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CAMS Questions and Answers

Question # 4

Which two channels can be utilized during a cross-border money laundering investigation to assist in gathering

information according to Financial Action Task Force? (Choose two.)

A.

Contacting existing liaison officers in the foreign jurisdiction

B.

Exchanging information between national law enforcement agencies

C.

Contacting the potential suspect or their family members to request information

D.

Submitting only formal requests for information to a financial intelligence unit

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Question # 5

A popular restaurant in town has begun depositing less cash than it has in prior years. In a review of the

customer’s accounts, you notice that credit card receipts have increased with no .

The account officer discovers that the restaurant has installed a privately-owned automated teller machine

(ATM) onsite and has begun construction on a patio dining area.

Which red flag should trigger additional investigation?

A.

Privately-owned ATM

B.

Lower cash deposits

C.

Increased credit card receipts

D.

Construction of the new patio dining area

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Question # 6

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.

The regulator authorities

B.

A member of senior management

C.

The anti-money laundering specialist

D.

A qualified independent party/auditor

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Question # 7

What are two requirements for monitoring and reporting suspicious activity for correspondent banking

according to the Wolfsberg Principles? (Choose two.)

A.

Incorporate suspicious activity monitoring into periodic reviews

B.

Incorporate due diligence results such as customer risk ratings

C.

Utilize downstream correspondents to investigate and report suspicious activity

D.

Investigate and report suspicious activity only for the correspondent bank’s clients

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Question # 8

What does the Egmont Group’s support for its members include?

A.

Issuing due diligence models for financial institutions

B.

Expanding and systematizing international cooperation in the reciprocal exchange of information

C.

Issuing strategic products for law enforcement agencies and FIUs on topics of international interest

D.

Expanding the ability of FIUs to enforce laws and exchange information globally to combat money laundering and terrorist financing

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Question # 9

What was the topic the Wolfsberg Group’s first guidance addressed?

A.

Enhanced due diligence for high risk customers

B.

Private banking

C.

AML training for financial institution staff

D.

Merchant acquiring activities

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Question # 10

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.

Advise the compliance officer on how to appropriately respond to policy exceptions.

B.

Include the regulatory violation in the audit report and report it to the board of directors.

C.

Consult with legal counsel to determine if the approval of the policy exception was acceptable.

D.

Include the regulatory violation in the audit report and recommend the compliance officer be subject to

disciplinary action by the board of directors.

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Question # 11

A European Union (EU) bank has a correspondent banking relationship with a U.S. bank. Under USA PATRIOT Act Section 311, the U.S. government has enacted special measures against a designated entity that has a payable-through account with the EU bank. Which of the following actions might the U.S. bank be required to take regarding the EU bank's services for the designated entity?

A.

Ensure the designated entity's confidential information is not shared with other entities.

B.

Obtain additional information about customers permitted to use this account.

C.

Verify that the EU bank serves the designated entity.

D.

Perform enhanced due diligence on the EU bank.

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Question # 12

In establishing procedures for the review of suspicious transactions and filling of STRs, what thing should an institution focus on?

A.

The need to have on-going training as to potential red flags that the institution might encounter

B.

The appropriateness of having a centralized review of suspicious transactions and recommendations to file an STR to ensure consistency

C.

A system for tracking STRs and ensuring that appropriate supporting documentation is segregated and maintained

D.

The need not to ensure that the institution has a strong case of impropriety before filling an STR

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Question # 13

An anti-money laundering specialist has been asked to create internal anti-money laundering policies, procedures and controls for a recently chartered offshore financial institution.

Which three should be included? Choose 3 answers

A.

Basel Committee on Banking Supervision’s capital adequacy requirements for the host country

B.

A training program for senior management and staff

C.

An anti-money laundering compliance program, internal audit program, and procedure manual

D.

Compliance requirement of host and charting countries

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Question # 14

FATF recommends the incorporation of some measures in customer due diligence (CDD) programs including:

A.

conducting the risk assessment of products and services.

