CAMS.

64q

Number: CAMS 6 edition

Passing Score: 800
Time Limit: 120 min

CAMS

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Certified Anti-Money Laundering Specialist (the 6th edition)

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Exam A

QUESTION 1
What are two legal risks of having inadequate privacy policies and procedures? (Choose two.)

A. Diminished reputation
B. Industry of regulatory sanctions
C. Charges of deceptive business practices
D. Higher marketing and public relations costs

Correct Answer: AB
Section: (none)
Explanation

Explanation/Reference:

QUESTION 2
The vice president of the foreign correspondent banking department at a large United States bank has been notified that a foreign bank with an offshore license
wants to open a correspondent account.

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Which two things must the vice president acquire under the USA PATRIOT Act? (Choose two.)

A. A list of all the customers of the correspondent bank

B. A list of the types of businesses served by the correspondent bank
C. Information relating to the foreign bank’s anti-money laundering program
D. The identity of 10% owners of the correspondent bank, unless it is publicly traded

Correct Answer: CD
Section: (none)
Explanation

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Explanation/Reference:

QUESTION 3
What is an example of the integration stage of money laundering involving a bank or another deposit-taking institution?

A. Depositing illicit funds into an account set up for a front company

B. Directing third parties to exchange illicit cash for negotiable instruments
C. Wiring illicit funds from an account at one bank to an account at another bank
D. Using illicit funds that had previously been deposited to purchase a luxury vehicle

Correct Answer: D
Section: (none)
Explanation

Explanation/Reference:
Reference: https://www.moneylaundering.ca/public/law/3_stages_ML.php

QUESTION 4
Which aspect of the USA PATRIOT Act impacts foreign financial institutions?

A. Requiring enhanced due diligence for foreign shell banks

B. Expanding sanctions requirements to a U.S. financial institution’s foreign branches
C. Expanding the anti-money laundering program requirements to all foreign financial institutions
D. Providing authority to impose special measures on institutions that are of primary money-laundering concern

Correct Answer: D
Section: (none)
Explanation

Explanation/Reference:
Reference: https://www.imf.org/external/np/leg/sem/2002/cdmfl/eng/tompki.pdf (8)

QUESTION 5
The compliance officer at a crowd funding website is in charge of monitoring new crowd funding projects. Recently, the number of crowd funding projects has
significantly increased.

Which red flag indicates the highest anti-money laundering risk?

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A. Those with the largest number of donors
B. Projects that get funding within days of their start
C. Projects with the highest monetary success threshold
D. Projects that start and close and are fully funded within a very short period

Correct Answer: D
Section: (none)
Explanation

Explanation/Reference:

QUESTION 6
Which two statements in the Wolfsberg Group’s “Suppression of the Financing of Terrorism” define the role financial institutions should play in the fight against
terrorism? (Choose two.)

A. Financial institutions need to assist competent authorities in fighting terrorist financing through prevention, detection and information sharing.
B. Financial institutions need to continuously analyze the types of activity related to terrorist financing and develop models that in the long term will drive down
terrorism.
C. Financial institutions should have financial intelligence units dedicated to the investigation of activity that would lead to the detection of terrorist financing as a
means to decrease global terrorism.
D. Financial institutions should apply extra due diligence whenever they see suspicious or irregular activities, especially when customers are engaged in sectors or
activities that have been identified by competent authorities as being used for the financing of terrorism.

Correct Answer: AD
Section: (none)
Explanation

Explanation/Reference:
Reference: https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/The-Wolfsberg-Group.pdf

QUESTION 7
What is the appropriate compliance control for identifying politically exposed persons (PEPs) according to the Basel Committee’s paper on Customer Due Diligence
for Banks?

A. Determining that a local figure is a PEP

B. Reviewing when a relationship is established
C. Reviewing relationships at account opening and on a periodic basis
D. Requiring that the customer discloses that they are a PEP or an associate of a PEP

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Correct Answer: C
Section: (none)
Explanation

Explanation/Reference:
Reference: http://www.menafatf.org/sites/default/files/Newsletter/PEPs_in_relat_on_to_AMLCFT.pdf

QUESTION 8
What are two sources for maintaining up-to-date sanctions information? (Choose two.)

