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

a qualified compliance officer is a mandatory element of all anti-money laundering programs, regardless of the type or size of the financial institution. The compliance officer is responsible for developing, implementing, and overseeing the anti-money laundering program, ensuring its compliance with the relevant laws and regulations, and reporting any suspicious activity to the appropriate authorities12. The compliance officer should have sufficient authority, resources, and expertise to perform these duties effectively.

References:

Anti-Money Laundering (AML) | FINRA.org1

Anti-Money Laundering Program and Suspicious Activity Reporting Requirements For Insurance Companies Frequently Asked Questions | FinCEN.gov2

payments received on the account that reference unknown companies in the instructions indicate a possible attempt to obscure the source or purpose of the funds. This could be a sign of money laundering, tax evasion, fraud, or other illicit activities. Such payments should be referred to AML Investigations for further review and verification of the identity and legitimacy of the companies involved.

References:

FATF Guidance on the Risk-Based Approach for Dealers in Precious Metals and Stones, page 18, paragraph 57: “The dealer should also pay attention to the information provided by the customer on the source and origin of the funds or assets, and verify it where possible. For example, the dealer should be alert to situations where the customer provides vague, incomplete or inconsistent information about the source and origin of the funds or assets, or where the information provided does not match with the customer’s profile or business activity.”

Risk-Based Approach For Dealers in Precious Metals and Stones (DPMS), section “Business-based risk approach”, sub-section “2- Geographical location”: “You must also assess the geographical location of your business and the countries you deal with. You must be aware of the countries that are high-risk or non-cooperative jurisdictions as per the FATF recommendations. You must also consider the countries that are subject to sanctions, embargoes, or similar measures issued by the United Nations, the European Union, or any other relevant organization. You must also be careful of the countries that are known to have significant levels of corruption, organized crime, or terrorist activity.”

What are the Risks of Money Laundering for Precious Metals Dealers?, section “Money Laundering Red Flags for DPMS”, bullet point 4: “The customer provides vague, incomplete, or inconsistent information about the source and origin of the funds or assets.”

Implementing a sound customer due diligence (CDD) program is the most effective way to prevent money laundering through financial institutions, according to experts. CDD is the process of identifying and verifying the identity of customers and assessing their risk profile, source of funds, and expected activity. CDD helps financial institutions to detect and prevent money laundering by enabling them to know their customers, monitor their transactions, and report any suspicious or unusual behavior. CDD is also a key requirement of the international standards and best practices for anti-money laundering and combating the financing of terrorism (AML/CFT), such as the Financial Action Task Force (FATF) Recommendations and the Basel Committee on Banking Supervision (BCBS) Guidelines.

The other options are not as effective as CDD, as they are either too narrow or too broad in scope. Ensuring that transaction monitoring systems can identify terrorist financing is important, but it does not address the broader issue of money laundering, which may involve other types of criminal proceeds or activities. Collecting information on beneficial owners and foreign customers is a part of CDD, but it is not sufficient by itself, as it does not cover the risk assessment and ongoing monitoring aspects of CDD. Instituting a policy prohibiting the acceptance of funds intended for terrorist financing is a good practice, but it is not a preventive measure, as it relies on the assumption that the funds are already identified as such, which may not be the case.

References:

Customer Due Diligence - FATF-GAFI.ORG

Sound management of risks related to money laundering and financing of terrorism - Bank for International Settlements

CAMS Study Guide 6th Edition, page 36-37.

An effective anti-money laundering training program should include real-life money laundering examples to illustrate the concepts and strategies for detecting and preventing money-laundering activity. Real-life examples can help employees to understand the risks, methods, indicators, and impacts of money laundering, as well as the roles and responsibilities of different staff members in combating it. Real-life examples can also enhance the engagement, retention, and application of the knowledge gained from the training program.

References: = The main references for this question are the following sources:

The document titled “Anti-Money Laundering Awareness Training” published by ACAMS. You can access it by clicking here. This document states that “ACAMS AML General Awareness Training equips employees with knowledge of basic anti-money laundering (AML) principles” and that it is “based on real-life industry scenarios with interactive content to help learning stick”.

The document titled “Anti-Money Laundering (AML) Training” published by LIMRA. You can access it by clicking here. This document states that “LIMRA’s AML training program provides training for insurance and securities producers and home office employees” and that it “uses real-life scenarios to help learners understand how to apply AML principles to their everyday work”.

 A startup virtual currency exchange that operates as a money services business (MSB) must comply with the anti-money laundering (AML) regulations and standards applicable to MSBs, such as the Bank Secrecy Act (BSA) in the United States. One of the key requirements for MSBs is to develop and implement an effective AML compliance program that covers the following four pillars: internal controls, independent testing, designated compliance officer, and training12.

