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NEW QUESTION # 219
When the minimum CDD standards of the home and host countries differ, the offices in the host countries should follow which requirements?
- A. Local rules and regulations
- B. The higher standard of the two
- C. The CDD standards required by the home country
- D. The minimum required
Answer: B
NEW QUESTION # 220
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/AML) program and oversight framework that is reasonably designed to ensure compliance with applicable regulations?
- A. Business line managers
- B. Board of directors
- C. BSA/AML compliance officer
- D. Senior management
Answer: B
Explanation:
Explanation/Reference:
NEW QUESTION # 221
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 due diligence on correspondent accounts
- B. Visiting the head office of the international financial institution
- C. Complying with Special Measures issued under the USA PATRIOT Act
- D. Performing enhanced due diligence on shell banks
Answer: A,D
Explanation:
The USA PATRIOT Act imposes several requirements on U.S. financial institutions when dealing with foreign financial institutions, especially those that pose a high risk of money laundering or terrorist financing.
Two of these requirements are:
* Performing enhanced due diligence on shell banks: A shell bank is a bank that has no physical presence in any country and is not affiliated with a regulated financial group. The USA PATRIOT Act prohibits
U.S. financial institutions from opening or maintaining correspondent accounts for shell banks, and requires them to take reasonable steps to ensure that their correspondent accounts are not being used by shell banks indirectly12.
* Performing due diligence on correspondent accounts: A correspondent account is an account established by a financial institution to receive deposits from, make payments on behalf of, or handle other financial transactions for a foreign financial institution. The USA PATRIOT Act requires U.S. financial institutions to collect and verify certain information about the foreign financial institution, such as its ownership, licensing, and anti-money laundering policies, and to assess the risk of money laundering or terrorist financing associated with the correspondent account13.
References:
* CAMS Certification Package - 6th Edition | ACAMS, Chapter 3: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), pages 82-84
* CAMS Certifications: How to Get CAMS Certified | ACAMS, Candidate Handbook, page 14
* ACAMS CAMS Certification Video Training Course - Exam-Labs, Video 3.4: Correspondent Banking and Money Laundering Risks
NEW QUESTION # 222
A customer puts high-denomination cash notes into a poker machine at a casino. Without placing any bets, the customer collected winnings in the form of a check from the casino.
Which money laundering threats could result from the customer's activities?
- A. Obscured beneficial ownership
- B. Micro-structuring cash
- C. Misuse of money service business
- D. Legitimizing illicit funds
Answer: D
Explanation:
1. A. Micro-structuring cash:
The customer's behavior of putting high-denomination cash notes into a poker machine without placing bets and then collecting winnings in the form of a check resembles "structuring" or "smurfing." Structuring involves breaking down large sums of money into smaller transactions to avoid detection. In this case, the customer may be attempting to legitimize illicit funds by converting them into casino winnings1.
2. B. Legitimizing illicit funds:
By using the poker machine to convert cash into a check, the customer is potentially legitimizing illicit funds.
The casino winnings obtained through this process may appear legitimate, even though the initial source of the cash remains suspicious1.
A: Micro-structuring cash:
The customer's actions of repeatedly inserting high-denomination cash notes into the poker machine without placing bets and then collecting winnings in the form of a check resemble structuring. Structuring involves deliberately breaking down large amounts of cash into smaller transactions to avoid detection. Money launderers engage in structuring to obscure the origin of funds and make them appear legitimate. In this case, the customer's behavior raises red flags and warrants further investigation.
B: Legitimizing Illicit Funds:
By converting cash into casino winnings (in the form of a check), the customer may be attempting to legitimize illicit funds. The casino winnings obtained through this process could be used to create a veneer of legitimacy, even though the initial source of the cash remains suspicious. Casinos are attractive for money launderers due to the anonymity and fluidity of transactions, making it challenging to trace the origin of funds1.
