CAMS Certified Anti-Money Laundering Specialist (CAMS7 the 7th edition) Questions and Answers

Question their co-worker to determine If their suspicions are correct before reporting to the Fl's Human Resources department

Use the Fl's whistle blowing channel to report the suspected employee

Warn colleagues and customers of the F1 that the employee's suspicious financial investment proposals could be a scam

Conduct an open-source intelligence investigation using artificial intelligence tools to gain more information on the activities of the suspected employee

Report the suspected employee to the line manager of the F1 to take the required action

Reputational risk

Operational risk

Sanctions risk

Compliance risk

Lending risk

Memorandum of Agreement.

Declaration of Understanding.

Memorandum of Understanding.

Mutual Legal Assistance Treaty.

Request for Urgent Information.

Subscribing lo a regulators' newsletter

Using a specific provider for regulatory horizon scanning

Regularly contacting the regulator to inquire about updates and future developments

Relying on information and insights from peers and working groups

Attempts to circumvent or evade sanctions imposed by the UNSC can constitute a criminal offense if designated under local laws and regulations

The UN can impose arms embargoes but cannot prohibit direct or indirect exports of other goods to specific countries

Member countries of the United Nations are expected to implement and enforce sanctions imposed by the UNSC

Direct breaches of sanctions imposed by the UNSC constitute a criminal offense in all member countries

A court order requests the bank to disclose the SAR subject to obtaining agreement from the legal team

A customer asks about potential reporting to the local Financial Intelligence Unit (Fill)

An external consultant inquires about the details of the SAR

A third-country police directly inquires about the customer.

Receiving securities into an existing brokerage account following the death of a spouse

Allowing fixed income securities to mature

Using brokerage accounts like deposit accounts

Engaging in transactions involving nominees or third parties

Reduction in the number of false positives in long term

Complete automation of compliance processes

Elimination of the need for human oversight

Increased flexibility in adapting to changing financial crime risks

Enhanced ability to detect emerging patterns and anomalies

National Risk Assessment

Regulatory guidance or publications

Government or state-run newspapers

Guidance issued by international bodies

Policies and procedures developed by other banks

how an organization defines Its risk-based approach.

how an organization determines its key risk and performance indicators.

the level and type of risk the organization is willing to take to meet its objectives

the purpose of an organization's financial crimes compliance program.

The use of new technologies to facilitate the onboarding of customers remotely

The prevalence of international wire transfers

Domestic business with small and medium-sized enterprises

The cash-intensive nature of the services offered

The use of digital channels and traceable payment methods

The first line

The second line

Senior management

The third line

Helping overcome data protection and information sharing limitations

Enhancing the quality of reporting and additional informational input

Helping to alleviate the financial cost burden on law enforcement

Helping to design common approaches and identify desired deliverables

Offering flexibility, agility, and opportunities to adjust to the ML/TF threat environment

Public organizations can belter understand what the private sector experiences and inform policy and the enactment of laws

Data-protection privacy policies provide an opportunity to develop information sharing protocols to prevent unauthorized access to information

Data-protection privacy policies prohibit the evolution of PPPs due to restrictions based on legacy government legislation

Small business owners can choose third-party providers or financial institutions to keep their private data safe which can easily be shared within a PPP

Accountants can prepare ledgers and spreadsheets, draft annual returns and make payments to government offices

Accountants can advise on the structuring of companies as well as ensure compliance with local tax regulations

Accountants are knowledgeable about financial management, including what to record over the course of the accounting year

Accountants are able to create and structure companies, falsify accounts and manipulate financial statements

Ensuring sanctions compliance by relying solely on international bodies like the UN because there is no requirement to adhere to local laws

Ensuring group policies and procedures prioritize adherence to US regulations because they are the most influential worldwide

Applying global AFC and sanctions policies to ensure consistency without the need to adapt to local regulations

Ensuring group policies cater to compliance with each country's specific AML and sanctions regulations

Customer loyalty program tracking

Product usage analysis

Customer satisfaction surveys

Customer support ticket tracking

Credit risk assessment

An external audit highlights several deficiencies

The company is merging with or acquiring another entity

Extensive AML legislation is proposed by a legislative body in the company's jurisdiction

A high-profile money laundering case involving another industry is publicized

Ensuring sanctions compliance by relying solely on international bodies like the UN because there is no requirement to adhere to local laws.

