Pass the ACAMS AML Certifications CAMS Questions and answers with ExamsMirror

Money launderers usehigh-value goods(e.g., jewelry, art, and precious metals) todisguise illicit funds.

Option C (Correct):Requesting ahandwritten receipt for a cash purchasesuggests anattempt to avoid record-keeping, a knownmoney laundering technique.

Option A (Incorrect):Buying gold bars withcash and cryptocurrencyisunusualbut notinherently illegalunless the amounts are suspicious.

Option B (Incorrect):Credit card payments are traceableanddo not raise immediate red flags.

Option D (Incorrect):Kimberly Process-certified diamondsare legally sourced, and requesting themdoes not indicate suspicious intent.

High-risk: The risks here are significant, but are not necessarily prohibited. To mitigate the heightened risk presented, the financial institution should apply more stringent controls to reduce the ML/FT risk, such as conducting enhanced due diligence and more rigorous transaction monitoring. Countries that maintain a reputation for corruption or drug trafficking are generally considered high-risk. High-risk customers may include politically exposed persons (PEPs) or certain types of money services businesses orcash-intensive businesses; high-risk products and services may include correspondent banking and private banking.

According to the USA PATRIOT Act, the four minimum elements required for an anti-money laundering program for a foreign bank with branches in the United States are:

An ongoing employee training program. This is to ensure that the employees are aware of the anti-money laundering policies and procedures, the legal and regulatory requirements, the red flags and indicators of suspicious activity, and their roles and responsibilities in detecting and reporting money laundering and terrorist financing.

The designation of a compliance officer. This is to ensure that there is a person responsible for overseeing the implementation and effectiveness of the anti-money laundering program, ensuring compliance with the applicable laws and regulations, and liaising with the regulators and law enforcement agencies.

An independent audit function to test the program. This is to ensure that the anti-money laundering program is periodically reviewed and evaluated by an independent and qualified auditor, who can assess the adequacy and effectiveness of the program, identify any weaknesses or deficiencies, and recommend corrective actions or improvements.

The development of internal policies, procedures, and controls. This is to ensure that the foreign bank has a written and documented anti-money laundering program that establishes the standards, guidelines, and processes for preventing, detecting, and reporting money laundering and terrorist financing, and that the program is consistent with the risk profile and business activities of the foreign bank.

The development of a Know Your Customer program is not a minimum element required under the USA PATRIOT Act, although it is a recommended best practice and may be required by other laws or regulations.

CAMS Study Guide - 6th Edition, Chapter 5, pages 141-142

CAMS Certification Exam Outline, Domain 2, Task 2.2, Skill 2.2.1

Anti-Money Laundering Initiatives Under the USA Patriot Act, FindLaw, March 2008

[The U.S. PATRIOT Act and AML: What You Need to Know], Dow Jones Risk & Compliance, June 2020

Accountants can be involved in money laundering schemes in various ways, either knowingly or unknowingly. Some of the common methods that accountants can use to launder money are:

Overstating income to hide excess cash: This method involves inflating the revenues or profits of a business to conceal the origin of illicit funds. For example, an accountant can create fake invoices or receipts to justify the deposit of cash from illegal sources into the business account. This can make the cash appear as legitimate income from the business operations.

Acting as a conduit for transferring cash between accounts: This method involves using the accountant’s own account or a third-party account to move funds around and obscure the audit trail. For example, an accountant can receive cash from a client and deposit it into their own account, then transfer it to another account or withdraw it in a different location. This can make it difficult to trace the source and destination of the funds.

Acting as a designee for someone who wishes to hide their identity: This method involves using the accountant’s name or credentials to open accounts or conduct transactions on behalf of a client who wants to remain anonymous. For example, an accountant can act as a nominee director or shareholder for a shell company that is used to launder money. This can make it appear as if the accountant is the owner or beneficiary of the funds, while the actual owner or beneficiary is hidden.

Money Laundering: What It Is and How to Prevent It - Investopedia, The Process of Laundering Money

Revealed: accountants aiding money laundering - Accountancy Age, Accountants’ methods

Accountants in the anti-money laundering front line, Accountants’ obligations

https://www.ojp.gov/pdffiles1/Digitization/119840NCJRS.pdf

The Egmont Group is a global network of 170 financial intelligence units (FIUs) that facilitate the exchange of information and cooperation among member FIUs to combat money laundering, terrorist financing, and associated predicate offences12. FIUs are national agencies that collect, analyze, and disseminate financial intelligence to relevant authorities3. The Egmont Group supports the implementation of international standardsand best practices for FIUs, provides training and technical assistance, and promotes the development of secure and effective communication channels12.