References: 1: Anti-Money Laundering Specialist (6th edition), ACAMS, Chapter 3: "Money Laundering and Terrorist Financing Methods," Section 3.1.2: "Structuring."
NEW QUESTION # 223
Private investment companies are potentially vulnerable to money laundering because:
- A. they exist in offshore jurisdictions with tight secrecy laws to protect the privacy of their owner(s).
- B. they are shell companies formed to maintain a client's confidentiality.
- C. they transact shares that are not traded on a stock exchange.
- D. It can be difficult to identify the people who are the ultimate beneficial owners.
Answer: D
Explanation:
Private investment companies (PICs) are potentially vulnerable to money laundering due to the difficulty in identifying the ultimate beneficial owners. PICs are often used to hold and manage private wealth, making them attractive targets for money launderers. Since these entities are privately held and not publicly traded, it can be challenging to identify the individuals who ultimately control or benefit from them. This makes it easier for money launderers to use them to disguise the origins of illicit funds.
NEW QUESTION # 224
The Wolfsberg Anti-Money Laundering Principles for Private Banking require new clients to be approved by whom?
- A. At least one person other than the private banker
- B. Only the private banker
- C. The board of directors
- D. The private banker's supervisor
Answer: A
Explanation:
The Wolfsberg Anti-Money Laundering Principles for Private Banking require new clients to be approved by at least one person other than the private banker. This is because the private banker may have a conflict of interest or be influenced by the client's wealth or reputation. The approval process should involve a senior manager or a compliance officer who can independently assess the client's risk profile and suitability for the institution's services12.
References:
1: CAMS Certification Package - 6th Edition | ACAMS, Chapter 2: Money Laundering Risks and Methods, p. 37 2: The Wolfsberg Group, The Wolfsberg Anti-Money Laundering Principles for Private Banking, June
2000, p. 3,
https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/Wolfsberg-AML-Principles-for-Private-Bankin Reference: https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/wolfsberg-standards/10.%
20Wolfsberg-Private-Banking-Prinicples-May-2012.pdf (04)
NEW QUESTION # 225
A financial institution is reorganizing and the anti-money laundering officer is now required to report to the Sales Director. Which of the following statements about this situation is most correct?
- A. The anti-money laundering officer should be elevated to a position on the Board.
- B. The anti-money laundering officer should be independent of business functions.
- C. The reorganization will enhance the compliance framework.
- D. The reorganization will ensure communication of anti-money laundering issues to the board.
Answer: B
Explanation:
The anti-money laundering officer (AML officer) is responsible for overseeing the implementation and effectiveness of the anti-money laundering (AML) program of a financial institution. The AML officer should have sufficient authority, independence, and access to resources to perform this role. Reporting to the Sales Director may compromise the independence and objectivity of the AML officer, as the Sales Director may have conflicting interests or incentives that could influence the AML officer's decisions or actions. The AML officer should report to a senior management level that is independent of business functions and has direct access to the board of directors or a relevant committee. This would ensure that the AML officer can communicate any AML issues or concerns to the board without any interference or undue influence from the business functions.
References: = Some of the references that support this answer are:
* ACAMS Study Guide for the CAMS Certification Examination, Chapter 2, Section 2.2.1, page 41: "The AML officer should report to a senior management level that is independent of the business line and has direct access to the board of directors or a relevant committee."
* Money Laundering Reporting Officer: The Role Of MLRO, Section "Role Of Money Laundering Reporting Officer": "The MLRO should have independent monitoring and should be able to connect directly with people who make business decisions, such as senior management or the board of directors."
* Money Laundering Reporting Officer (MLRO)? | Dow Jones, Section "What is a Money Laundering Reporting Officer (MLRO)?": "A Money Laundering Reporting Officer (MLRO) is tasked with overseeing a firm's compliance with the Financial Conduct Authority's (FCA) rules on money laundering. ... The MLRO should have sufficient authority and independence within the firm to carry out their responsibilities effectively."
NEW QUESTION # 226
Bank A is located in Country A.
