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NEW QUESTION # 178
One key aspect of the Office of Foreign Assets Control's extraterritorial reach includes the blocking of certain non-United States initiated transactions for or through the United States (U.S.) for benefit of a restricted person or entity.
Under which three circumstances are U.S. banks required to block transactions? (Choose three.)
- A. Those that are in connection with a transaction in which a blocked individual or entity has an interest
- B. Those that are in connection with a transaction in which a blocked individual or entity has no interest
- C. The transactions are to, or go through, a blocked entity
- D. Those that are by or on behalf of a blocked individual and a licensed entity
- E. Those that are by, or on behalf of, a blocked individual or entity
Answer: A,C,E
Explanation:
U.S. law requires that assets and accounts of an OFAC-specified country, entity, or individual be blocked when such property is located in the United States, is held by U.S. individuals or entities, or comes into the possession or control of U.S. individuals or entities.
For example, if a funds transfer comes from offshore and is being routed through a U.S. bank to an offshore bank, and there is an OFAC-designated party to the transaction, it must be blocked. The definition of assets and property is broad and is specifically defined within each sanction program. Assets and property includes anything of direct, indirect, present, future, or contingent value (including all types of bank transactions).
Banks must block transactions that:
* Are by or on behalf of a blocked individual or entity;
* Are to or go through a blocked entity; or
* Are in connection with a transaction in which a blocked individual or entity has an interest.
NEW QUESTION # 179
An AML specialist at a financial institution is presented with a search warrant. Which actions should be taken to comply with the search? (Select Two.)
- A. Leave the premises to allow the agents to conduct the search.
- B. Proactively ask the agents as many questions as time allows.
- C. Remember what items the agents have seized and taken from the premise.
- D. Obtain a copy of the warrant or photocopy the original warrant.
- E. Record the names and affiliations of the agents who conduct the search.
Answer: D,E
Explanation:
Explanation
When presented with a search warrant, the AML specialist should record the names and affiliations of the agents who conduct the search. This will help in identifying who conducted the search in case there are any issues that need to be addressed later. Additionally, the AML specialist should obtain a copy of the warrant or photocopy the original warrant. This is important to ensure that the warrant is valid and that the agents are authorized to conduct the search. It is not appropriate to ask the agents questions or remember what items they have seized, as this could interfere with the search and potentially lead to legal issues. Finally, leaving the premises to allow the agents to conduct the search is not necessary, as the AML specialist has the right to be present during the search.
NEW QUESTION # 180
In which type of banking transaction is price manipulation, as a form of money laundering, a common practice?
- A. Subscribing to a cash management account
- B. Issuing a letter of credit
- C. Redeeming an annuity
- D. Sending a wire transfer
Answer: B
NEW QUESTION # 181
A retail bank has just acquired a credit card business. The bank's anti-money laundering policy requires that new employees are trained within 30 days of their hire date and refresher training is delivered to all employees on an annual basis.
Is the bank's existing anti-money laundering training adequate to be delivered to employee of the newly acquired credit card business?
- A. Yes, the existing training covers the bank's policies, procedures, and processes.
- B. Yes, the existing training covers the anti-money laundering regulations that the bank is required to follow.
- C. No, anti-money laundering training needs to be delivered face-to-face for credit card businesses.
- D. No, anti-money laundering training needs to be tailored and focused on the risks specific to the business.
Answer: D
Explanation:
The bank's existing anti-money laundering training is not adequate to be delivered to the employees of the newly acquired credit card business, because anti-money laundering training needs to be tailored and focused on the risks specific to the business. Credit card businesses face different types of money laundering risks than retail banks, such as card-not-present fraud, identity theft, card skimming, and prepaid card abuse. Therefore, the anti-money laundering training for credit card businesses should cover the specific red flags, indicators, typologies, and mitigation measures related to these risks, as well as the relevant laws and regulations that apply to credit card businesses.
References:
CAMS Study Guide, 6th Edition, Chapter 4, Section 4.31
CAMS Study Guide, 6th Edition, Chapter 5, Section 5.21
Certification Candidate Handbook, Section 3.22
Latest CAMS Exam Questions, Question 433
NEW QUESTION # 182
Which activity associated with new or developing technologies does the Financial Action Task Force recommend financial institutions pay special attention to?