A. U.S. Federal Bureau of Investigation’s National Security Letters

B. U.S. Department of the Treasury Office of Foreign Assets Control
C. U.S. Department of the Treasury – Section 311 – Special Measures
D. Financial Action Task Force’s list of High Risk and Non-Cooperative Jurisdictions

Correct Answer: BD
Section: (none)
Explanation

Explanation/Reference:
Reference: https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_lists.aspx#search

QUESTION 9
A bank has maintained an account for a European charity for several years. The charity provides clothing to persons in need in various countries with active
terrorists’ cells.

Which action by the charity indicates possible terrorist financing?

A. The charity frequently withdraws cash from the bank

B. The charity has branch locations located in various countries
C. The charity receives cash donations primarily from European countries
D. The charity maintains a bank account for non-business-related expenses

Correct Answer: B
Section: (none)
Explanation

Explanation/Reference:

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Reference: https://www.fatf-gafi.org/media/fatf/documents/reports/FATF%20Terrorist%20Financing%20Typologies%20Report.pdf

QUESTION 10
A politically exposed person (PEP) maintains an account at a bank. Last month a money laundering analyst filed a suspicious transaction report about unusual wire
deposits originated by unknown individuals in the home country of the official.

To whom should this situation be escalated?

A. The board of directors

B. The line of business executive
C. The bank’s anti-money laundering officer
D. The Financial Action Task Force’s PEP Hotline

Correct Answer: C
Section: (none)
Explanation

Explanation/Reference:

QUESTION 11
Which two individuals are ordinarily beneficial owners of a private banking account according to the Wolfsberg Anti-Money Laundering Principles for Private
Banking? (Choose two.)

A. Those two are authorized signers on the account

B. Those who have legal title to a controlling share interest in the customer
C. Those who generally have ultimate control through ownership or other means over the funds in the account
D. Those who are the ultimate source of funds for the account and whose source of wealth should be subject to due diligence

Correct Answer: CD
Section: (none)
Explanation

Explanation/Reference:
Reference: https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/wolfsberg-standards/10.%20Wolfsberg-Private-Banking-Prinicples-May-2012.pdf (2)

QUESTION 12
What are two requirements for monitoring and reporting suspicious activity for correspondent banking according to the Wolfsberg Principles? (Choose two.)

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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

Correct Answer: BC
Section: (none)
Explanation

Explanation/Reference:

QUESTION 13
When should the anti-money laundering risk assessment be updated?

A. Every two years

B. After a merger or acquisition
C. When the board of directors changes
D. When instructed to by the Financial Action Task Force

Correct Answer: B
Section: (none)
Explanation

Explanation/Reference:
Reference: https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/faqs/17.%20Wolfsberg-Risk-Assessment-FAQs-2015.pdf (10)

QUESTION 14
A customer brings $15,000 worth of chips into a casino and plays various games. The customer redeems all the remaining chips and requests a wire transfer of the
proceeds to an unrelated third party.

What are two red flags that indicate money laundering? (Choose two.)

A. Customer redeeming all remaining chips

B. Playing various games before cashing out
C. Bringing $15,000 worth of chips into the casino
D. Requesting a wire transfer to an unrelated third party

Correct Answer: AD

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Section: (none)
Explanation

Explanation/Reference:

QUESTION 15
Upon a routine account review a money laundering investigator identified a number of large round dollar wire transfer deposits into a business account owned by a
local auto repair shop. The wire transfers all originated from a country that is a known financial secrecy haven with poor anti-money laundering controls. The
investigator concludes there appears to be no legitimate business purpose for the wire transfers and files a suspicious transaction report. The owner of the auto
repair shop is popular in the community and is a well-known philanthropist.

To whom should the investigator escalate these concerns?

A. Audit committee
B. Chairman of the Board
C. The owner of the auto repair shop
D. The bank anti-money laundering officer

Correct Answer: A
Section: (none)
Explanation

Explanation/Reference:

QUESTION 16
A compliance officer learns from an Information Technology (IT) source of a potential new financial service being discussed by the new product approval
committee.

What is the correct next course of action?

