies
Answer: C
Explanation:
The first Financial Action Task Force (FATF) initiative was the 40 Recommendations on Money Laundering, which were issued in April 1990, less than a year after the FATF was established by the G7 summit in Paris in
1989. The 40 Recommendations aimed to provide a comprehensive plan of action to fight money laundering by setting out the principles and measures for effective legal, regulatory, and operational frameworks at the national and international levels. The 40 Recommendations have been revised and updated several times since then, most recently in 2022, to reflect the evolving trends and techniques of money laundering and to include the issues of terrorist financing and the financing of proliferation of weapons of mass destruction.
The other options are not the first FATF initiative, but they are related to the FATF's work and mandate. The Report on Non-Cooperative Countries and Territories (NCCTs) was launched in 2000 to identify and monitor the jurisdictions that did not comply with the FATF standards and posed a risk to the international financial system. The Report on Money Laundering Typologies was first published in 1996 and has been updated annually to provide an analysis of the methods, techniques, and trends of money laundering and to assist the FATF members and observers in developing effective countermeasures. The Special Recommendations on Terrorist Financing were issued in October 2001, following the September 11 attacks, to complement the 40 Recommendations and to address the specific challenges of combating the financing of terrorism and terrorist acts.
References:
History of the FATF, 1
Financial Action Task Force - Wikipedia, 2
Financial Action Task Force (FATF): What it is, How it Works - Investopedia, 3 The FINANCIAL ACTION TASK FORCE (FATF) - INSIGHTSIAS, 4
NEW QUESTION # 150
Which action should financial institutions with cross border correspondent banking activity be required to perform according to the Financial Action Task Force 40 Recommendations?
- A. Obtain a third party independent review of the respondent's anti-money laundering program
- B. Gather a list of their politically exposed customers
- C. Identify natural persons who own or control more than 5%
- D. Obtain senior management approval before establishing the relationship
Answer: D
NEW QUESTION # 151
According to Basel Committee on Banking Supervision guidelines, which of the following statements best describes the relationship between the internal audit function and compliance?
- A. The internal audit methodology should include an assessment of compliance risk.
- B. The compliance function and internal audit function should be combined.
- C. An internal audit program of adequacy of the bank's compliance function should be es-tablished, but should not include review of transactions.
- D. The auditors should not discuss internal audit findings with compliance management to maintain independence.
Answer: A
Explanation:
According to the Basel Committee on Banking Supervision guidelines, the internal audit function should evaluate the adequacy and effectiveness of the bank's compliance function and its compliance risk management framework1. This includes assessing the compliance risk inherent in the bank's activities, products, services, and systems, as well as the compliance policies, procedures, controls, and reporting mechanisms2. The internal audit function should also review the transactions and records of the bank to ensure compliance with applicable laws, regulations, and internal standards3.
The other statements are incorrect because:
B: An internal audit program of adequacy of the bank's compliance function should be established, but should not include review of transactions. This statement is false because the internal audit function should review the transactions and records of the bank to ensure compliance, as mentioned above3.
C: The compliance function and internal audit function should be combined. This statement is false because the compliance function and the internal audit function should be separate and independent from each other, to avoid conflicts of interest and ensure objectivity and credibility.
D: The auditors should not discuss internal audit findings with compliance management to maintain independence. This statement is false because the internal audit function should communicate and coordinate with the compliance function on a regular basis, to share information, insights, and recommendations, and to avoid duplication of work. However, the internal audit function should maintain its independence and report directly to the board of directors or the audit committee.
References:
1: The internal audit function in banks, Principle 10, p. 9
2: The internal audit function in banks, Principle 10, p. 10
3: The internal audit function in banks, Principle 10, p. 11
4: The internal audit function in banks, Principle 2, p. 4
5: The internal audit function in banks, Principle 10, p. 11
NEW QUESTION # 152
According to the Basel Committee's principles on customer due diligence, a bank should:
- A. maintain systems to detect suspicious transactions based on a customer's velocity and volume patterns.
- B. file a suspicious activity report when there is reason to believe the bank is being used for criminal activity.
- C. refuse to conduct ongoing business with a customer who fails to provide proper identification documentation.
- D. obtain the information to establish the identity of a customer, beneficial owners, and any person acting on behalf of the customer,
Answer: D
Explanation:
Explanation
According to the Basel Committee's principles on customer due diligence, banks must obtain the necessary information to establish the identity of their customers, beneficial owners, and any persons acting on behalf of their customers. This includes verifying the identity of the customer and the beneficial owners and assessing the customer's risk profile. Additionally, banks must conduct ongoing due diligence to ensure that the customer does not give rise to suspicions of money laundering or terrorist financing [1].