A wire transfer from Bank B located in Country B is processes by Bank A,where the funds are being moved to a customer at Bank C located in Country C.
The wire transfer isdeemed suspicious by Bank A.
- A. The transaction in Country A.
- B. The transaction in Country B.
- C. Bank B in Country A.
- D. Bank C in Country C.
Answer: C
NEW QUESTION # 227
A charity has unaudited accounts. Which of the following represents the highest risk factor for terrorist financing?
- A. Disbursement of funds to entities unrelated to the purpose of the charity.
- B. Frequent changes to the senior management of the charity.
- C. An international board composed of politically exposed persons.
- D. Frequent deposits from third parties into the charity's bank account.
Answer: D
NEW QUESTION # 228
Which method to launder money through deposit-taking institutions is closely associated with international trade?
- A. Using Black Market Peso Exchange
- B. Forming a shell company
- C. Structuring cash deposits withdrawals
- D. Investing in legitimate business with illicit funds
Answer: A
Explanation:
Explanation/Reference: http://fraudaid.com/Dictionary-of-Financial-Scam-Terms/black_market_peso_exchange.htm
NEW QUESTION # 229
A law enforcement agency is reviewing a suspicious transaction report (STR) filed by a financial institution for suspicious activity on a client's account.
Subsequently, the agency requests further information.
Which supporting documentation might the law enforcement agency request from the institution to facilitate its investigation?
- A. A copy of the institution's STR policy and procedures
- B. Account opening documents and account statements
- C. Previously filed STRs on the same customer
- D. Copies of promotional materials sent to the customer
Answer: B
Explanation:
account opening documents and account statements are examples of supporting documentation that can help the law enforcement agency to verify the identity, profile, and activity of the customer involved in the suspicious transaction. These documents can provide useful information such as the customer's name, address, date of birth, identification number, occupation, source of funds, transaction history, and beneficiaries. These documents can also help to establish the baseline of normal and expected activity for the customer, and to identify any deviations or anomalies that may indicate money laundering, fraud, or other criminal activities.
References:
* Suspicious Activity Report Supporting Documentation, section "What Constitutes Supporting Documentation", paragraph 2: "Supporting documentation may include, for example, transaction records, new account information, tape recordings, e-mail messages, and correspondence."
* Documentation Requirements: Suspicious Activity Report Supporting Documentation, section "SARs Documentation Requirements", paragraph 2: "Keep all documents with evidence of the background, the purpose of the transactions, the trigger, the investigation carried out, and all findings and conclusions."
* BSA/AML Manual, section "Assessing the BSA/AML Compliance Program - BSA Compliance Officer", paragraph 3: "The BSA compliance officer is responsible for ensuring that the bank's BSA/AML compliance program is implemented effectively, including timely updates in response to changes in regulations or business activities, and for managing all aspects of the BSA/AML compliance program. The BSA compliance officer is also responsible for ensuring that the bank's BSA/AML compliance program is communicated to all personnel and that adequate training is provided to appropriate personnel."
NEW QUESTION # 230
In some instances, a financial institution may receive a warrant from law enforcement authorities to search its premises. A search warrant is a grant of permission from a court for a law enforcement agency to search certain designated premises and seize specific categories of items or information. Generally, what is the required threshold for the requesting agency to establish in order to obtain a search warrant of a financial institution?
- A. Probable cause
- B. Reasonable belief
- C. Clear and convincing proof
- D. A preponderance of the evidence
Answer: A
NEW QUESTION # 231
Which practices are dealers in antiques, precious metals, precious stones, jewelry, and art advised to follow to reduce the element of money laundering risk? Choose 3 answers
- A. Verify the identities of all new vendors and customers and conduct due diligence on them
- B. Insist on all vendors signing a declaration that the item placed by them for sale was not stolen or acquired through illegitimate means
- C. Avoid accepting cash payment from the buyers
- D. Insist all vendors submit an appropriate license issued by enforcement agencies authorizing the sale
Answer: A,B,C
NEW QUESTION # 232
What is the result of an increased awareness of the potential for gatekeepers to assist in money laundering in recent years?