A. Request that the new product approval committee include the compliance officer.
B. Go to the board of directors and try to shut the new service down immediately because the committee did not communicate with the compliance officer.
C. Get as much information as possible from the source so that potential risks can be researched and a report prepared and presented to the head of marketing.
D. Start initial research into potential risks but wait until notified that the service has been approved by the committee before initiating extensive research.

Correct Answer: D
Section: (none)
Explanation

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Explanation/Reference:

QUESTION 17
What is the goal of the Egmont Group in providing a forum for Financial Intelligence Units (FIUs) around the world?

A. To improve international laws to combat money laundering and the financing of terrorism and foster the implementation of domestic programs.
B. To provide a forum for FIUs to improve cooperation in the fight against money laundering and the financing of terrorism and to foster the implementation of
domestic programs in this field.
C. To improve communication with law enforcement in the fight against money laundering and the financing of terrorism and to foster the implementation of
domestic programs in this field.
D. To improve cooperation with state and federal governments in the fight against money laundering and the financing of terrorism and to foster the implementation
of domestic programs in this field.

Correct Answer: B
Section: (none)
Explanation

Explanation/Reference:
Reference: https://en.wikipedia.org/wiki/Egmont_Group_of_Financial_Intelligence_Units

QUESTION 18
A compliance officer at an insurance company has been reviewing the transaction activity of several clients.

Which transaction is considered a red flag for potential money laundering?

A. A client paid the quarterly life insurance premium using money orders from two different banks.
B. A client from a high-risk jurisdiction recently purchased property insurance for a real-estate development.
C. A corporation owns several affiliates and recently opened separate group life insurance policies for each of the affiliates.
D. A client established a $100,000 charitable annuity with a non-profit organization that provides health and safety assistance internationally.

Correct Answer: D
Section: (none)
Explanation

Explanation/Reference:

QUESTION 19

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The branch manager notices that a number of customers come in weekly and always use the same teller to process their deposits. The manager notices that the
customers and the teller, who are from the same ethnic group, are speaking in a foreign language and every once in a while the customers from local ethnic
restaurants will bring the teller lunch. The commercial customers that visit the teller generally deposit the same amount of cash each time they come in.

How should the branch manager respond to this activity?

A. Transfer the teller to another branch

B. Conduct further investigation before taking any other action
C. Encourage the teller to bring in more business from the ethnic community
D. Suggest to the teller to send the customers to other tellers to avoid the opportunity for collusion

Correct Answer: B
Section: (none)
Explanation

Explanation/Reference:

QUESTION 20
A law enforcement official calls a bank inquiring about a customer who is currently under investigation. The law enforcement official requests information about the
customer.

How should the bank respond?

A. Confirm the customer is either a current or former customer

B. Inform the board of directors before responding to the request
C. Provide the requested information to help aid in the investigation
D. Request a formal letter be submitted to verify the validity of the request

Correct Answer: D
Section: (none)
Explanation

Explanation/Reference:
Reference: https://ico.org.uk/for-organisations/guide-to-freedom-of-information/receiving-a-request/

QUESTION 21
A bank compliance officer has implemented enhanced monitoring rules that have identified some unusual activity that may be indicative of human trafficking.

Which red flag should prompt additional transactional review?

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A. Wire transfer activity from countries with significant migrant populations
B. Cash deposits that occur in cities where the customer resides and conducts business
C. Cash deposits that occur in cities where the customer does not reside or conduct business
D. Cash deposits that occur in cities where the customer does not reside or conduct business followed by same-day withdrawals

Correct Answer: C
Section: (none)
Explanation

Explanation/Reference:

QUESTION 22
The compliance officer for a private bank has been tasked with writing a policy on how the bank will deal with intermediaries.

Which two aspects should be included in the policy in respect of intermediaries to align it with the Wolfsberg Anti-Money Laundering Principles for Private Banking?
(Choose two.)

A. When an intermediary introduces clients to the bank, it is not necessary for the bank to perform due diligence on the intermediary’s clients.
B. Where an intermediary introduces clients to the bank, the bank must obtain the same type of information with respect to an introduced client that would
otherwise be obtained by the bank, absent the involvement of the intermediary.
C. Where an intermediary manages assets on behalf of a number of clients and is the account holder with the bank, but that intermediary does not conduct the
same level of due diligence as the bank, it is necessary for the bank to undertake due diligence on the intermediary’s clients.
D. Where an intermediary manages assets on behalf of a number of clients and arranges for the opening of accounts for its clients with the bank, and that
intermediary is a financial institution subject to similar regulations, it is necessary for the bank to perform due diligence on the intermediary’s clients.