B.

conducting ongoing due diligence on the business relationship and monitoring of transactions.

C.

identifying the products and services and their suitability to customers.

D.

identifying the number of beneficial owners without the verification of their true identity.

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Question # 15

What indicates potential money laundering activity by a lawyer?

A.

A lawyer’s trust account regularly receives wire transfers from unknown remitters in a high risk country and immediately redirects the same funds to the same remitters account in a low risk country

B.

A lawyer’s trust account receives a large value wire transfer from a publicly listed life insurance company and then immediately transfers the same funds out to an unknown individual in a low risk country

C.

A lawyer’s account in a low risk country receives a bank draft from another lawyer firm in a high risk country

D.

A lawyer’s account in a high risk country receives a cash deposit of an amount that is considerable below the reporting threshold

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Question # 16

What is an indicator of suspicious activity?

A.

A customer who pay back a late loan all at once after collecting on a bad debt

B.

A convenience store that brings in $20s and $10s and requests small bills and change

C.

Large and frequent credit balances on a credit card resulting in request for refunds

D.

An online retailer that uses a third-party payment processor to facilitate its transactions

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Question # 17

An immigrant residing in the United States opens a bank account that includes a debit card. Several months

later, the transactional monitoring system identifies small deposits into the account followed by corresponding

ATM withdrawals from a country bordering a conflict zone.

How should the bank respond?

A.

Block any further activity

B.

File a suspicious transaction report

C.

Initiate an investigation into the activity

D.

Contact the customer if the transaction activity continues

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Question # 18

A national Financial Intelligence Unit, which is responsible for receiving, analyzing and disseminating disclosure of financial information, should consider becoming a member of what organization?

A.

The Egmont Group

B.

The Wolfsberg Group

C.

The Financial Action Task Force

D.

The Basel Committee

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Question # 19

On who does the ultimate responsibility for an institution’s anti-money laundering program rest?

A.

The designated AML Compliance Officer

B.

The institution’s Board of Directors

C.

All employees with customer contact

D.

The government regulator examining the AML program

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Question # 20

Which statement about U.S. Specified Unlawful Activities (SUA) is true?

A.

At least one SUA must be proven in order to pursue a money laundering conviction

B.

SUAs are generally limited to a small sub-set of crimes

C.

In order to secure a conviction, the defendant must be proven to have known the precise nature of the source of funds

D.

SUAs are limited to crimes that occur within the borders of the U.S. and its territories and possessions

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Question # 21

Why is the Mutual Legal Assistance Treaty (MLAT) a gateway for international cooperation?

A.

They provide a legal basis for transmitting evidence that can be used for prosecution and judicial proceedings

B.

They receive reports of suspicious transactions from financial institutions to disseminate to local Law enforcement and foreign FIUs

C.

They obtain intelligence that might lead to evidence

D.

They issue the Prmc4es of Information Exchange Between Financial intelligence Units (FIUs)

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Question # 22

A compliance officer is looking to update an institutions private bank procedures. What should be included as recommended by the Wolfsberg AML Principles on

Private Banking?

A.

Approval of Politically Exposed Persons (PEPs) by at least one person other than the relationship manager

B.

Dedicated automated AML monitoring of client activity

C.

Review of client files annually if there are unusual transactions

D.

The institution’s senior management has primary responsibility for the relationship

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Question # 23

In addition to monitoring for suspicious activity, what are electronic monitoring systems also valuable for?

A.

Identifying how customers are using products

B.

Highlighting the skills of the system analysts

C.

Proving to the Board of Directors that the FIU is doing its job

D.

Meeting mandatory regulatory requirements for system implementation

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Question # 24

What three attributes do havens for money laundering and terrorist financing typically have? Choose 3 answers

A.

Limited types of institutions and persons covered by money laundering laws and regulations

B.

Little enforcement of the laws, weak penalties or provisions that make it difficult to confiscate or freeze assets related to money laundering

C.