Ensuring group policies and procedures prioritize adherence to US regulations because they are the most influential worldwide.

Applying global AFC and sanctions policies to ensure consistency without the need to adapt to local regulations.

Ensuring group policies cater to compliance with each country's specific AML and sanctions regulations.

has a general understanding of virtual assets.

consistently reviews transactions between fiat and virtual currencies.

implements enhanced KYC measures.

owns virtual currencies itself.

Gatekeepers have specialized knowledge that can be abused to facilitate the movement of illicit funds and conceal the Involvement of their clients in illicit schemes.

Gatekeeper positions ate of a secretive nature, often making it difficult to verify (heir source of wealth.

Gatekeepers have unique relationship structures, making it difficult to determine beneficial ownership

Gatekeepers are entrusted with prominent functions and code of conduct that can assist laundering Illicit funds.

Guaranteeing 100% accuracy in regulatory compliance across all jurisdictions

Improving customer satisfaction by offering personalized recommendations

Reducing identity theft effectively

Providing reliable customer authentication to enhance trust

Decreasing the time required for customer authentication

protect the rights of the citizens of the state target against their own government and improve financial stability in the region.

indicate that the use of military force is likely unless the state or non-state target complies with the government's

interests encourage non-governmental organizations to increase the provision of humanitarian and charitable aid to the target

alter the behavior of the state or non-state target that threatens the interests of that government or violates international norms

evaluate and monitor compliance with the FATF standards and provide recommendations for improvement.

assist countries in implementing EU, UN, and regional sanctions regimes.

develop and promote international standards to prevent money laundering and terrorist financing.

conduct investigations on countries legislations and laws to prevent them from being used for money laundering and terrorist financing.

ensure that countries follow its laws to maintain financial stability.

Engage in the PPP without strict data sharing protocols, allowing for open and unrestricted flow of information between the bank, FIUs, and other financial institutions

Rely solely on the intelligence provided by government agencies through the PPP because they have the most comprehensive data on suspicious activities

Establish a clear framework within the PPP that outlines data privacy protections and ensures that information sharing complies with legal and regulatory requirements in all jurisdictions involved

Prioritize the bank’s internal data sources over external intelligence from PPPs, as internal data is easier to control and does not present data privacy challenges

Make a note in the customer's account that the customer's gambling activities are frequently conducted below the reporting limit

Follow internal reporting procedures to escalate the activity as suspicious and report to appropriate authorities

Inform the customer their activity Is suspicious and request an explanation

Contact law enforcement to launch an Investigation into the customer's financial activities

Forming a trust on behalf of a customer with a complex setup and acting as a nominee director

Auditing a firm that provides payroll software to large corporate customers

Preparing financial statements for a listed or a privately owned firm

Providing tax advice to an international customer hoping to move their assets out of their home country

Assisting an offshore corporation from a jurisdiction with no available beneficial owner information to buy property in the UK

Fully rely on central beneficial owner registry records in the high-risk third country to determine the ultimate beneficial owners of all customers

Apply tailored due diligence measures, based on the level of risk posed by each customer following risk assessment

Monitor every cross-border transaction in real time, flagging all for enhanced scrutiny due to the country risk level

Automatically apply enhanced customer due diligence measures to all customers in the high-risk third-country branch regardless of risk level

dictating what predicate offences must be considered in the Fl's risk assessment.

providing guidance on the types of customers and transactions that pose the highest risk.

defining exactly what policies and procedures must be implemented.

determining the maximum fines that can be imposed for AML violations.

identification of the customer's occupation.

identification and verification of the customer's identity.

identification of the customer's work address.

identification of the beneficial owner.

verification of the customer's credit history.

[verification of the customer's income sources.

reputational risk.

the customers personal relationships.

the frequency of account activity

the Fl's policies and procedures.

the seriousness of the underlying conduct.

correspondence with law enforcement

the legal basis for closing the account.

The board of directors should be responsible for overseeing the management of the bank's compliance risk but not involved in establishing a compliance policy that explains the processes by which compliance risks are to be identified and managed throughout the organization.