Correct Answer: BD
Section: (none)
Explanation

Explanation/Reference:
Reference: https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/faqs/20.%20Wolfsberg-FAQs-on-Intermediaries-May-2012.pdf (2)

QUESTION 23
A non-U.S. bank wants to open an account at Bank A, which is a U.S.-based bank.

Which information must Bank A obtain under the USA PATRIOT Act?

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A. A complete client list from the non-U.S. bank
B. The identity of owners and percentage of ownership of the non-U.S. bank
C. The structure and identity of the management team at the non-U.S. bank
D. The details of the non-U.S. bank’s anti-money laundering compliance training program

Correct Answer: C
Section: (none)
Explanation

Explanation/Reference:

QUESTION 24
Which insurance product is particularly vulnerable to money laundering?

A. Annuity

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B. Casualty
C. Collateral
D. Regulated pension

Correct Answer: A
Section: (none)
Explanation

Explanation/Reference:

QUESTION 25
What is an essential element of Know Your Customer (KYC) standards according to the Basel Committee’s Customer Due Diligence for Banks paper?

A. Annual staff training

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B. A customer acceptance policy
C. The same KYC requirements must be applied in all cases
D. All completed KYC documents must be reviewed by a senior manager not involved in the account opening process

Correct Answer: B
Section: (none)
Explanation

Explanation/Reference:
Reference: https://www.bis.org/publ/bcbs77.pdf

QUESTION 26
A foreign bank operating under an offshore license wants to open a correspondent account with a United States (U.S.) bank. The foreign bank plans to provide
payable through account services to some of its customers.

What must the foreign bank provide to the U.S. bank under the USA PATRIOT Act?

A. A list of politically exposed persons who are owners of the correspondent bank
B. A list of account holders at the financial institution who will use the payable through account
C. The person in the United States who can receive service of legal process for the correspondent bank
D. A list of anti-money laundering training records for the financial institution employees monitoring payable through account transactions

Correct Answer: A
Section: (none)
Explanation

Explanation/Reference:
Reference: https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/CBDDQ-Capacity-Building/Wolfsberg%
27s_CBDDQ_Capacity_Building_Guidance_Final%20V1.1.pdf

QUESTION 27
An institution has made the decision to exit a client relationship due to anti-money laundering concerns. Prior to starting the close out process, the institution
receives a written request from a law enforcement agency to keep the account open. The client is the subject of an ongoing investigation and law enforcement
wants the institution to continue to monitor the account and report any suspicious activity.

What is primary consideration the institution should keep in mind when deciding whether to agree to this request?

A. The anticipated cost of complying with the law enforcement request

B. The number of suspicious transaction reports previously filed on the client

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C. The fact that the institution has a solid record in complying with law enforcement requests
D. Whether the institution can continue to meet its regulatory obligations with the accounts open

Correct Answer: D
Section: (none)
Explanation

Explanation/Reference:

QUESTION 28
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

Correct Answer: C
Section: (none)
Explanation

Explanation/Reference:

QUESTION 29
A customer living in a high-risk jurisdiction makes frequent, large cash deposits at a bank. The same customer sends small wire transfers to unrelated parties in
other high-risk jurisdictions.

What are two red flags that may indicate money laundering? (Choose two.)

A. The bank allows cash deposits

B. The client resides in a high-risk jurisdiction
C. Wire transfers are to high-risk jurisdiction
D. Large cash deposits are from a high-risk jurisdiction

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Correct Answer: CD
Section: (none)
Explanation

Explanation/Reference:
Reference: https://aml-cft.net/library/banks-amlcft-red-flags/

QUESTION 30
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. No, anti-money laundering training needs to be delivered face-to-face for credit card businesses.
C. No, anti-money laundering training needs to be tailored and focused on the risks specific to the business.
D. Yes, the existing training covers the anti-money laundering regulations that the bank is required to follow.