- A. Complex or unusually large transactions
- B. Non-face-to-face business relationships or transactions
- C. Financial intermediaries performing transactions for customers
- D. High volumes of cash transactions
Answer: B
Explanation:
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.
References:
FATF Opportunities and Challenges of New Technologies for AML/CFT
FATF: New Technologies for AML/CFT
FATF Recommendation 15: New technologies
NEW QUESTION # 183
An anti-money laundering specialist has just developed and implemented an anti-money laundering program. What is the most effective resource to evaluate the effectiveness of the program?
- A. A member of senior management
- B. The anti-money laundering specialist
- C. A qualified independent party/auditor
- D. The regulator authorities
Answer: C
Explanation:
A qualified independent party/auditor is the most effective resource to evaluate the effectiveness of an anti-money laundering program. This is because an independent auditor can provide an objective and unbiased assessment of the program, identify any weaknesses or gaps, and make recommendations for improvement. An independent auditor can also verify the compliance of the program with the relevant regulations and best practices, and test the adequacy and functionality of the internal controls, customer due diligence processes, and transaction monitoring systems. An independent auditor can also help an organization prepare for regulatory examinations and audits, and avoid potential penalties or sanctions.
Reference:
The document titled "Frequently Asked Questions Conducting Independent Reviews of Money Services Business Anti-Money Laundering Programs" published by the Financial Crimes Enforcement Network (FinCEN) in July 2010. You can access it by clicking here.
The document titled "AML Audit: How to Effectively Assess Your Compliance Program" published by Alessa in May 2023. You can access it by clicking here.
The document titled "Mutual Evaluations" published by the Financial Action Task Force (FATF). You can access it by clicking here.
NEW QUESTION # 184
Law enforcement is conducting an investigation of a financial institution (FI) and has submitted an overly broad and unduly intrusive request. Which is a Fl's most appropriate response?
- A. Ignore the request due to the unacceptable volume of information contained within.
- B. Narrow the request through a prompt response to the law enforcement agency.
- C. Contest the request with the company's board of directors and key senior management.
- D. Delay a response until all documents can be gathered regardless of the duration.
Answer: B
Explanation:
Financial institutions (FIs) are required to cooperate with law enforcement agencies (LEAs) in their investigations of money laundering, terrorist financing, and other financial crimes. However, sometimes LEAs may submit requests for information or documents that are overly broad, unduly intrusive, or unreasonable in scope or volume. Such requests may pose challenges or risks for FIs, such as violating customer privacy, compromising data security, disrupting business operations, or incurring excessive costs.
The most appropriate response for an FI in such a situation is to narrow the request through a prompt response to the LEA. This means that the FI should communicate with the LEA as soon as possible to clarify the purpose, scope, and relevance of the request, and to negotiate a more reasonable and proportionate request that meets the LEA's needs and the FI's capabilities. The FI should also explain the potential difficulties or consequences of complying with the original request, and propose alternative or additional sources of information that may be more useful or accessible. The FI should document the communication and the agreed terms of the request, and comply with the request in a timely and accurate manner.
By narrowing the request through a prompt response, the FI can demonstrate its good faith and willingness to cooperate with the LEA, while also protecting its own interests and obligations. This can help avoid or resolve any conflicts or misunderstandings between the FI and the LEA, and facilitate a more efficient and effective investigation.
Reference:
Requests by Law Enforcement for Financial Institutions to Maintain Accounts EFFECTIVE SUPERVISION AND ENFORCEMENT BY AML/CFT SUPERVISORS OF THE FINANCIAL SECTOR AND LAW ENFORCEMENT Bank Secrecy Act/Anti-Money Laundering: Requests by Law Enforcement for Financial Institutions to Maintain Accounts Support of Law Enforcement ACAMS CAMS Certification Study Guide 6th Edition
NEW QUESTION # 185
When should a financial institution (FI) exit a relationship? (Choose two.)
- A. The suspicious conduct of the account holder
- B. The request from law enforcement to close the account
- C. The FI's requirements for opening an account
- D. The reputational risk to the FI posed by closing the account
- E. The FI's stated policies and procedures for closing an account
Answer: A,E
Explanation:
A financial institution (FI) should exit a relationship when the suspicious conduct of the account holder or the FI's stated policies and procedures for closing an account warrant such action. A FI has the right and responsibility to terminate a customer relationship that poses an unacceptable level of risk to the FI or violates its AML/CFT program. A FI should have clear and consistent criteria for exiting a relationship, such as the number and severity of SARs filed, the nature and extent of due diligence conducted, the availability and effectiveness of mitigating controls, and the alignment of the customer profile with the FI's risk appetite. A FI should also document the rationale and process for exiting a relationship, communicate the decision to the customer and relevant stakeholders, and monitor the account until closure.