- A. Accountants are no longer considered gatekeepers, since they are not permitted to set upcompanies or trusts
- B. The IMF has raised the profile of gatekeepers, requiring that countries regulate them
- C. The FATF recommendations cover lawyers performing financial transactions
- D. Lawyers who represent money launderers can more easily be prosecuted
Answer: D
NEW QUESTION # 233
The Wolfsberg Anti-Money Laundering Principles for Private Banking require new clients to be approved by whom?
- A. At least one person other than the private banker
- B. Only the private banker
- C. The board of directors
- D. The private banker's supervisor
Answer: A
Explanation:
Explanation/Reference: https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/wolfsberg-standards/10.%
20Wolfsberg-Private-Banking-Prinicples-May-2012.pdf (04)
NEW QUESTION # 234
Which three statements are true about on-line banking offering a significant money laundering risk to a financial institution?
- A. The nature of on-line banking can make it difficult to establish who is controlling the account
- B. Due to client confidentiality, information collected on-line cannot be shared with law enforcement agencies on mere suspicion
- C. The ease of access through the internet enables cross border movement of funds
- D. The speed of electronic transaction enables execution of multiple complex transactions within short time frame
Answer: A,C,D
Explanation:
On-line banking offers a significant money laundering risk to a financial institution because:
* The nature of on-line banking can make it difficult to establish who is controlling the account. On-line banking allows customers to access their accounts remotely, without face-to-face contact with the financial institution. This can pose challenges for verifying the identity and legitimacy of the account holder, especially if the account is opened on-line or through a third-party intermediary. On-line banking can also facilitate the use of anonymous or fictitious identities, or the use of proxies or nominees to hide the true beneficial owner of the account.
* The ease of access through the internet enables cross border movement of funds. On-line banking allows customers to transfer funds quickly and easily across different jurisdictions, without physical movement of cash or other instruments. This can increase the risk of money laundering, as funds can be moved to or from high-risk countries or regions, or through multiple accounts or financial institutions, to obscure the origin, destination, or purpose of the funds. On-line banking can also enable customers to access or use alternative payment systems or virtual currencies, which may have lower regulatory oversight or transparency standards than traditional banking systems.
* The speed of electronic transaction enables execution of multiple complex transactions within short time frame. On-line banking allows customers to conduct transactions in real time, with minimal or no human intervention or verification. This can increase the risk of money laundering, as customers can execute multiple transactions in a short period of time, or use complex transaction structures or patterns, to avoid detection or reporting thresholds, or to conceal the source, nature, or ownership of the funds.
On-line banking can also enable customers to use automated or algorithmic trading systems, which may generate large volumes of transactions that are difficult to monitor or analyze.
References:
* CAMS Study Guide - 6th Edition, Chapter 5, pages 139-140
* CAMS Certification Exam Outline, Domain 2, Task 2.1, Skill 2.1.1
* Online Banking and Money Laundering, ACAMS Today, September 2012
NEW QUESTION # 235
Which should authorities do to safeguard AML information exchanged with other countries?
- A. Require the use of non-disclosure agreements with anyone accessing the exchanged information.
- B. Destroy the information once the investigation is complete.
- C. Protect exchanged information as they would protect similar information received from domestic sources.
- D. Use the court system to ensure confidentiality of exchanged information through court orders.
Answer: A,C
Explanation:
According to the FATF Recommendation 40, which sets the standards for international cooperation in relation to money laundering, associated predicate offences and terrorist financing, countries should ensure that exchanged information is used only for the purpose for which it was sought or provided, and that any dissemination or use of the information beyond the original scope is subject to prior authorization by the requested competent authority. Moreover, countries should have safeguards in place to ensure that the information exchanged is protected in a manner that is consistent with the way they protect their own information of a similar nature. One of the possible safeguards is to require the use of non-disclosure agreements or other legal instruments to prevent unauthorized access or disclosure of the exchanged information.