The board of directors should establish a compliance function and approve the bank's policies for identifying, assessing, monitoring, reporting, and advising on compliance risk.

The compliance function must have sufficient authority, stature, independence, and resources to be effective on its own and should not have access to the board of directors.

The compliance function should report directly to the CEO concerning the bank's compliance with applicable laws, rules, and standards and only update the board of directors on the bank's efforts in managing compliance risk when required.

Review the transaction history of the account to identify patterns, including the frequency, destination, and purpose of the wire transfers

Notify senior management and suggest account closure due to potential risks

Immediately file a suspicious activity report (SAR) based on the employee's report of suspicious behavior

Contact the customer directly to ask for clarification on the reason for the large cash withdrawal

fraudulent identities involving stolen or manufactured identification.

suspicious behavior involving a transaction that occurs at an unusual time of day.

hidden beneficial owners.

transaction patterns involving transactions that exceed a certain dollar amount.

anomalies involving a transaction that occurs in a location far away from the customer's usual spending patterns.

evidence that the increased residual risk arising from the change is within the bank's risk appetite.

approval by money-laundering reporting officer for the proposal.

how many resources are spent on the less productive lower threshold and the associated costs.

the number of cases that will not be filed and the resources that can be freed up for other tasks.

minutes of meeting held with the regulator where agreement was obtained that the higher threshold was justified.

historical analysis proving that the current scenario generates a disproportionate number of false positives.

remote verification of identity by third-party program managers

heavy usage by senior political figures.

heightened risks of returned transactions.

informal networks used for cross-border transactions outside of the formal banking system

difficulty in tracking the originator recipient, and source of transactions.

account activity that is not consistent with the purpose of the account

bills of lading matching the description of goods, quantities, and values with transshipment details justified

transaction structures that appear unnecessarily complex

trade documents, such as invoices and letters of credit, that are not clearly worded or are in foreign languages

invoices with prices that are much higher than market price

fluctuations in the pricing of standard goods and services

A client frequently submits financial statements much earlier than required appearing overly eager

A client insists on using a personal bank account for business transactions despite being advised otherwise

A new client shows a preference for minimal direct interaction and relies primarily on indirect communication methods, citing convenience or time constraints

The client is a publicly listed company but very diversified

The ultimate beneficial ownership is unclear

triggers identifying static data changes and data based on client's behaviors in real time.

periodic refreshing at one-, three- and five-year cycles.

ability to prioritize better based on client data rather than driven by schedules alone.

classification of clients into categories of risk.

These businesses are all cash intensive, increasing the risk of financial crime

KYC challenges arise because e-commerce platforms face global customers making customer due diligence complex and resource intensive

These businesses are highly regulated and therefore have no reason to be non-compliant as this would put them at risk of sanctions and fines

Criminals can make use of identify fraud to fulfill KYC processes for layering purposes

The settlement systems of these businesses are not sophisticated enough to cope with the high transaction volume

Reviewing the enterprise-wide risk assessment methodology

Enhancing staff training on the documentation of justification on closed alerts

Revisiting the post-transaction monitoring system parameters and thresholds

Reviewing the fuzzy logic currently adopted in the screening system

Enhanced due diligence (EDD)

Transaction monitoring

Customer risk assessment

Sanctions screening

helping to identify high-risk sectors that require enhanced due diligence (EDO),

eliminating the need for sectoral risk assessments within the organization

guiding the allocation of resources for mitigating financial crime risks

requiring all organizations to apply standardized measures

automatically reducing the organization's responsibility for conducting its own risk assessment

Adverse media databases

Publicly available information on non-government data repositories

Credit reference agencies

Beneficial ownership registers available in country of incorporation of entity

Work with the front-line to understand their strategic growth targets specifically aimed at increasing their market share around military technology and dual-use products

Review the organization's sanction risk assessment to better understand the potential for exposure to Russia and the Democratic People's Republic of Korea

Read and analyze the most recent National Proliferation Financing Risk Assessment produced by the relevant body of the organization's jurisdiction

Undertake a detailed review of all payment-related transactions to any clients identified as defense contractors, paying special attention to the beneficial owners of those clients

FIs may disclose customer information to any third party

FIs may provide information about their internal compliance programs to law enforcement agencies without any limitations

FIs are required to report all transactions involving foreign entities to FinCEN so that FinCEN can share this information with other financial institutions

FIs may share information about suspected money laundering activities with other FIs to aid in identifying and reporting suspicious transactions

Use of cash to purchase property

Unlicensed real estate agents acting as front companies

Use of a registered trust for the purchase of property

Use of a company for the purchase of property

Manipulation of the value of a property

public administration.

legal assessment.

law enforcement.

legal activity.