A large number of predicate crimes for money laundering

D.

Absence of an effective FIU

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Question # 25

With which person(s) should an anti-money laundering officer coordinate when implementing a new hire screening program?

A.

Internal Auditor

B.

Local Financial Intelligence Unit

C.

Human Resources

D.

Institution’s Regulator

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Question # 26

Which information must a United States financial institution retain for having foreign correspondent accounts as part of the USA PATRIOT Act record keeping requirements?

A.

Records identifying the owners of each foreign bank

B.

Section 314(b) information sharing results related to foreign correspondent accounts

C.

Purchase of monetary instruments of $3,000 or more involving foreign correspondent accounts

D.

A suspicious activity report filed and the supporting documentation involving foreign correspondent accounts

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Question # 27

Which of the following customers require the most enhanced due diligence?

A.

A resident of a non-cooperative jurisdiction.

B.

An international business corporation.

C.

A politically exposed person.

D.

An established customer.

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Question # 28

According to Basel Committee on Banking Supervision's Customer Due Diligence for Banks, which of the following should provide an evaluation of a bank's policies and procedures independent from its management?

A.

The credit risk department

B.

The Board

C.

A peer institution

D.

The compliance function

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Question # 29

Financial Action Task Force (FATF)-style regional bodies are created and obliged to understand the inherent

money laundering and terrorist financing risks in the region of the world they serve.

What is one of the methods they use to understand these risks?

A.

They require member countries to develop statistical metrics over money laundering and terrorist financing

crimes

B.

They require participating financial institutions of their members to file suspicious transaction reports to the

regional body

C.

They conduct global research on money laundering and terrorist financing trends and report their findings

in their own typologies report

D.

They conduct regional-level research and analysis of the money laundering and terrorist financing methods

and trends using standards and templates used for FATF typologies reports

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Question # 30

A bank employee reviews wire transactions looking for indications of wire stripping.

Which two actions should the employee take to complete appropriate bank procedures? (Choose two.)

A.

Compare the wire transaction as it enters and after it leaves the bank

B.

Check for suspicious phrases usually used to conceal originator or beneficiary identity

C.

Identify large incoming wire transactions received on behalf of a foreign client with no explicit reason

D.

Identify wire transaction activity to or from a financial institution located in a higher risk jurisdiction

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Question # 31

A bank has opened a new account for a well-known attorney to manage client funds. During the first six months, bank staff observe the account receives multiple deposits via wire transfer. They also observe that the attorney withdraws cash, makes payments to various people, and transfers funds to the law firm’s account online.

What is considered a red flag for potential money laundering in this situation?

A.

Withdrawing cash

B.

Making payment to various people

C.

Receiving multiple deposits via wire transfer

D.

Transferring funds to his law firm’s account online

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Question # 32

What is the currency threshold under the European Union Fourth Anti-Money Laundering Directive?

A.

3,000 Euros

B.

5,000 Euros

C.

10,000 Euros

D.

15,000 Euros

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Question # 33

A money remittance business will most likely attract money launderers because it

1.deals primarily in cash transactions.

2.engages in international transactions.

3. conducts transactions for walk-in customers.

4.does not have to comply with transaction reporting.

A.

1, 2, and 3 only

B.

1, 2, and 4 only

C.

1, 3, and 4 only

D.

2, 3, and 4 only

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Question # 34

In which two ways do Financial Action Task Force-style regional bodies influence anti-money laundering and terrorist financing standards within their respective regions? (Choose two.)

A.

They issue typologies specific to their geographical region.

B.

They administer mutual evaluations of participating members.

C.

They enforce the laws of the member countries in their geographic region.

D.

They require participating countries to adopt laws in line with their recommendations.

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Question # 35

What do the Financial Action Task Force (FATF) mutual evaluations of each member assess?

A.

The levels of implementation of the FATF Recommendations

B.

