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

A privately held company originates funds transfers through the casino into the betting accounts of multiple patrons

A patron requests the casino to transfer their winnings to another gambling operator

A patron purchases a large amount of chips at a blackjack table using cash

A patron routinely places multiple bets on the same sporting events

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.

governance arrangements

complexity of the products

results of the last audit

financial status of the business

wire transfers in different currencies between accounts held at different banks for the same client.

an incoming third-party wire transfer followed by the purchase of real estate in the client's name.

an incoming wire transfer followed by the loan payment to a third party that is a business associate of the client.

multiple wire transfers sent to counterparties associated with the client as per KYC documentation.

Engagement of third-party art advisors as representatives at art auctions

High-quality single pieces of significant value sold on social media platforms

Use of art and antiquity experts to verify an item's authenticity

Paying fair market value or premium prices for valuable art, gems, or precious metals at auction

Use of art storage facilities located in tax-free zones

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

Helping Financial Intelligence Units (FIUs) to analyze the suspicious activity reports (SARs)

Directly prosecuting money launderers in court

Providing financial assistance to governments to strengthen their anti-money laundering efforts

Raising awareness about the issue of money laundering and its consequences

A beneficiary of a transaction is a politically exposed person.

A FI is unable to verify the relevant customer due diligence documents.

A FI identifies the payer is a dealer in precious metals or stones.

A transaction involves funds exchanged from crypto to fiat currencies.

The bank is likely to face secondary sanctions from global financial institutions despite addressing many of the previous concerns.

The bank may face civil or criminal penalties if it is unable to demonstrate sustained improvement in addressing the previous concerns.

The bank may face the risk of regulatory orders to remediate its AML program despite addressing many of the previous concerns.

The bank is protected from reputational risk arising from any regulatory action because regulatory orders must remain confidential.

The regulatory agency may require the bank's board of directors to publicly share the actions taken to address the previous concerns in order to limit its reputational risk.

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

Permanent US resident aliens regardless of location

Merchants that offer US-origin goods for sale regardless of location

Non-US financial institutions that offer accounts in USD regardless of location

US citizens regardless of location

US incorporated entities and their foreign branches

Restrict trade between countries that have robust AML/CFT and sanctions regulatory regimes and those that do not.

AFC (Anti-Financial Crime) and sanctions-related seminars, webinars, and training within these countries.

Enforcement and pecuniary fines against these countries.

Bilateral conversations and cooperation between governments.

Setting tone from the top

Mandatory participation in all regulatory inspections

Mandatory attendance and review of all financial crime trainings

Setting clear criteria for escalations to senior management

Types of payment messages

Customers

Third-party service providers

Customer spouses

Surrendering a policy early to liquidate funds

Focusing excessively on the investment performance of an insurance product

Using a credit card to purchase an insurance policy

Using cryptocurrencies or other non-fiat currencies to fund an insurance policy

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

Independent compliance testing

Qualified and knowledgeable staff

Third-party screening software

An automated monitoring system

Written policy and procedures

product risk.

credit risk.

geographic risk.

customer risk.

liquidity risk.

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)

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

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

Make an official request directly from the head of Country A's anti-corruption authority to Country B's corresponding law enforcement authority

Make a request for the required evidence using Country A's mutual legal assistance treaty with Country B

Use the International Criminal Police Organization (INTERPOL) network to obtain the required evidence from Country B

Use the Egmont Secure Web to obtain the required evidence from Country B's financial intelligence unit

In-person training sessions

Comprehensive curriculum delivered by senior management

Comprehensive content with engaging delivery methods

Generalized content designed to apply to a broad audience

Implementation of a blacklist of correspondent customers with previously detected and investigated suspicious activity

Enhancement of a customer acceptance policy to more clearly identify high-risk customers

Increased frequency of training provided to front office employees

Enhancement of customer identification procedures to appropriately identify trust, nominee, and fiduciary accounts

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

Restrict the client's access to the account

Request information from the relationship manager assigned to the account that caused the alert

Perform below-the-line testing to ensure the automated monitoring system is operating effectively

Send a request for information to the counterparty bank involved in the transaction that caused the alert

comparing these risks with industry benchmarks to determine the residual risk.

implementing new controls to eliminate all risks

rating the effectiveness of the related controls in order to calculate the residual risk.

documenting the historical risk incidents for future reference.

