Acams CAMS Exam Practice Test Instant Access

Question 1

When an existing customer becomes a politically exposed person (PEP), what should the KYC analyst do during the review/refresh period?

ASeek the compliance officer's advice before marking the authorized signatory as PEP.

BUpdate the new authorized signatories in the customer profile.

CPerform enhanced due diligence for the customer and update the KYC profile.

DUpdate the list of signatories and perform enhanced due diligence in the next periodic refresh cycle.

Answer : C

When an existing customer becomes a politically exposed person (PEP), the KYC analyst should perform enhanced due diligence (EDD) for that customer. EDD involves gathering additional information about the customer, assessing the risk associated with their PEP status, and updating the KYC profile accordingly. The goal is to ensure compliance with regulations, verify customer identities, and mitigate the higher risk posed by PEPs. Regular monitoring and updates during the review/refresh period are essential to stay informed about any changes in the customer's status or risk profile1.

PEP in KYC & KYB: Requirements and Steps for PEP Screening

Politically Exposed Persons (PEP): Definition and Risks | Okta

How to effectively screen PEPs to meet KYC requirements - Castellum.AI

Question 2

A law enforcement agent is conducting an investigation into a possible money laundering event. During the investigation, the officer will use:

Aa risk-based approach alert generating system.

Bthe follow the money approach.

Cconfirmed evidence obtained from financial intelligence units.

Da process to identify suspicious activity.

Answer : B

During a money laundering investigation, law enforcement agents often employ the ''follow the money'' approach. This investigative technique focuses on tracing financial transactions and identifying patterns to uncover illicit activities. By analyzing the movement of funds, investigators can reveal hidden connections, identify suspicious behavior, and build a case against money launderers. It involves tracking the flow of funds through various accounts, financial institutions, and jurisdictions to understand the underlying criminal activity12.

An Introduction to the 360 Degree AML Investigation Model

Money Laundering and Asset Forfeiture - LEB

Recommendation 30: Responsibilities of law enforcement and investigative authorities

Money Laundering: A Guide for Criminal Investigators

Question 3

When a financial institution is requested to provide data and information to a law enforcement agency for matters related to financing of terrorism, assistance:

Acan be refused on the grounds of tipping-off.

Bcannot be refused on the grounds of bank secrecy.

Ccannot be refused on the grounds of tipping-off.

Dcan be refused on the grounds of bank secrecy.

Answer : C

When a financial institution is requested to provide data and information to a law enforcement agency for matters related to the financing of terrorism, assistance cannot be refused on the grounds of tipping-off. Tipping-off refers to disclosing to a customer or any third party that a suspicious activity report (SAR) has been filed. However, in this specific context, the obligation to provide information to law enforcement takes precedence over any concerns related to tipping-off. Financial institutions must cooperate fully with law enforcement agencies in such cases to combat money laundering and terrorist financing12.

31 CFR 1010.520 (a) (2)

FinCEN: Fact Sheet on the Rapid Response Program (RRP)

FinCEN.gov

Federal Financial Institutions Examination Council (FFIEC) BSA/AML Examination Manual

Question 4

Which activity associated with new or developing technologies does the Financial Action Task Force recommend financial institutions pay special attention to?

AHigh volumes of cash transactions

BComplex or unusually large transactions

CFinancial intermediaries performing transactions for customers

DNon-face-to-face business relationships or transactions

Answer : D

The Financial Action Task Force (FATF) recommends that financial institutions pay special attention to non-face-to-face business relationships or transactions when dealing with new or developing technologies. These include digital channels, online platforms, and virtual interactions. The increased use of technology for remote transactions poses unique risks related to customer identification, authentication, and due diligence. Financial institutions must implement robust controls to mitigate these risks and ensure compliance with anti-money laundering (AML) and counter-terrorist financing (CFT) requirements12.

FATF Opportunities and Challenges of New Technologies for AML/CFT

FATF: New Technologies for AML/CFT

FATF Recommendation 15: New technologies

Question 5

Which is often an indirect consequence of non-compliance with AML laws?

ADrop in stock value

BPunitive fines

CCriminal proceedings

DSanctioning

Answer : A

Non-compliance with anti-money laundering (AML) laws and regulations can lead to severe consequences for both financial institutions and individuals. One of the indirect consequences is the imposition of punitive fines. These fines can vary based on the type of violation and the institution's willingness to address the issue. Additionally, non-compliance may damage a company's reputation, impacting its standing in the market and potentially leading to financial losses beyond the fines themselves123.

Consequences of AML Non-Compliance

Understanding, Consequences & Changes in Anti-Money Laundering

Mastering Compliance: Effective AML Controls for Non-Bank Financial Institutions

AML Compliance: The Risks of Poor Practice and What Not to Miss

Question 6

In order for a terrorist organization to move funds from Cyprus to England through trade-based money laundering, which technique would be used?

AAn England-based exporter under-invoices a shipment to Cyprus.

BAn England-based exporter over-invoices a shipment to Cyprus.

CA Cyprus-based exporter short-ships a shipment to London.

DA Cyprus-based exporter over-invoices a shipment to London.

Answer : B

Trade-based money laundering (TBML) involves manipulating trade transactions to move illicit funds rather than goods. One common technique is over-invoicing, where an exporter intentionally inflates the invoice value of goods. In this scenario, an England-based exporter would over-invoice a shipment to Cyprus. By doing so, the exporter creates a surplus amount that can be transferred back to the terrorist organization in England, effectively disguising the movement of illicit funds12.

Trade-Based Money Laundering Techniques to Know

Money Trails Of Deceit: Understanding Techniques Of Trade-Based Money Laundering

Sanction Scanner: What is Trade-Based Money Laundering (TBML)?

Question 7

According to the Financial Action Task Force methodology, which situations would require a financial institution (FI) to consider filing a suspicious activity report?

AA beneficiary of a transaction is a politically exposed person.

BA transaction involves funds exchanged from crypto to fiat currencies.

CA FI identifies the payer is a dealer in precious metals or stones.

DA FI is unable to verify the relevant customer due diligence documents.

Answer : A

According to the Financial Action Task Force (FATF) methodology, financial institutions (FIs) are required to consider filing a suspicious activity report (SAR) in situations where they suspect or have reasonable grounds to suspect that funds are the proceeds of criminal activity or related to terrorist financing. One such situation is when a beneficiary of a transaction is a politically exposed person (PEP). PEPs are individuals who hold prominent public positions or have close associations with such individuals. Their involvement in transactions can raise red flags due to the potential risk of corruption, money laundering, or other illicit activities1.

1. Recommendation 20: Reporting of suspicious transactions

Acams Certified Anti-Money Laundering Specialist v6 Exam Practice Test