The reputational risk to the FI posed by closing the account or the request from law enforcement to close the account are not valid reasons for exiting a relationship by themselves. A FI should consider the potential reputational impact of closing an account, but it should not outweigh the legal and regulatory obligations of the FI to prevent and detect money laundering and terrorist financing. A FI should also cooperate with law enforcement requests, but it should not automatically close an account based on such requests, as they may interfere with ongoing investigations or intelligence gathering. A FI should exercise its own judgment and discretion in deciding whether to exit a relationship, based on its own policies and procedures and the facts and circumstances of each case.
Exiting Relationships: Ten Steps to a Successful Client Exit Strategy
De-risking your SARs: Building SAR relationship exit strategies into your AML/CFT program Answers to Frequently Asked Questions Regarding Suspicious Activity Reporting and Other Anti-Money Laundering Considerations
NEW QUESTION # 186
Which is a red flag for funds transfers?
- A. Funds transfers are to a higher-risk geographic location with a known supplier within the same industry as the originator.
- B. Funds transfers are received in numerous small quantities from entities that are in related industries.
- C. Funds transfers are repeatedly sent to the same beneficiary out of line with the business purpose.
- D. Funds transfers are repetitive and within expected patterns.
Answer: C
Explanation:
Funds transfers are electronic payments that move money from one account to another, either within the same financial institution or across different institutions, countries, or currencies1. Funds transfers are commonly used for legitimate purposes, such as remittances, trade, or investment, but they can also be abused by money launderers, terrorists, or fraudsters to move illicit funds or conceal their origin or destination2. Therefore, financial institutions and other entities that offer funds transfer services are required to apply anti-money laundering and counter-terrorism financing (AML/CFT) measures, such as customer due diligence, transaction monitoring, record-keeping, and reporting of suspicious activities2.
One of the red flags for funds transfers that may indicate money laundering or other criminal activity is when funds transfers are repeatedly sent to the same beneficiary out of line with the business purpose3. This could suggest that the originator and the beneficiary are colluding to layer or integrate illicit funds, or to evade reporting or sanctions requirements. For example, a business may send multiple funds transfers to the same supplier, but the amounts or frequencies do not match the invoices or contracts, or the supplier is located in a high-risk jurisdiction or is subject to sanctions. Alternatively, an individual may send frequent funds transfers to the same person, but the relationship or the reason for the transfers is unclear or inconsistent, or the person is associated with a criminal or terrorist organization. In such cases, the financial institution or the funds transfer service provider should conduct enhanced due diligence, verify the source and purpose of the funds, and report any suspicious activity to the relevant authorities.
Reference:
1: Wire Transfer Definition - Investopedia
2: International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation - The FATF Recommendations | FATF
3: Wire Transfer Red Flags: Money Laundering & Fraud Risks - Alessa1
NEW QUESTION # 187
Which of the following attributes would enhance an AML program's effectiveness?
- A. Auditors providing prescriptive guidance and support to the program following a less than satisfactory audit
- B. Providing basic AML training to all employees
- C. An AML officer being appointed to the board as a working member of management with increased authority
- D. Providing effective challenge with AML staff and continuous cross-training
Answer: D
Explanation:
Effective AML programs promote aculture of compliance, which includes an environment where staff are empowered to raise concerns, challenge decisions, and continuously improve through cross-functional learning.Providing effective challengeis a supervisory expectation and best practice in institutions that value AML governance integrity.
While AML officer authority (option B) supports oversight, it is not as impactful on daily operational effectiveness as fostering a challenging and adaptive compliance culture.
Reference: ACAMS CAMS Study Guide - 6th Edition, Chapter: AML Program Components - Section:
Culture of Compliance
NEW QUESTION # 188
What are three potential issues for foreign financial institutions maintaining correspondent accounts with U.S.
banks under the Patriot Act? Choose 3 answers
- A. Cancellation of correspondent banking relationships
- B. Forfeiture of funds in a U.S. interbank account
- C. U.S. residents maintaining private banking accounts
- D. Prohibition of correspondent accounts for shell banks
Answer: A,B,D
Explanation:
Reference: http://www.ffiec.gov/bsa_aml_infobase/p
NEW QUESTION # 189
A bank compliance officer discovers cash deposit activity inconsistent with the expected and historical cash activity within the personal accounts of the chairman of the board. The cash activity appears structured to avoid the local legal filing requirements for large cash transactions, and a suspicious transaction report (STR) was filed.