To prohibit the payment of anything of value by persons or entities to government officials or employees of state-owned enterprises to obtain an improper business advantage

To prohibit the conversion of illegally obtained money into legal money by senior government figures

To protect against election interference by corrupt foreign adversaries facilitated by illicit funds

To protect against the use of illegal means by senior political figures to avoid paying taxes

Incoming fund transfers from third-party payment processors, with limited originator information

Transactional activity with a registered virtual currency exchange

Large amounts of cash payments to migrant agricultural workers

Frequent payments for online advertisements or non-local classified ads

The customer is attempting to convert illicit funds into “clean” withdrawals

The customer is attempting to avoid high fees by minimizing gambling activity

The customer is testing the gaming platform’s payout system for potential fraud

The customer is a high-risk gambler who regularly places large bets

Use of wire transfers

Loitering

Instructions or involvement from third parties

Amended letters of credit without reasonable justification

Non-standard settlement arrangements

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

Focus on understanding the risks presented by new clients within the assessment period, and the controls to mitigate associated money laundering risks.

Include appropriate measures and controls to mitigate money laundering risks stemming from higher-risk customers, products, and geographies.

Focus on the inherent risk in the FI's product and service offerings and the controls to mitigate potential money laundering risks.

Use a framework provided by a third-party vendor and used by other FIs in the jurisdiction.

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

Purpose and intended use

Liquidity

Age of the beneficiary

Customer anonymity or third-party transactions

Length of waiting period

Defining a common communication approach and language between all involved parties.

Delays in the investigation due to a foreign FIU awaiting the results of queries performed by third parties.

Conducting an investigation in all countries through which ML funds were transferred when one or more of the countries do not have an FIU.

Investigations which involve high-ranking politicians, who often have influence over the local FIU.

It reduces the overall cost of compliance programs.

It eliminates the need for periodic audits of low-risk customers.

It ensures focus on high-risk areas while maintaining operational efficiency.

It standardizes compliance processes across all regions.

International cooperation provides actionable information to use against criminals

Those convicted of money laundering offenses are denied access to basic banking services

Money laundering offenses are investigated and criminally prosecuted

Financial intelligence information is collected by authorities and shared with the FATF for further investigation

Supervisors regulate financial institutions and non-bank financial institutions and their risk-based AML/CFT programs

Information security, data privacy, and cybersecurity

Foreign exchange control, and precious gemstone and metal dealing

Ombudsman and anti-competition authority

Electronic contract and biological signature acceptance

Consumer protection, financial inclusion, and environmental, social and governance

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

amount of annual fees associated with the jurisdiction.

permissibility of bearer shares.

rules governing the disclosure of beneficial ownership by the jurisdiction.

ease of travel to the jurisdiction.

The buyer is using high-value real estate transactions to obscure the origin of the funds.

The buyer is quickly diversifying their investment portfolio through structuring payments in order to take advantage of the liquidity of cash transactions in real estate.

The buyer is capitalizing on favorable market conditions and using cash purchases to outbid competitors in a competitive real estate market using insider information.

The buyer is a real estate developer acquiring multiple properties for a potential redevelopment project with a business partner located in a high-risk jurisdiction.

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.

A customer changes multiple high-denomination notes to low-denomination notes.

A customer conducts cash transactions using multiple branches of the MSB on the same day.

A customer has a family link to the destination of a money transfer

A customer sends and receives money transfers in equal amounts at or about the same time.

A customer only wants to deal with a particular employee in the MSB.

Media searches reveal a report that the customer was accused of misconduct three years ago.

The EU bank considers the origin and destination countries Involved in the transactions to be high-risk.

The customer's activity includes multiple cross-border transactions involving various counterparties.

The EU bank received no originator or beneficiary information for the wire transfers.

The customer specializes in the import and export of petrochemical products.

to force developing nations to adopt liberal or substantive democracies.

to support governments and regimes in the peaceful resolution of conflict.

to punish governments for having weak financial crime controls.

to deter non-democratic and non-constitutional changes within countries.

to support the protection of human rights.

The head office of a foreign legal entity which has a branch in the US does not need to comply with OFAC rules.

A foreign individual visiting the US for a short vacation is obligated to follow OFAC rules.

Nationals of the US must comply with OFAC rules, regardless of where they are located in the world.

Any foreign corporation is also penalized if it conducts transactions with sanctioned countries under OFAC rules.

A subsidiary of a legal entity of the US, which is formally registered in a foreign country, is exempt from OFAC rules.

simultaneous encryption and decryption for underlying data.

full access to underlying data with full and uninterrupted calculations made on the data.

secure processing of data while it remains encrypted.

transfer, decryption and storage of data by the data processor.

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.

