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

 the correspondent bank has engaged in a high-risk activity that could expose the primary bank to sanctions violations, reputational damage, and regulatory scrutiny. The Office of Foreign Assets Control (OFAC) administers and enforces economic and trade sanctions against targeted foreign countries, regimes, terrorists, and other threats to the national security, foreign policy, or economy of the United States1. Opening branches in a country on the OFAC list indicates that the correspondent bank is not complying with the sanctions requirements, and could be facilitating transactions for sanctioned entities or individuals. This would pose a serious risk for the primary bank, which is responsible for conducting due diligence and monitoring of its correspondent banking relationships2. Therefore, the primary bank should terminate the relationship with the correspondent bank to avoid any potential liability or penalties.

The other options are not as compelling as A, because they do not necessarily indicate that the correspondent bank is violating any laws or regulations, or that the primary bank is exposed to significant risks. Option B could be a cause for concern, but it does not imply that the correspondent bank is involved in any wrongdoing, or that the compliance officer has any influence over the correspondent banking activities. Option C could suggest that the correspondent bank is engaging in unusual or suspicious transactions, but it does not mean that the primary bank should terminate the relationship immediately, as it could also be a result of changes in the correspondent bank’s business profile, customer base, or market conditions. Option D is a normal and expected part of the correspondent banking relationship, as the primary bank has the right and obligation to request transactional details from the correspondent bank to verify the legitimacy and source of funds, and to identify any red flags or anomalies3.

References:

1: OFAC website

2: ACAMS Study Guide for the CAMS Certification Examination, 6th Edition, Chapter 5, page 178

3: ACAMS CAMS Certification Video Training Course, Module 5, Lesson 4

4: ACAMS CAMS Certification Practice Exam, Question 93

: https://home.treasury.gov/policy-issues/office-of-foreign-assets-control-sanctions-programs-and-information

: https://www.acams.org/en/cams-certification-package-6th-edition

: https://www.exam-labs.com/video-training/acams-cams

: https://vceplus.io/exam-cams/

The customer’s wire transfers to high-risk jurisdictions and the large volume of activity with low month-end balance are two facts that should be considered during the course of an investigation into possible money laundering. These facts may indicate that the customer is trying to move funds from or to countries that have weak anti-money laundering (AML) controls, or that are known to be a source or destination of illicit funds12. They may also suggest that the customer is using a technique called “smurfing” or “structuring”, which involves breaking down large amounts of cash into smaller transactions to avoid detection or reporting34. The other two facts are not necessarily indicative of money laundering, as the customer may have a legitimate reason to have a long-standing account at the bank or to be on the exempt list for currency transaction reporting requirements.

References: 1: FFIEC BSA/AML Examination Manual, Appendix F: Money Laundering and Terrorist Financing Red Flags, Geographic Concerns, 5; 2: AML Red Flags – What are the Top 10 Indicators?, ComplyAdvantage, 6; 3: FFIEC BSA/AML Examination Manual, Appendix F: Money Laundering and Terrorist Financing Red Flags, Transaction Has Unusual Features, 5; 4: Money Laundering Red Flags | Key Behaviours and Indicators, High Speed Training, 7.

The Wolfsberg Group is an association of 13 global banks that aims to develop frameworks and guidance for the management of financial crime risks. The group started as a meeting of banks in 1999 to address anti-money laundering (AML) in private banking, which carries an increased degree of risk from a money laundering perspective. In the course of discussions, they articulated principles that reflected uniformly high standards for this client segment. These principles became the first guidance published by the group under the name Wolfsberg Principles.

References:

The Wolfsberg Group - Institute on Governance

Wolfsberg Group - Wikipedia

The Group first came together in 2000 at the Wolfsberg castle in Switzerland, accompanied by representatives of Transparency International, to draft anti-money laundering guidelines for private banking

 According to the Anti-Money Laundering Specialist (the 6th edition) study guide, when a financial institution receives a law enforcement inquiry, it should cooperate as much as possible and respond to all formal requests for information, unless there is a valid objection that can and should be made1. The institution should also file a suspicious transaction report (STR) if the inquiry or the customer’s activity triggers any red flags or indicators of money laundering or other financial crimes2. Additionally, the institution should monitor the account for suspicious activity and review the money laundering risk posed by the account, as these are part of the ongoing due diligence and risk assessment processes3. Closing the account immediately is not a recommended action, as it may alert the customer or interfere with the investigation4.