Before launching its operations, the startup should consider the following two AML responsibilities that are essential for its compliance program:

A customer onboarding process: The startup should establish a customer identification program (CIP) that verifies the identity of its customers and collects relevant information, such as name, address, date of birth, and identification number12. The startup should also perform customer due diligence (CDD) and enhanced due diligence (EDD) for higher-risk customers, such as those who engage in large or frequent transactions, use anonymous or pseudonymous digital wallets, or originate from high-risk jurisdictions34. The startup should also screen its customers against sanctions lists and other watchlists to prevent dealing with prohibited or suspicious entities12.

Transaction limits consistent with risk appetite: The startup should set appropriate transaction limits for its customers based on its risk assessment and risk appetite. Transaction limits can help mitigate the exposure to money laundering and terrorist financing risks, as well as comply with the reporting and recordkeeping obligations under the BSA. For example, the startup should report any cash transactions over $10,000 or any suspicious transactions over $2,000 to the Financial Crimes Enforcement Network (FinCEN)12. The startup should also monitor its customers’ transactions for any unusual or inconsistent patterns or behaviors that may indicate money laundering or other illicit activities34.

References:

1: ACAMS CAMS Certification Package - 6th Edition, Chapter 6: AML Compliance Program, pp. 139-1461

2: ACAMS CAMS Certification Video Training Course, Module 6: AML Compliance Program, Lesson 6.1: The Four Pillars of an AML Compliance Program3

3: ACAMS CAMS Certification Package - 6th Edition, Chapter 4: Customer Due Diligence, pp. 87-1061

4: ACAMS CAMS Certification Video Training Course, Module 4: Customer Due Diligence, Lesson 4.1: Customer Identification Program and Lesson 4.3: Enhanced Due Diligence3

According to the Financial Action Task Force (FATF) 40 Recommendations, financial institutions should obtain senior management approval before establishing new correspondent banking relationships1. This is to ensure that the financial institution has assessed the money laundering and terrorist financing risks associated with the respondent institution and has applied appropriate due diligence measures. The FATF also requires financial institutions to gather sufficient information about the respondent institution, its business activities, its reputation, its supervision, and its anti-money laundering and counter-terrorist financing policies and procedures1. Additionally, the FATF recommends that financial institutions document the respective responsibilities of each institution and prevent the use of their accounts by shell banks1.

References:

1: Guidance on Correspondent Banking Services, FATF, 2016

This customer action indicates possible money laundering because it could be a sign of layering, which is the second stage of the money laundering process. Layering involves moving the illicit funds around to create distance and confusion between the source and the destination of the money. Transferring all funds to another bank on the same day of large cash deposits could be an attempt to avoid detection by the bank’s transaction monitoring system or by the authorities. It could also be a way to break the audit trail and obscure the origin of the funds.

The other customer actions are not necessarily indicative of money laundering, although they could raise some red flags depending on the context and the customer profile. Continually making weekly small cash deposits could be a sign of structuring, which is a technique to avoid reporting requirements by depositing amounts below the threshold. However, this could also be a legitimate behavior for a tutor who receives cash payments from students. Periodically initiating wire transfers to another account owned by a relative could be a sign of funneling, which is a technique to move funds between accounts that are not related to the business or personal activities of the customer. However, this could also be a legitimate behavior for a tutor who supports their family members financially. Opening a savings account and making frequent transfers from the checking account could be a sign of commingling, which is a technique to mix illicit funds with legitimate funds from a legal source. However, this could also be a legitimate behavior for a tutor who wants to save money for future expenses.

References:

CAMS Certification Package - 6th Edition | ACAMS, Chapter 2: Money Laundering Risks and Methods, pp. 35-40

CAMS Certifications: How to Get CAMS Certified | ACAMS, CAMS Study Guide, pp. 28-32

ACAMS CAMS Certification Video Training Course - Exam-Labs, Module 2: Money Laundering Risks and Methods, Video 2.2: The Three Stages of Money Laundering

Exam CAMS: Certified Anti-Money Laundering Specialist (the 6th edition), Question 311, Answer C

 If an employee of a financial institution is found to have assisted in money laundering or any other criminal activity, the institution should take appropriate disciplinary action and report the employee to the relevant authorities. This is not only a legal obligation, but also a sound compliance practice to protect the institution’s reputation and integrity. Disciplining the employee without informing the authorities would be insufficient and potentially expose the institution to further legal risks. Ignoring the employee’s involvement or requiring additional training for all employees would be ineffective and inappropriate responses.

References:

ACAMS CAMS Certification Package - 6th Edition, Chapter 5: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), pp. 121-1221

ACAMS CAMS Certification Package - 6th Edition, Chapter 6: AML Compliance Program, pp. 143-1441

ACAMS CAMS Certification Video Training Course, Module 5: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), Lesson 5.2: International Standards and Best Practices2

ACAMS CAMS Certification Video Training Course, Module 6: AML Compliance Program, Lesson 6.4: Internal Controls2