Correct Answer: D
Section: (none)
Explanation

Explanation/Reference:

QUESTION 31
A new compliance officer is reviewing the bank’s anti-money laundering program and notices that the risk assessment was completed six months ago. Since that
time, the bank acquired another financial institution, re-named the internal records group, and streamlined cash handling procedures.

Which factor causes the compliance officer to update the bank’s risk assessment?

A. The bank acquired another institution

B. The internal records group has been re-named
C. The cash handling procedures were streamlined
D. The risk assessment was completed six months ago

Correct Answer: B
Section: (none)
Explanation

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Explanation/Reference:

QUESTION 32
The Wolfsberg Anti-Money Laundering Principles for Private Banking require new clients to be approved by whom?

A. The board of directors

B. Only the private banker
C. The private banker’s supervisor
D. At least one person other than the private banker

Correct Answer: D
Section: (none)
Explanation

Explanation/Reference:
Reference: https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/wolfsberg-standards/10.%20Wolfsberg-Private-Banking-Prinicples-May-2012.pdf (04)

QUESTION 33
Which two factors should increase the risk of a correspondent bank customer and require additional due diligence according to the Wolfsberg Anti-Money
Laundering Principles for Correspondent Banking? (Choose two.)

A. The customer is located in a Financial Action Task Force member country and provides services primarily to a local individual customer.
B. The customer is located in a Financial Action Task Force member country and the bank’s head of information security is a politically exposed person.
C. The customer is located in a Financial Action Task Force member country and provides services to other correspondent banks in neighboring countries.
D. The customer is located in a non-Financial Action Task Force member country and services mostly commercial customers who engage in international trade.

Correct Answer: CD
Section: (none)
Explanation

Explanation/Reference:

QUESTION 34
In which two ways does a government Financial Intelligence Unit interact with public and private sectors? (Choose two.)

A. It governs the methods of investigation used by competent authorities

B. It mediates disputes between financial institutions and investigative authorities

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C. It receives and analyzes disclosures filed by financial and non-bank institutions
D. It disseminates information and the results of its analysis to competent authorities

Correct Answer: CD
Section: (none)
Explanation

Explanation/Reference:
Reference: http://pubdocs.worldbank.org/en/834721427730119379/AML-Module-2.pdf

QUESTION 35
What do Financial Action Task Force (FATF)-style regional bodies do for their members to help combat money laundering and terrorist financing?

A. They provide technical assistance to members in implementing FATF recommendations

B. They assist member countries in penalizing entities that violate FATF standards and recommendations
C. They work with members on areas of concern outside of anti-money laundering and terrorist financing
D. They supervise member country financial institutions relating to anti-money laundering and terrorist financing

Correct Answer: D
Section: (none)
Explanation

Explanation/Reference:
Reference: https://www.fatf-gafi.org/media/fatf/documents/brochuresannualreports/FATF30-(1989-2019).pdf

QUESTION 36
What are the regulatory risks to a bank employee who willfully violates anti-money laundering laws?

A. Investigation and reputational damage

B. Fines and suspension from the industry
C. Criminal investigation and imprisonment
D. Enforcement actions including fines against the financial institution

Correct Answer: C
Section: (none)
Explanation

Explanation/Reference:
Reference: https://books.google.com.pk/books?id=qKLr7IdWCqsC&pg=PA9&lpg=PA9&dq=What+are+the+regulatory+risks+to+a+bank+employee+who+willfully

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+violates+anti-money+laundering
+laws&source=bl&ots=gZzA0Ey5nB&sig=ACfU3U29fq8lwYh08XqdR1X7sWSISySPZw&hl=en&sa=X&ved=2ahUKEwiHwKHTjIvmAhWqwzgGHfW_AToQ6AEwC3o
ECAkQAQ#v=onepage&q=What%20are%20the%20regulatory%20risks%20to%20a%20bank%20employee%20who%20willfully%20violates%20anti-money%
20laundering%20laws&f=false

QUESTION 37
What are two requirements with respect to supporting documentation that is used to identify potentially suspicious activity, according to Financial Action Task
Force? (Choose two.)