References:

1: ACAMS, CAMS Certification Package - 6th Edition, Chapter 4, page 121

2: ACAMS, CAMS Certification Package - 6th Edition, Chapter 4, page 122

3: ACAMS, CAMS Certification Package - 6th Edition, Chapter 4, page 123

4: ACAMS, CAMS Certification Package - 6th Edition, Chapter 4, page 124

According to the Anti-Money Laundering Specialist (the 6th edition) study guide, one of the best practices for hiring an AML officer is to do a thorough background check, including verifying the candidate’s credentials, qualifications, references, and reputation1. This is because the AML officer plays a crucial role in ensuring the compliance and integrity of the financial institution, and therefore must have the necessary skills, knowledge, experience, and ethics to perform the job effectively and professionally. A background check can also help to identify any potential conflicts of interest, criminal records, or regulatory sanctions that may affect the candidate’s suitability for the position1. The other options are incorrect because:

B. Confering with the regulatory agency may not be necessary or appropriate, as the hiring decision is ultimately the responsibility of the financial institution, and the regulatory agency may not have any specific or relevant information or guidance on the candidate2.

C. Hiring the individual, relying on the recommendation of the correspondent, may not be sufficient or prudent, as the correspondent may have different standards, expectations, or interests than the financial institution, and may not have conducted a comprehensive or objective assessment of the candidate3.

D. Hiring the individual on a probationary basis may not be feasible or fair, as the AML officer role requires a high level of trust, authority, and responsibility, and the financial institution may not be able to evaluate the candidate’s performance or potential in a short period of time4.

References:

1: ACAMS, CAMS Certification Package - 6th Edition, Chapter 5, page 147

2: ACAMS, CAMS Certification Package - 6th Edition, Chapter 5, page 148

3: ACAMS, CAMS Certification Package - 6th Edition, Chapter 5, page 147

4: ACAMS, CAMS Certification Package - 6th Edition, Chapter 5, page 148

According to the Third European Union Money Laundering Directive (3rd AMLD), a politically exposed person (PEP) is an individual who is or has been entrusted with prominent public functions, such as heads of state, government ministers, judges, senior military officers, or members of parliament1. The 3rd AMLD requires institutions and persons covered by the Directive to apply enhanced customer due diligence measures when dealing with PEPs residing in another Member State or in a third country, in order to prevent money laundering and terrorist financing risks1. The 3rd AMLD also specifies that a person who is no longer entrusted with a prominent public function shall not be considered a PEP after a period of at least one year has elapsed since that person left office, unless the institution or person covered by the Directive has knowledge or reason to believe that the person is still exposed to specific risks2. However, the Commission Directive 2006/70/EC, which lays down implementing measures for the 3rd AMLD, extends this period to at least two years, and allows Member States to extend it further, depending on the level of risk and the type of prominent public function involved3.

References:

1: Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing

2: Article 3(8) of Directive 2005/60/EC

3: Article 2 of Commission Directive 2006/70/EC of 1 August 2006 laying down implementing measures for Directive 2005/60/EC of the European Parliament and of the Council as regards the definition of ‘politically exposed person’ and the technical criteria for simplified customer due diligence procedures and for exemption on grounds of a financial activity conducted on an occasional or very limited basis

having an outdated and incomplete risk assessment could expose the financial institution to significant money laundering and terrorist financing risks that are not identified, measured, or mitigated. The risk assessment is a key component of an effective anti-money laundering program, and it should be updated regularly to reflect the changes in the business environment, customer profile, product offerings, delivery channels, and regulatory requirements12. A risk assessment that is several years old and does not cover all current products and services could fail to capture the emerging threats and vulnerabilities that the financial institution faces, and could result in inadequate or inappropriate controls, policies, and procedures. This could lead to the highest potential for unmitigated risk, as the financial institution could be exploited by money launderers and terrorist financiers, and face regulatory sanctions, reputational damage, and financial losses.

References:

Anti-Money Laundering (AML) Risk Assessment | ACAMS1

Risk assess your business for money laundering supervision - GOV.UK2

shell banks are banks that have no physical presence in any country and are not affiliated with any regulated financial institution. They are often used by money launderers and terrorist financiers to hide their illicit activities and evade regulatory oversight. The USA PATRIOT Act prohibits US financial institutions from opening or maintaining correspondent accounts with shell banks, and requires them to take reasonable steps to ensure that their foreign correspondent banks do not provide services to shell banks12. Therefore, the US does not have jurisdiction over shell banks operating in foreign jurisdictions, unless they are involved in transactions that violate US laws or sanctions.

References:

USA PATRIOT Act Section 313: Prohibition on U.S. Correspondent Accounts with Foreign Shell Banks1

Fact Sheet Regarding the Treasury Department’s Use of Sanctions Authorities to Combat Money Laundering and Terrorist Financing3