How should the compliance officer report the filing of the STR to the board of directors without revealing the existence of the filing to the subject?
- A. The compliance officer and the chief executive officer should jointly interview the chairman
- B. Notify the financial institution's regulator to disclose the activity
- C. Inform the legal counsel of the bank
- D. Follow the financial institution's established STR reporting policy
Answer: C
NEW QUESTION # 190
Which action indicates possible Penza scheme activity?
- A. A licensed seller offers higher profit on investments in a high risk country
- B. A unlicensed investment advisor offers returns that are competitive with industry benchmarks
- C. A licensed investment advisor lures aging/retired professionals to invest in securities
- D. An unlicensed investment advisor offers profits other investments cannot guarantee
Answer: D
Explanation:
A Penza scheme, also known as a Ponzi scheme, is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors1 The scheme relies on attracting new investors with unrealistic promises of high returns and low risk, while using their money to pay off the previous investors2 An unlicensed investment advisor who offers profits other investments cannot guarantee is likely to be involved in a Penza scheme, as this is a common way to entice unsuspecting victims3 The other options are not necessarily indicative of a Penza scheme, as they could be legitimate or involve other types of fraud.
References: 1 Ponzi scheme - Wikipedia; 2 Ponzi Schemes: Definition, Examples, and Origins - Investopedia; 3 What is Ponzi Scheme? - Sanction Scanner
NEW QUESTION # 191
What was cited by the Wolfsberg Group in its Statement on the Suppression of the Financing of Terrorism as being vulnerable to terrorist financing?
- A. Private banking
- B. Alternative remittance
- C. Correspondent banking
- D. Trade finance
Answer: B
Explanation:
Alternative remittance, also known as underground banking or informal value transfer systems, is a method of transferring money or value without using formal financial institutions or channels. It is often used by migrant workers, refugees, or people who lack access to formal banking services. However, it can also be exploited by criminals and terrorists to move funds across borders without detection or regulation. The Wolfsberg Group, a group of leading international banks that promotes best practices in anti-money laundering and counter-terrorist financing, cited alternative remittance as one of the sectors and activities that are widely used for the financing of terrorism in its Statement on the Suppression of the Financing of Terrorism. The Wolfsberg Group recommended that financial institutions apply enhanced and appropriate due diligence to customers engaged in alternative remittance and report any suspicious transactions to the relevant authorities.
References:
Wolfsberg Group (2002). Wolfsberg Statement on Anti-Terrorism Financing1 Pieth, M. (ed.) (2002). Financing Terrorism. Springer, Dordrecht2 ACAMS (2020). CAMS Certification Package (6th Edition)3
NEW QUESTION # 192
A director of a financial institution was convicted of laundering money as part of a Ponzi scheme and terminated. As a result of an internal investigation evidence proved that an employee assisted in the illegal activity.
Which action should the institution take?
- A. Require all employees to complete additional anti-money laundering training
- B. Since the employee was not charged, no further action is required
- C. Discipline the employee with no further action
- D. Discipline the employee and inform local authorities
Answer: D
Explanation:
If an employee of a financial institution is found to have assisted in money laundering or any other criminal activity, the institution should take appropriate disciplinary action and report the employee to the relevant authorities. This is not only a legal obligation, but also a sound compliance practice to protect the institution's reputation and integrity. Disciplining the employee without informing the authorities would be insufficient and potentially expose the institution to further legal risks. Ignoring the employee's involvement or requiring additional training for all employees would be ineffective and inappropriate responses.
:
ACAMS CAMS Certification Package - 6th Edition, Chapter 5: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), pp. 121-1221 ACAMS CAMS Certification Package - 6th Edition, Chapter 6: AML Compliance Program, pp. 143-1441 ACAMS CAMS Certification Video Training Course, Module 5: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), Lesson 5.2: International Standards and Best Practices2 ACAMS CAMS Certification Video Training Course, Module 6: AML Compliance Program, Lesson 6.4:
Internal Controls2
NEW QUESTION # 193
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