A. It must be retained for at least five years

B. It must be retained for at least seven years
C. It must be kept in a manner so that it can be provided promptly
D. It must only be released to the government through a subpoena process

Correct Answer: AC
Section: (none)
Explanation

Explanation/Reference:
Reference: https://www.fatf-gafi.org/media/fatf/documents/recommendations/pdfs/FATF%20Recommendations%202012.pdf

QUESTION 38
What are two reasons physical certificates present a money laundering risk to broker-dealers? (Choose two.)

A. The trade information on a physical certificate can be easily altered

B. Physical certificates do not expire and may be held by the owner for perpetuity
C. There is little information readily available to the broker confirming the source of the funds
D. Physical certificates may be provided to nominees for deposit or settled in off-market transactions

Correct Answer: CD
Section: (none)
Explanation

Explanation/Reference:

QUESTION 39
An automotive parts company in South America sends multiple $500,000 wire transfers per week to ABC Holdings Ltd. in Asia referencing payment for silk flower
shipments. Research reveals Sunrise Holdings, Ltd is registered in the British Virgin Islands with no available ownership information.

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What are two red flags that indicate how trade-based money laundering could be occurring in this instance? (Choose two.)

A. The transaction involves the use of front (or shell) companies

B. The packaging is inconsistent with the commodity or shipping method
C. Significant discrepancies appear between the description of the commodity on the bill of lading and the invoice
D. The type of commodity being shipped appears inconsistent with the exporter or importer’s regular business activities

Correct Answer: AC
Section: (none)
Explanation

Explanation/Reference:

QUESTION 40
The branch manager calls the compliance officer and informs her that a law enforcement officer has just left the branch and was asking a lot of questions and left a
business card.

What should the compliance officer do?

A. File a suspicious transaction report

B. Follow up to verify that the officer received all necessary information
C. Verify that the reported officer was an actual authorized representative
D. Require the branch manager to write a detailed memo about the request

Correct Answer: C
Section: (none)
Explanation

Explanation/Reference:

QUESTION 41
What is a major economic consequence of money laundering through the use of front companies?

A. Placing more emphasis on manufacturing

B. Weakening of the legitimate private sector
C. Creating a more competitive pricing environment
D. Aligning management principles between criminal enterprises and legitimate businesses

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Correct Answer: B
Section: (none)
Explanation

Explanation/Reference:
Reference: http://people.exeter.ac.uk/watupman/undergrad/rtb/effects2.htm

QUESTION 42
An institution is about to release a new peer to peer (P2P) funds transfer product to provide much needed remittance services to an under-banked population
segment in the country.

The service allows customers to transfer funds through a mobile banking application to individuals worldwide entering only a name and mobile number. The new
service charges less than comparable market solutions and offers real time transfer of funds. The customer onboarding process is conducted at branch locations
with identity verification.

Which three present the highest anti-money laundering or sanctions risk and will require controls prior to launch? (Choose three.)

A. Customer onboarding
B. Cross-border functionality
C. Real time transfer of funds
D. Servicing the under-banked population
E. Limited access to counterparty information

Correct Answer: ACE

Section: (none)
Explanation

Explanation/Reference:

QUESTION 43
What is true regarding disclosure to a law enforcement agency by a financial institution of the supporting documentation for a suspicious transaction report?

A. Documentation must be provided as quickly as possible using email

B. The financial institution may notify the account holder of the request
C. Confirm that the request originated from a representative of the law enforcement agency
D. A copy of all the documentation released must also be provided to the account holder’s attorney

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Correct Answer: C
Section: (none)
Explanation

Explanation/Reference:
Reference: https://www.sec.gov/about/offices/ocie/aml2007/fin-2007-g003.pdf

QUESTION 44
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.

Correct Answer: B
Section: (none)
Explanation

Explanation/Reference:

QUESTION 45
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

Correct Answer: B
Section: (none)
Explanation

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Explanation/Reference:
Reference: https://www.fatf-gafi.org/media/fatf/documents/recommendations/Private-Sector-Information-Sharing.pdf (18)

QUESTION 46
A bank’s anti-money laundering section receives an anonymous tip that a customer might be engaging in possible money laundering.

Which two facts should be considered during the course of an investigation into this matter? (Choose two.)