Ensuring an effective export control and treaty compliance system

Administering and enforcing economic and trade sanctions

Designating jurisdictions as primary money laundering concerns

Managing trade agreements between the US and foreign countries

buy in-game items with virtual in-game currencies.

exchange in-game items with other players.

trade in-game items with other players that can be exchanged for fiat currency

obtain in-game materials by performing in-game activities.

Securely share sensitive information in the fight against money laundering and the financing of terrorism

Establish an environment to foster trust amongst countries

Sign memoranda of cooperation that recognize and allow room for case-by-case solutions to specific problems

Improve global cooperation between FIUs

Propose legislation to combat financial crime, including money laundering and the financing of terrorism

A large multinational corporation with extensive, documented wire transfer activity

A local convenience store that replenishes the onsite automated teller machine (ATM) with cash from its till

A local used car sale lot that allows individuals to pay their monthly bill in cash

A virtual asset service provider (VASP), facilitating peer-to-peer cryptocurrency transactions

Money laundering typologies applicable to monetary instrument reporting

Applicable AML laws and regulations

Regulatory exam best practices

Money laundering typologies applicable to corporate loans

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.

Prioritizing resources towards lower-risk areas to reduce workload

Regularly reassessing risks to adjust resource allocation

Allocating more resources to areas with higher financial crime risk

Providing equal resources to all departments to maintain consistency

Using a fixed resource allocation plan without adjustments

The Dutch bank should limit any information sharing to what is necessary, reasonable, and proportionate, in line with applicable laws and regulations

The Dutch bank's legal obligations to protect customer privacy and bank secrecy prohibit it from sharing any such information

The Dutch bank should require a production order from the Italian bank and receive approval from its legal department before sharing the requested information

The need to fight financial crime outweighs the EU's data protection and privacy regulations

To avoid sanctions breach related to payments

To avoid onboarding customers previously exited due to true match

To meet international regulatory requirements and identify risks across jurisdictions

To be in line with the risk appetite statement

A limited liability company incorporated in a foreign jurisdiction

A private company that has no activity in a tax haven jurisdiction

A company with nominee shareholders and directors in a local jurisdiction

A company with bearer shares incorporated in a tax haven jurisdiction

A private investment company incorporated in a tax haven jurisdiction with strict secrecy laws

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

The ratio of true positives to false positives generated by the automated monitoring system

The number of money laundering alerts generated by the watchlist screening system

The number of high-risk customers onboarded each month

The number of clients exited for commercial reasons

FATF Evaluation Committee

Series of internal audits followed by reporting to FATF

Basel Committee

Mutual evaluation

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

Designated AML compliance officer

Chief executive officer

Chief operating officer

Board of directors

provide the information available to them because the exchange is between two FlUs that are members of the Egmont Group, and the formal request was made using secure communication channels.

provide the requested information only if a memorandum of understanding (MoU) is signed between Country A and Country

direct the FIU of Country A to the Fl where the account was opened for further information.

deny the request if the FIU of Country B has not received a suspicious activity report (SAR) from the Fl where the account was opened.

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

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

Ongoing monitoring

Risk assessment

Policies and procedures

Suspicious activity reporting

Customer due diligence

Keep senior management informed at all times to strategically organize a defense to terminate the law enforcement request

Verify the officer's identification and ask for the law enforcement request to be served when the Chief Executive Officer is available to sign for it

Ask for an extension to review the FI's privacy policy and confidentiality policy before providing any information under the law enforcement request

Designate a person responsible for the internal investigation in preparation of documents for the request

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

Using predefined rules to flag specific transaction patterns

Randomly flagging transactions for further investigation

Statistical tuning of monitoring scenarios to improve accuracy

Using advanced machine learning models to detect outliers

Setting transaction thresholds for automated alerts

have informal business arrangements between persons or entities.

are located in geographies that are not accountable to US laws.

include trusts, investment funds, and insurance companies.

have limited organizational disclosure and recordkeeping requirements for establishing these business entities.

Management structure

Governance framework

Asset structure

Origin of the funds

include all documents or records that assisted the Fl in making the determination that the activity required a filing.

always be limited to account name, account details, and transaction records.

have written policies and procedures to maintain supporting documentation.

be saved in a single separate file with hard copies stored in a fireproof cabinet.