The preference of upper management regarding which teams should participate in the data-sharing initiative

The cost of the data-sharing system and whether it its within the existing IT budget

The potential return on investment (ROI) from the data shared versus the financial crime prevention effort

Ensuring that the shared data complies with applicable data protection regulations while maintaining the integrity and accuracy of the information

Advising private financial institutions on how to enhance their profitability through AML efforts

Establishing and enforcing legal frameworks to detect, prevent, and punish money laundering and related financial crimes

Providing funding to private and non-governmental organizations (NGOs) for the development of advanced compliance technologies

Acting as intermediaries between private sector firms and non-governmental organizations (NGOs) to streamline AML compliance programs

Politically exposed persons (PEPs)

Capital flight risk

Anti-bribery and corruption risk

Tax evasion

funds being stolen from other users.

obscuring the source of illicit funds.

layering transactions to hide the origin of funds derived from illicit activity.

difficulty converting into physical currency.

facilitating payment for other illicit activities and goods.

Vishing

Pharming

SMSishing

Spear phishing

Policies are broad guidelines. Procedures are detailed instructions for specific processes. Only procedures are mandatory for knowledge and adherence.

Policies define the principles of an organization and influence the drafting of procedures. Procedures are detailed instructions for specific processes.

Policies are detailed instructions for specific processes. Procedures are an overarching framework. Neither policies nor procedures are mandatory for knowledge and adherence.

Policies are detailed instructions for specific processes. Procedures are an overarching framework. Both policies and procedures are mandatory for knowledge and adherence.

Private bankers should receive training on AML procedures.

All employees should receive refresher AML training.

The board should review and approve a revised AML policy to change customer due diligence requirements in private banking.

The legal department should conduct a review to assess potential legal consequences.

Low thresholds for transactions

Frequent use of cash

Cross-border transactions

Weak KYC policies and procedures

Who made the decision not to file the SAR

Why the officer deemed that the case did not merit filing a SAR

How much money was involved in the case

How the money flowed through the institution

When the unusual activity occurred

mutual legal assistance treaty.

memorandum of understanding.

request for urgent information.

declaration of understanding.

memorandum of agreement.

Regulation (EU) 2024/1624 of the European Parliament

Collaborative Sharing of Money Laundering/Terrorism Financing (ML/TF) Information & Cases (COSMIC)

USA Patriot Act Section 314(a)

USA Patriot Act Section 314(b)

Investment advisor

Relationship manager

Operations manager

Compliance officer

Establishing risk controls

Assessing risk controls

Ongoing risk monitoring

Conducting a risk assessment

Ensure that the second line reviews, monitors, and escalates risk-related issues as needed to senior management while maintaining independent oversight from the third line

Have senior management handle risk-related issues directly when possible because they are ultimately responsible for the organisation's overall risk management strategy

Delegate some risk-related issues to the first line to avoid overwhelming the second line and to ensure operational efficiency

Assign risk-related oversight duties to the third line to provide an independent review and address issues more effectively by avoiding conflicts of interest in the first and second lines

Purpose and intended use

Liquidity

Age of the beneficiary

Customer anonymity or third-party transactions

Length of waiting period

Establishing BSA/AML compliance staff reporting to the management of the business line in the first line of defense

Ensuring BSA/AML compliance staff is primarily outsourced

Providing BSA/AML compliance staff a reporting line to compliance or other second line of defense internal control function

Providing BSA/AML compliance staff with a reporting line to the chief financial officer

Use of wire transfers

Loitering

Instructions or involvement from third parties

Amended letters of credit without reasonable justification

Non-standard settlement arrangements