References: = FATF Recommendation 40, Section A.3; Compliance Trends: AML Information Sharing, Section: Cross-border AML information sharing; Safeguarding AML Information Exchanged with Other Countries, Section: Answers.
Reference:
https://cfatf-gafic.org/index.php/documents/fatf-40r/406fatf-recommendation-40-other-forms-of-international-co
NEW QUESTION # 236
Which three conduits for moving terrorist-related funds do terrorist financing generally favor? Choose 3 answers
- A. Informal financial systems
- B. Currency exchange firms
- C. Banks and/or other formal financial systems
- D. Cash couriers
Answer: A,B,D
Explanation:
Dealers in antiques, precious metals, precious stones, jewelry, and art are advised to follow these practices to reduce the element of money laundering risk:
Verify the identities of all new vendors and customers and conduct due diligence on them. This is to ensure that the dealers know who they are dealing with and can assess the risk level of each customer or vendor. Due diligence may include obtaining and verifying identification documents, checking against sanctions lists or watchlists, obtaining information on the source and purpose of funds, and applying a risk-based approach to the level and frequency of due diligence.
Avoid accepting cash payment from the buyers. This is to prevent the dealers from being used as a conduit for laundering illicit cash or facilitating cash smuggling. Cash transactions are more difficult to trace and may indicate attempts to evade reporting or record-keeping requirements. Dealers should encourage the use of non-cash payment methods, such as bank transfers, cheques, or credit cards, and keep records of all payment transactions.
Insist all vendors submit an appropriate license issued by enforcement agencies authorizing the sale.
This is to ensure that the dealers are not involved in the trade of stolen, smuggled, or counterfeit goods, which may be linked to money laundering or other criminal activities. Dealers should verify the authenticity and validity of the licenses and keep copies of them for record-keeping purposes.
References:
FATF Guidance on the Risk-Based Approach for Dealers in Precious Metals and Stones, pages 9-10,
13-14, 17-18, 21-22
AML-CFT Handbook for Dealers in Precious Metals and Stones, pages 25-26, 37-38, 52-53 The anti-money laundering framework for precious stones and metals dealers in Singapore, pages 7-8,
11-12, 15-16
Dealers in Precious Metals, Stones or Jewels Required to Establish Anti-Money Laundering Programs, pages 2-3, 6-7, 10-11
NEW QUESTION # 237
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 due diligence on correspondent accounts
- B. Visiting the head office of the international financial institution
- C. Complying with Special Measures issued under the USA PATRIOT Act
- D. Performing enhanced due diligence on shell banks
Answer: A,D
Explanation:
The USA PATRIOT Act imposes several requirements on U.S. financial institutions when dealing with foreign financial institutions, especially those that pose a high risk of money laundering or terrorist financing.
Two of these requirements are:
* Performing enhanced due diligence on shell banks: A shell bank is a bank that has no physical presence in any country and is not affiliated with a regulated financial group. The USA PATRIOT Act prohibits
U.S. financial institutions from opening or maintaining correspondent accounts for shell banks, and requires them to take reasonable steps to ensure that their correspondent accounts are not being used by shell banks indirectly12.
* Performing due diligence on correspondent accounts: A correspondent account is an account established by a financial institution to receive deposits from, make payments on behalf of, or handle other financial transactions for a foreign financial institution. The USA PATRIOT Act requires U.
S. financial institutions to collect and verify certain information about the foreign financial institution, such as its ownership, licensing, and anti-money laundering policies, and to assess the risk of money laundering or terrorist financing associated with the correspondent account13.