Reporting entities are prohibited from disclosing to clients or third parties that a suspicious activity report (SAR) has been filed or that an investigation is ongoing

Reporting entities can share general information about suspicious activities internally within the organization without compromising confidentiality

Reporting entities must inform their clients if a suspicious activity report (SAR) has been filed, as part of maintaining transparency in customer relations

Reporting entities are allowed to discuss suspicious activities with clients if it helps clarify a situation before submitting a suspicious activity report

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

Appointing individuals to serve in official capacities of the company

Annual maintenance services

Provision of a local business address

Company incorporation services

A customer receives funds from a popular decentralized mixer

A customer uses funds from their monthly income to purchase virtual currency

A customer makes a transaction on the blockchain that their traditional financial institution is unaware of

A customer receives multiple wires from different sources and uses those funds to purchase virtual currency

An existing local league footballer trying to open a bank account with a bank in their local jurisdiction

The current prime minister of a country trying to open a bank account in another country

The former personal secretary to the minister of transport in a low-risk country 25 years ago opening a bank account at a bank in a neighboring low-risk country

A bank located in a higher risk country trying to establish a correspondent-respondent banking relationship with a bank in a lower-risk country

An individual with a current bank account who resides in one country becoming the ambassador of another country

Consumer protection laws may intersect will) AML/CFT requirements when handling customer complaints or disputes, potentially affecting how FIs implement their compliance programs.

AML/CFT laws are the primary focus for FIs, and other regulations like data privacy and consumer protection may only indirectly influence their compliance obligations

Environmental, social, and governance (ESG) frameworks can influence a Fl's risk management strategies but are generally considered separate from core AML/CFT compliance requirements

Data privacy laws can restrict the sharing of customer information, while financial inclusion initiatives require FIs to avoid excessive de-risking that could exclude vulnerable populations.

Buying property allows for the movement of large amounts of funds in a single transaction

Criminal networks could purchase real estate for use as supply houses or locations to grow, manufacture, or distribute illicit narcotics

Markets can be volatile, and buyers may not achieve a strong return on their investment

Beneficial ownership information might be opaque, and criminals may abuse arrangements like shell companies and trusts

Real estate transactions often involve financial institutions and other professional gatekeepers

The high value of properties may require multiple types of financing, which can make it more difficult to identify the source of funds

Blockchain to ensure traceability and security in shared data transactions

Data encryption to protect sensitive information from unauthorized access

Privacy-enhancing technologies (PETs) to enable secure and privacy-compliant data sharing

Artificial intelligence (AI) to automating compliance processes like data anonymization and secure sharing

Cloud storage solutions for efficient data handling and management

A lawyer located in a higher risk country deposits their firm's bank draft issued from their trust account to another lawyer's trust account located in a low-risk country for legal services rendered.

A lawyer's trust account regularly receives wire transfers from unknown remitters from a higher risk country and immediately transfers the same amount of funds received to a known beneficiary's account in a low-risk country.

A lawyer's trust account receives a large-value wire transfer from a regulated insurance company and immediately transfers the same amount of funds received to the beneficiary's bank account located in a low-risk country.

A lawyer's trust account receives a large wire transfer deposit from a client that wanted to purchase a piece of property and then transfers the same amount to the property seller's lawyer's trust account.

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.

European Commissions

Financial Action Task Forces

Wolfsberg Groups

Financial Intelligence Units

The European Commission and the High Representative issue a joint proposal for an import ban on refined oil products.

The European Commission and the High Representative issue a joint proposal for an import ban on oil extraction equipment

The Council of the European Union adopts a new export control regime for electronic equipment

The Council of the European Union adopts a new import restriction regime for goods coming from countries that do not respect human rights

Send a 314(b) request to the corporation's bank in Hong Kong

Call the receiving individual to review identity verification documents

Confirm that neither the beneficiary nor the originator are sanctioned parties

Request supporting documents, including invoices and contracts to confirm the purpose of the payment

Check for negative news in public sources on the sender and receiver

The residual risk would be eliminated entirely because the controls are sufficient to mitigate all potential risks

The residual risk would be significantly reduced due to the effectiveness of the controls in place

The residual risk would remain high due to the inherent nature of the private banking business

The residual risk would be moderately reduced, but further controls may be necessary to achieve an acceptable level

Companies operating in cash intense businesses not subject to licensing requirement

Companies operating hospitals and health-care services

Companies operating in cash intense businesses subject to licensing requirement

Companies producing pharmaceutical products and medical devices, companies active in the mining industry

Companies operating retail shops countrywide

A customer being hesitant to provide beneficiary name or address information when sending international wire transfers

Cash-intensive businesses, such as convenience stores or restaurants, making large cash deposits

A customer exchanging foreign currency from a higher-risk jurisdiction for domestic currency under the reporting threshold

A customer using multiple accounts under different names to conduct transactions

A customer completing frequent small-dollar international money transfers to their native country