The member’s ability to send a representative to the plenary sessions

C.

If the member has a large enough economy to maintain its membership

D.

If the member has made any suggestions for updates to the FATF Recommendations

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Question # 36

Which factor should a bank consider before sharing information about a customer with its broker-dealer

affiliate in the case of an investigation?

A.

Whether the broker-dealer affiliate can rely on the due diligence done by the bank

B.

Whether there is a mutual legal assistance treaty in place between the two institutions

C.

Whether privacy and data protection rules permit the bank to share the information with the affiliate

D.

Whether both institutions have an account or are in the process of opening an account for the customer

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Question # 37

A junior account manager within an international private bank in Country A was asked by one of his valued customers, who has held an account for several years in the institution, about depositing a large sum of cash into her account. The junior account manager informed his customer that his bank does not accept cash. The junior account manager later reviewed a customer activity report and noticed a number of smaller dollar wires from banks in neighboring Country B, which has lax currency controls, that totaled about as much as the customer intended to deposit.

What should the junior account manager do?

A.

Close the account

B.

File a suspicious transaction report with the Financial Intelligence Unit

C.

Notify the anti-money laundering specialist of his bank, but do not call the customer

D.

Offer the customer a more secure method of depositing in the hope of learning something more during the conversation

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Question # 38

Based on the USA PATRIOT Act, what action might the US take to demonstrate extraterritorial reach?

A.

Send requests for information to a non-US based financial institution (FI)

B.

Hand over potential penalties from the US to another government

C.

Freeze U. S. accounts that contain funds from the non-US FI

D.

Initiate a lawsuit in the home country of the non-US FI

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Question # 39

An anti-money laundering specialist working at a bank just received a legal request from a law enforcement agency mandating the release of all financial transaction records relating to an account at the bank. The specialist immediately recognizes the account as one owned by the bank Chief Executive Officers brother. During research to gather the requested documents, the specialist finds several internal memos he had sent to the bank president with concerns regarding possible suspicious activity relating to this account. The specialist recalls the bank president verbally responded to each memo with an explanation of the activity and indicated there was no cause for concern. What should the specialist do with respect to these internal memos?

A.

Place these memos in his personal files in case they are subsequently requested

B.

Ask the bank president to document his instructions to the specialist

C.

Call the law enforcement agent and suggest he modify the legal request to include these memos

D.

Advise the bank’s senior legal advisor of the situation

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Question # 40

Which method to launder money through deposit-taking institutions is closely associated with international

trade?

A.

Forming a shell company

B.

Using Black Market Peso Exchange

C.

Structuring cash deposits withdrawals

D.

Investing in legitimate business with illicit funds

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Question # 41

How can a ‘free-look provision’ as part of a life insurance policy help criminals to launder money?

A.

A policy owner can decide how to pay the premium within a pre-defined period.

B.

A policy owner is able to terminate the contract without penalties such as surrender charges.

C.

A policy owner has freedom to decide who the beneficiary of the policy will be and can in this way move money to a related third party.

D.

A policy owner has freedom to decide who the beneficiary of the policy will be and can in this way move money to an unrelated third party.

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Question # 42

Which is a key role of FATF-Style Regional Bodies (FSRBs)?

A.

Support the system of mutual evaluation

B.

Setting regional standards for combatting money laundering

C.

Bring additional terrorist financing laws into action in the region

D.

Enforce the specific FATF laws in the region

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Question # 43

An anti-money laundering specialist has been asked to establish a compliance program to detect and prevent money laundering and terrorist financing. Which of the following should the anti-money laundering specialist consider in developing the program?

1. Funds for money laundering and terrorist financing are derived from illegal sources.

2. Related practices are used to conceal the nature of the funds.

3. The source and disposition of funds are similar.

4. Similar techniques are used to move funds.

A.

1 and 2 only

B.

1 and 3 only

C.

2 and 4 only

D.