References:
* CAMS Certification Package - 6th Edition | ACAMS, Chapter 3: Compliance Standards for Anti- Money Laundering (AML) and Combating the Financing of Terrorism (CFT), pages 82-84
* CAMS Certifications: How to Get CAMS Certified | ACAMS, Candidate Handbook, page 14
* ACAMS CAMS Certification Video Training Course - Exam-Labs, Video 3.4: Correspondent Banking and Money Laundering Risks
NEW QUESTION # 238
A well-developed anti-money laundering compliance program is unlikely to achieve institutional goals without
- A. Screening all staff.
- B. Verification of account owners.
- C. Training appropriate employees.
- D. Endorsement by a competent authority.
Answer: D
NEW QUESTION # 239
What are three potential issues for foreign financial institutions maintaining correspondent accounts with U.S.
banks under the Patriot Act? Choose 3 answers
- A. U.S. residents maintaining private banking accounts
- B. Cancellation of correspondent banking relationships
- C. Prohibition of correspondent accounts for shell banks
- D. Forfeiture of funds in a U.S. interbank account
Answer: B,C,D
Explanation:
Reference: http://www.ffiec.gov/bsa_aml_infobase/p
NEW QUESTION # 240
What are three potential issues for foreign financial institutions maintaining correspondent accounts with U.S.
banks under the Patriot Act? Choose 3 answers
- A. U.S. residents maintaining private banking accounts
- B. Cancellation of correspondent banking relationships
- C. Prohibition of correspondent accounts for shell banks
- D. Forfeiture of funds in a U.S. interbank account
Answer: B,C,D
Explanation:
The Patriot Act, enacted in 2001, introduced several provisions to enhance the anti-money laundering and counter-terrorist financing (AML/CFT) measures for U.S. banks and their foreign correspondent relationships.
Some of the potential issues for foreign financial institutions (FFIs) maintaining correspondent accounts with
U.S. banks under the Patriot Act are:
Cancellation of correspondent banking relationships: The Patriot Act requires U.S. banks to conduct due diligence and enhanced due diligence on their foreign correspondent accounts, and to terminate any account that poses a significant risk of money laundering or terrorist financing. This may result in the cancellation of correspondent banking relationships with FFIs that do not meet the U.S. standards or cooperate with the U.S. authorities. The loss of correspondent banking relationships may affect the FFIs' ability to access the U.S. financial system and provide services to their customers.
Forfeiture of funds in a U.S. interbank account: The Patriot Act authorizes the U.S. government to seize and forfeit any funds in a U.S. interbank account that are involved in or traceable to money laundering or terrorist financing activities. This means that FFIs may face the risk of losing their funds in a U.S.
interbank account if they or their customers are suspected or accused of engaging in illicit activities. The forfeiture of funds may have significant financial and reputational consequences for the FFIs and their customers.
Prohibition of correspondent accounts for shell banks: The Patriot Act prohibits U.S. banks from establishing or maintaining correspondent accounts for shell banks, which are banks that have no physical presence in any country and are not affiliated with a regulated financial group. This means that FFIs that are shell banks or have relationships with shell banks cannot access the U.S. financial system through correspondent accounts. The prohibition of correspondent accounts for shell banks aims to prevent the use of shell banks as vehicles for money laundering and terrorist financing.
References:
CAMS Study Guide, 6th Edition, Chapter 4: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), pp. 81-841 USA PATRIOT Act, Title III: International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, Sections 312, 319, and 3132 Wolfsberg Anti-Money Laundering Principles for Correspondent Banking, October 2014, pp. 3-43 Reference: http://www.ffiec.gov/bsa_aml_infobase/pages_manual/olm_027.htm
NEW QUESTION # 241
What is an example of the integration stage of money laundering involving a bank or another deposit-taking institution?
- A. Directing third parties to exchange illicit cash for negotiable instruments
- B. Using illicit funds that had previously been deposited to purchase a luxury vehicle
- C. Depositing illicit funds into an account set up for a front company
- D. Wiring illicit funds from an account at one bank to an account at another bank
Answer: B
Explanation:
Explanation/Reference: https://www.moneylaundering.ca/public/law/3_stages_ML.php
NEW QUESTION # 242
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