NEW QUESTION # 153
A suspicious transaction report filed on a car dealer structuring deposits initiates a criminal investigation. The dealer changes branches and begins placing transactions with a frontline employee to whom the dealer has given numerous gifts.
This employee handles all of the dealer's structured deposits and does not report the suspicious activity internally.
The competent authority has advised the anti-money laundering specialist to avoid tipping off the employee until the investigation is finalized.
What action should the specialist take next?
- A. Inform the institution's regulatory agency of the situation.
- B. Recommend the immediate termination of the employee.
- C. Advise that the dealer's accounts should be closed.
- D. Consult with senior management and the legal advisor.
Answer: D
Explanation:
it describes the action that the anti-money laundering specialist should take next, which is to consult with senior management and the legal advisor. This is because the specialist needs to seek guidance and approval from the higher authorities and the legal experts on how to handle the situation without compromising the ongoing criminal investigation or violating the anti-money laundering laws and regulations. The specialist also needs to ensure that the institution's internal policies and procedures are followed and that the appropriate measures are taken to mitigate the risks and protect the reputation of the institution.
The other options are not necessarily actions that the anti-money laundering specialist should take next, although they may be considered or implemented later depending on the outcome of the consultation and the investigation. Option A describes a possible consequence for the employee, which is to recommend the immediate termination of the employee, but this may not be the best course of action at this stage, as it may alert the employee or the dealer of the investigation, or it may be premature or disproportionate without sufficient evidence or due process. Option B describes a possible measure for the dealer, which is to advise that the dealer's accounts should be closed, but this may not be feasible or advisable at this stage, as it may also tip off the dealer or the employee of the investigation, or it may interfere with the collection of evidence or the prosecution of the case. Option D describes a possible reporting obligation for the institution, which is to inform the institution's regulatory agency of the situation, but this may not be required or appropriate at this stage, as it may conflict with the instructions of the competent authority or the confidentiality of the investigation, or it may expose the institution to legal or regulatory liabilities or sanctions.
References:
* ACAMS CAMS Certification Video Training Course - 6th Edition1
* Exam CAMS: Certified Anti-Money Laundering Specialist (the 6th edition)2
* ACAMS CAMS Study Guide - 6th Edition, Chapter 6, pages 132-133
https://www.acams.org/wp-content/uploads/2019/09/ACAMS-CAMS-Study-Guide-6th-Edition-Chapter-6.pdf
NEW QUESTION # 154
Release of the EU's Fourth AML Directive resulted in what change to member state*s procedures? (Select Two.)
- A. Knowledge of criminal conduct could be inferred from objective factual circumstances.
- B. Money laundering and terrorist financing were defined as separate crimes, expanding the directive's measures.
- C. The scope of obliged entities was enlarged from casinos to all providers of gambling services.
- D. The threshold for reporting suspicious transactions decreased from 15,000 EUR to 10,000 EUR.
- E. All financial institutions were required to identify and verify the beneficial owner of legal entities.
Answer: D,E
Explanation:
According to the Certified Anti-Money Laundering Specialist (the 6th edition), Section 2.2.2 The EU Fourth AML Directive, the release of the EU's Fourth AML Directive resulted in the threshold for reporting suspicious transactions decreasing from 15,000 EUR to 10,000 EUR (Answer A) and all financial institutions were required to identify and verify the beneficial owner of legal entities (Answer B). The directive also defined money laundering and terrorist financing as separate crimes, which expanded the directive's measures (Answer C). Answer D is incorrect as the scope of obliged entities was not enlarged from casinos to all providers of gambling services, but rather to all providers of payment services. Answer E is also incorrect as the directive does not provide that knowledge of criminal conduct can be inferred from objective factual circumstances. Reference: Certified Anti-Money Laundering Specialist (the 6th edition), Section 2.2.2 The EU Fourth AML Directive, p. 12.
NEW QUESTION # 155
According to the Financial Action Task Force 40 Recommendations, to fulfill identification requirements concerning legal entities, financial institutions should take measures to verify
- A. funds or trusts maintained by terrorists.
- B. the financial status of the legal entity through documented proof of the entity's other banking relations.
- C. a person purporting to act on behalf of the legal entity who is a resident in a country with strict secrecy laws.
- D. the legal existence and ownership structure of the legal entity.