3 and 4 only

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Question # 44

A high-volume dealer of precious metals and stones in a high-risk jurisdiction is approached by a new customer interested in selling gold worth $200,000. The customer was referred by a longtime family friend of the dealer and provides no indication of background or business purpose for the sale. The dealer agrees to make the purchase based solely on the reference.

What is the money laundering red flag?

A.

The customer was referred by a longtime friend of the dealer

B.

The precious metals dealer is operating in a high-risk jurisdiction

C.

A new customer is selling gold worth $200,000 to a high volume dealer

D.

The customer provides no background information or business purpose for the transaction

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Question # 45

A customer has held an account at a bank and has lived locally for over 25 years. Historically he has come

into the bank monthly to deposit a $1,500 retirement check from the company where he worked. He is well

known at the bank and often brings the staff cookies. Over the past four months, he has come into the bank

every Monday, Wednesday, and Thursday to make $3,000 cash deposits into his account. A review of his

account shows that an $8,500 check made out to cash clears his account each week. The bank has decided

to file a suspicious transaction report (STR).

What is the important fact to include in the STR?

A.

The recent change in the timing of deposits and withdrawals in the account

B.

The customer’s work history and the amount of his monthly retirement check

C.

The fact that the account holder is well known to the bank staff

D.

The fact that the customer has lived in the area and has banked at this bank for 25 years

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Question # 46

What are two requirements of United States financial institutions when conducting business with an

international institution as a result of the USA PATRIOT Act? (Choose two.)

A.

Performing enhanced due diligence on shell banks

B.

Performing due diligence on correspondent accounts

C.

Visiting the head office of the international financial institution

D.

Complying with Special Measures issued under the USA PATRIOT Act

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Question # 47

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 are foreign

B.

The clients have the funds necessary to fund a £30 million purchase

C.

The clients are not willing to have their names provided to the bank

D.

The clients want to purchase to be made in the names of the private companies

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Question # 48

A comprehensive set of risk-based guidelines for maintaining business relationships is being developed.

Which situation indicates that the institution should terminate the relationship with a client?

A.

The client does business in countries with active terrorist organizations.

B.

The client conducts international financial transactions exceeding U.S. $500 million.

C.

The client exceeds the criteria of an acceptable risk model created by another institution that is not similar in size and complexity.

D.

The client exceeds the criteria of an acceptable risk model created by the institution and does not perform acceptable remedial actions.

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Question # 49

Which statement is true about when an institute becomes aware that a particular employee is under investigation by law enforcement as a result of a subpoena or warrant?

A.

Under no circumstances can the employee be interviewed by the institution without the consent of law enforcement for fear of tipping the employee off

B.

If an independent investigation provides grounds to interview the employee, they can be interviewed and, if necessary, terminated buy not advised that they are under investigation

C.

The employee can and should be interviewed, as well as notified of the investigation to demonstrate the seriousness of the offence and to get the employee’s full attention and cooperation

D.

The institute has a duty as an employer to inform the employee he or she is under investigation by law enforcement, buy must not inform them that a warrant or subpoena has been received

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Question # 50

In which situation can money laundering adversely affect a country’s currencies and interest rates due to launderers investing dirty funds?

A.

They invest in high risk ventures with high rates of return

B.

They invest in legitimate companies as a way of making their funds appear to be legitimate

C.

They invest in shell companies in secrecy havens that intentionally manipulate rates

D.

They invest in a way to hide funds rather than get a high rate of return

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Question # 51

An organization uses an automated surveillance system that generates a very large volume of anti-money laundering alerts. The monthly volume of alerts has increased over the last year causing the compliance staff to fall significantly behind reviewing the alerts. As a result, the system settings are under review to determine if they are appropriate.

Which action should be included in the evaluation of system settings?

A.

Compare settings to organizations within its peer group

B.

Flag filters with no history of generating an alert for removal

C.

Review parameter settings based on the latest risk assessment

D.

Calibrate parameters based on staffing capabilities to clear alerts

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