A. The customer has had a long-standing account at the bank

B. The customer in on the exempt list for currency transaction reporting requirements
C. The customer is issuing a number of wires to several relatively high-risk jurisdictions
D. The customer’s account has had a large volume of activity, but the month-end balance is usually low

Correct Answer: CD
Section: (none)
Explanation

Explanation/Reference:

QUESTION 47
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

Correct Answer: CD
Section: (none)
Explanation

Explanation/Reference:
Reference: https://www.lexology.com/library/detail.aspx?g=79732c5e-b4bf-456a-9604-712f44f5a930

QUESTION 48
Who has the ultimate responsibility within a bank for ensuring that the bank has a comprehensive and effective Bank Secrecy Act / anti-money laundering (BSA/

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AML) program and oversight framework that is reasonably designed to ensure compliance with applicable regulations?

A. Senior management
B. Board of directors
C. Business line managers
D. BSA/AML compliance officer

Correct Answer: B
Section: (none)
Explanation

Explanation/Reference:

QUESTION 49
A compliance officer provides an overview of the bank’s anti-money laundering program to a group of new tellers during employee orientation.

Which training element should be delivered to this audience?

A. Results of recent risk assessments

B. Large cash transaction reporting procedures
C. The financial institution’s surprise cash audit policy
D. Past check fraud losses incurred by the financial institution

Correct Answer: B
Section: (none)
Explanation

Explanation/Reference:

QUESTION 50
Which red flag indicates high potential for money laundering in a real estate purchase?

A. The purchaser is a nominee

B. The purchaser had a previous bankruptcy
C. The purchaser owns a cash intensive business
D. The purchaser is not a resident where the property is located

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Correct Answer: C
Section: (none)
Explanation

Explanation/Reference:

QUESTION 51
A compliance officer at a small community bank has been asked to review existing customer onboarding policies and procedures to ensure they adequately
address anti-money laundering risks.

How should customer due diligence be implemented?

A. With an annual compliance review and approval of customers

B. With a one-time event conducted at initial customer onboarding
C. As an ongoing activity that may vary commensurate with the risk profile of the customer
D. As applicable to customers that pose higher money laundering or terrorist financing risk

Correct Answer: C
Section: (none)
Explanation

Explanation/Reference:

QUESTION 52
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. Inform the legal counsel of the bank

B. Follow the financial institution’s established STR reporting policy
C. Notify the financial institution’s regulator to disclose the activity
D. The compliance officer and the chief executive officer should jointly interview the chairman

Correct Answer: A
Section: (none)
Explanation

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Explanation/Reference:

QUESTION 53
Under which two circumstances may law enforcement be given access to a financial institution customer’s financial records? (Choose two.)

A. If the person is named in a suspicious transaction report

B. If law enforcement serves a legal summons or subpoena
C. If the investigation of a customer is made public in the media
D. If law enforcement has circumstantial evidence to suspect money laundering

Correct Answer: BD
Section: (none)
Explanation

Explanation/Reference:

QUESTION 54
What must be materially true regarding transactions for United States (U.S.) sanctions laws to have jurisdiction?

A. Transactions are traced to illegal proceeds

B. Transactions are processed by a U.S. person
C. Transactions are stripped of beneficial owner information
D. Transactions are identified as proceeds of foreign corruption

Correct Answer: B
Section: (none)
Explanation

Explanation/Reference:
Reference: https://www.treasury.gov/resource-center/faqs/Sanctions/Documents/faq_all.html

QUESTION 55
How does the Financial Acton Task Force (FATF) communicate its findings regarding jurisdictions with strategic anti-money laundering / Counter Financing of
Terrorism deficiencies?

A. By issuing documentation to the private sector

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B. By issuing two formal documents three times per year
C. By issuing informal communication to FATF members
D. By issuing four formal documents to the deficient jurisdictions

Correct Answer: D
Section: (none)
Explanation

Explanation/Reference:

QUESTION 56
A recent anti-money laundering audit revealed several regulatory reporting violations and lapses with the organization’s anti-money laundering policy. As a result,
the compliance officer has created a follow-up matrix to document progress in correcting the identified deficiencies.

To whom should the compliance officer provide regular updates of corrective action to help ensure the appropriate oversight?