Egmont Group website

Egmont Group of Financial Intelligence Units - Wikipedia

ACAMS CAMS Study Guide (the 6thedition), Chapter 5: The Role of the Financial Intelligence Unit in Combating Money Laundering and Terrorist Financing, page 1532

The CAMS 6th Edition clearly identifies a risk-based approach as the cornerstone of effective AML/CFT programs. Risk assessments should consider various risk factors that directly influence exposure to ML/TF.

Product risk (A): Certain products or services may present higher ML/TF risks, such as private banking, correspondent banking, or cash-intensive products.“Products and services offered, and their inherent risk levels, must be assessed as part of the risk-based approach.”(CAMS 6th Edition, AML Compliance Program, Risk Assessment)

Geographic risk (C): Jurisdictions where the customer operates or where transactions are conducted may present higher or lower risks due to factors such as weak AML regulations or high corruption.“Geographic risk considers where a customer is located and/or where transactions occur, referencing countries with increased risk, such as those identified by the FATF.”(CAMS 6th Edition, Risk Assessment Factors)

Customer risk (D): The type of customer, such as PEPs, non-residents, or companies with complex structures, may present higher ML/TF risks.“Customer risk assessment is based on the customer’s profile, activity, and ownership structure, and is a critical component in risk-based monitoring.”(CAMS 6th Edition, CDD/EDD)

Incorrect Options:

B (Credit risk): Related to creditworthiness, not ML/TF.

E (Liquidity risk): Refers to a firm’s ability to meet financial obligations; not an AML risk factor.

Paying a large amount in cash for an art purchase is a typical red flag of potential money laundering, as it may indicate an attempt to avoid traceability and reporting requirements. Cash transactions are often used by criminals to launder illicit funds, as they are difficult to track and verify. According to the FATF guidance on money laundering and terrorist financing risks in the art trade, cash payments above a certain threshold should be subject to enhanced due diligence and reporting obligations by art market participants (AMPs). AMPs should also be wary of customers who provide insufficient or inconsistent information about the source of funds, the purpose of the transaction, or the identity of the beneficial owner.

According to the ACAMS CAMS Study Guide (the 6th edition), one of the key steps in conducting an effective investigation of a potential money laundering or terrorist financing activity is to gather all relevant information about the customer and the transaction, including the nature and purpose of the account, the source and destination of funds,the expected account activity, and the customer’s risk profile1. In this case, the compliance officer should meet with the staff who opened the new account for the public official to obtain this information and assess whether the account is consistent with the customer’s profile and needs, or whether it indicates a possible attempt to conceal or launder illicit funds. Waiting for the new account to receive funds, calling the competentauthorities, or calling the official’s office are not appropriate actions at this stage, as they may compromise the investigation, alert the customer, or violate confidentiality rules1.

ACAMS CAMS Study Guide (the 6th edition), Chapter 4: Conducting or Supporting the Investigation Process, page 1311

The board of directors is ultimately responsible for ensuring that the financial institution has an effective anti-money laundering program that complies with the applicable laws and regulations. If the institution receives a regulatory enforcement action, the board should take prompt and corrective actions to address the deficiencies and mitigate the risks of further violations or penalties. One of the most important actions is to instruct the compliance officer to develop a plan to remediate the institution’s anti-money laundering program, which should include a root cause analysis, a gap assessment, a timeline, and a budget. The board should also monitor the implementation and progress of the remediation plan, and communicate with the regulators on a regular basis.

The other options are not appropriate actions for the board of directors to take in response to a regulatory enforcement action. Terminating the compliance officer and staff may not solve the underlying issues of the anti-money laundering program, and may create more disruption and instability. Purchasing and installing a new suspicious activity monitoring system may not be necessary or sufficient to address the deficiencies, and may entail additional costs and challenges. Hiring an attorney to protest the enforcement action may not be in the best interest of the institution, and may antagonize the regulators and escalate the situation.

CAMS Certification Package - 6th Edition | ACAMS, Chapter 5: Risk Management, Section 5.2: Regulatory Examinations and Enforcement Actions, pp. 171-174.

CAMS Certifications: How to Get CAMS Certified | ACAMS, CAMS Examination Preparation Guide, Section 3: Regulatory Compliance, pp. 23-24.