Answer: D
NEW QUESTION # 156
What is the currency threshold under the European Union Fourth Anti-Money Laundering Directive?
- A. 15,000 Euros
- B. 3,000 Euros
- C. 10,000 Euros
- D. 5,000 Euros
Answer: C
Explanation:
Explanation/Reference: https://www.acams.org/aml-resources/eu-fourth-aml-directive/
NEW QUESTION # 157
With which of the following should an anti-money laundering officer coordinate when implementing a new hire screening program?
- A. Human resources
- B. Local Financial Intelligence Unit
- C. Institution's regulator
- D. Internal auditor
Answer: A
NEW QUESTION # 158
An individual opened an account with a minimal cash deposit at a financial institution. He presented a foreign passport and stated he would be working locally for a few months. He also requested information about making electronic fund transfers. The institution was subsequently unable to verify the employment or residence information provided by the individual. Soon after this, a large transfer was sent to the customer's account. Which of the following is the course of action recommended by the Basel Committee on Banking Supervision's Customer Due Diligence for Banks?
- A. End the relationship by sending a check (cheque) to the customer for the full amount in the account.
- B. Close the account and return the funds to the source from which they were received.
- C. Post the deposit to the account and notify the customer that the deposit has been made.
- D. Implement enhanced due diligence procedures to monitor the account for suspicious activity.
Answer: B
NEW QUESTION # 159
Which aspect of the USA PATRIOT Act impacts foreign financial institutions?
- A. Expanding the anti-money laundering program requirements to all foreign financial institutions
- B. Requiring enhanced due diligence for foreign shell banks
- C. Expanding sanctions requirements to a U.S. financial institution's foreign branches
- D. Providing authority to impose special measures on institutions that are of primary money-laundering concern
Answer: D
Explanation:
Section 311 of the USA PATRIOT Act grants the Secretary of the Treasury the authority to designate foreign jurisdictions, financial institutions, classes of transactions, or types of accounts as being of primary money laundering concern, and to impose one or more of five special measures on them. These special measures range from requiring enhanced recordkeeping and reporting to prohibiting U.S. financial institutions from opening or maintaining correspondent accounts for the designated entities. The purpose of these special measures is to protect the U.S. financial system from money laundering and terrorist financing risks posed by the designated entities.
References:
USA PATRIOT Act | FinCEN.gov
FACT SHEET for Section 312 of the USA PATRIOT Act Final Regulation and Notice of Proposed Rulemaking | FinCEN.gov International Financial Crime: Treasury's Roles and Responsibilities Should Be Updated - GovInfo Reference: https://www.imf.org/external/np/leg/sem/2002/cdmfl/eng/tompki.pdf (8)
NEW QUESTION # 160
Which three measures are contained in Financial Action Task Force 40 Recommendations for reporting suspicious activity? (Choose three.)
- A. The financial institution has grounds to believe the activity is related to terrorist financing.
- B. The financial institution has reasonable grounds to suspect the funds are proceeds of criminal activity.
- C. The financial institution has contacted the account holder to determine the activity of the account.
- D. The activity should be reported promptly to the country's financial intelligence unit.
- E. The financial institution has been contracted by law enforcement regarding the activity.
Answer: A,B,D
Explanation:
REPORTING OF SUSPICIOUS TRANSACTIONS [https://www.fatf- gafi.org/media/fatf/documents
/recommendations/pdfs/FATF%20Recommendations%202012.pdf] If a financial institution suspects or has reasonable grounds to suspect that funds are the proceeds of a criminal activity, or are related to terrorist financing, it should be required, by law, to report promptly its suspicions to the financial intelligence unit (FIU). According to the Financial Action Task Force's (FATF) Recommendation 20, a suspicious transaction report (STR) or a suspicious activity report (SAR) is filed by a financial institution or, by a concerned citizen, to the local Financial Intelligence Unit if they have reasonable grounds to believe that a transaction is related to criminal activity. [https://aml-cft.net/library/suspicious-transaction-report-str-suspicious-activity-report-sar/]
NEW QUESTION # 161
Which are social/economic consequences of money laundering? (Choose two.)
- A. Weakening financial institutions
- B. Increase in corruption and organized crime
- C. Increase in tax revenue
- D. Civil war
- E. Weakening of the country's infrastructure
Answer: A,B
Explanation:
Reference:
https://www.fatf-gafi.org/faq/moneylaundering/#:~:text=As%20for%20the%20potential%20negative,and%20ex
NEW QUESTION # 162
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