A. Audit management
B. Human Resources
C. Business line managers
D. Designated board committee

Correct Answer: D
Section: (none)
Explanation

Explanation/Reference:

QUESTION 57
A banker in the credit department wants to assess the risk of all customers, and contacts the compliance officer to request a list of customers with suspicious
transaction report filings.

What should be done to protect suspicious transaction report information?

A. Provide the suspicious transaction report information to the credit department

B. Decline to provide the suspicious transaction report information to the credit department
C. Seek approval from the board of directors to disclose the suspicious transaction report information
D. Contact the credit department manager to determine how the suspicious transaction report information can be provided

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Correct Answer: C
Section: (none)
Explanation

Explanation/Reference:

QUESTION 58
Which two methods have terrorist groups used to diversify their revenue stream and to fund their operations? (Choose two.)

A. Human trafficking
B. Engaging in civil conflict
C. Smuggling cultural artifacts
D. Engaging in wire transfer activity

Correct Answer: AB
Section: (none)
Explanation

Explanation/Reference:

QUESTION 59
Which two statements are true regarding the European Union Money Laundering Directives? (Choose two.)

A. They apply to member states of the European Union

B. They require member states to enact laws and/or regulations to comply with the directives
C. They set forth non-binding best practices for financial institutions within the member states
D. They have extraterritorial impact and apply to states that have diplomatic relations with member states

Correct Answer: AB
Section: (none)
Explanation

Explanation/Reference:
Reference: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32015L0849&from=FR

QUESTION 60

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A compliance officer was recently reviewing transactional data for an international charity and found transactions that present a higher risk.

Which reason is cause for terminating the banking relationship?

A. The charity has had a high a high turnover rate of official positions
B. The charity has several incoming international funds transfers
C. The flow of funds both in and out are complex and hard to trace
D. The charity is headquartered in a country on the Office of Foreign Assets Control list

Correct Answer: C
Section: (none)
Explanation

Explanation/Reference:

QUESTION 61
Which action does the Financial Action Task Force (FATF) recommend be taken against jurisdictions that have strategic deficiencies?

A. Conduct due diligence

B. Apply counter-measures
C. Add the jurisdiction to the United Nations’ list of sanctioned jurisdictions
D. Create an action plan to address the deficiencies without the support of the FATF

Correct Answer: B
Section: (none)
Explanation

Explanation/Reference:
Reference: http://www.fatf-gafi.org/publications/high-risk-and-other-monitored-jurisdictions/documents/public-statement-october-2018.html

QUESTION 62
Which method is used to launder money via wire remittances sent through a bureau de change or money services business?

A. A customer in country A makes a weekly small wire transfer to the bank account of an individual in country B.
B. A customer in country A makes frequent wire transfers to a single customer in country B that are slightly under the legal reporting threshold.
C. A large number of wire transfers are sent from a large number of senders in country A to a large number of recipients in country B during the period of
December 1 to December 15.
D. A customer in country A receives four small wire transfers from four different individuals located in country B on December 21. The aggregate of the wire

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 transfers falls below the legal reporting threshold.

Correct Answer: B
Section: (none)
Explanation

Explanation/Reference:

QUESTION 63
Historically, a tour guide has made monthly cash deposits averaging $10,000. Over the past three months, the monthly deposits have averaged $100,000. When
the financial institution questions the increased deposits, the tour guide explains that there have been numerous conventions in town so business has increased
substantially.

Which further action(s) should the financial institution take?

A. Immediately terminate the relationship

B. Schedule a periodic review of activity
C. Perform further investigation, it appropriate report the activity to the authorities and consider terminating the relationship
D. Perform further investigation, if appropriate report the activity to the authorities and place a limit on future transactions

Correct Answer: C
Section: (none)
Explanation

Explanation/Reference:

QUESTION 64
To ensure compliance with economic sanctions established by governmental authorities in the jurisdictions where it operates, a financial institution requires that all
new and existing customers be screened at onboarding and quarterly thereafter.

Is this step sufficient to ensure compliance?

A. No, screening should occur promptly after list updates

B. Yes, this is recommended by the international guidance
C. No, it is necessary to screen and perform enhanced due diligence on new relationships
D. Yes, screening all existing customer relationships ensures the institutions is not dealing with a sanctioned individual or entity

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Correct Answer: B
Section: (none)
Explanation

Explanation/Reference:

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