A customer living in a high-risk jurisdiction makes frequent, large cash deposits at a bank. The same customer sends small wire transfers to unrelated parties in other high-risk jurisdictions. What are two red flags that may indicate money laundering? (Choose two.)
Correct Answer: C,D
Wire transfers to high-risk jurisdictions and large cash deposits from a high-risk jurisdiction are two red flags that may indicate money laundering. These activities suggest thatthe customer is trying to move funds from or to a country that has weak anti-money laundering (AML) controls, or that is known to be a source or destination of illicit funds12. Wire transfers can also be used to obscure the origin or destination of the funds, or to layer transactions through multiple accounts or intermediaries3. Large cash deposits can indicate that the customer is trying to avoid the reporting or record-keeping requirements that apply to cash transactions, or that the customer is dealing with proceeds from illegal activities45. The other two options are not necessarily red flags, as the bank may have legitimate reasons to allow cash deposits, and the client may reside in a high- risk jurisdiction for legitimate reasons.: 1: FFIEC BSA/AML Examination Manual, Appendix F: Money Laundering and Terrorist Financing Red Flags, Geographic Concerns, 6; 2: AML Red Flags - What are the Top 10 Indicators?, ComplyAdvantage, 5; 3: FFIEC BSA/AML Examination Manual, Appendix F: Money Laundering and Terrorist Financing Red Flags, Transaction Has Unusual Features, 6; 4: FFIEC BSA/AML Examination Manual, Appendix F: Money Laundering and Terrorist Financing Red Flags, Unusual Source of Funds, 6; 5: Money Laundering Red Flags | Key Behaviours and Indicators, High Speed Training, 8. Reference:https://aml-cft.net/library/banks-amlcft-red-flags/
CAMS Exam Question 312
What does designing a country as being of "prime money laundering concern" allow the U.S. government to do?
Correct Answer: B
Designating a country as being of "prime money laundering concern" allows the U.S. government to impose one or more of five special measures under Section 311 of the USA PATRIOT Act12. These special measures are intended to protect the U.S. financial system from the risks posed by the designated country, such as money laundering, terrorist financing, or other illicit activities. The fifth special measure, which is the most severe, authorizes the Treasury Department to prohibit U.S. financial institutions from opening or maintaining correspondent or payable-through accounts for foreign financial institutions that involve the designated country12. Correspondent accounts are accounts that enable foreign banks to access the U.S. financial system and provide services to their customers, while payable-through accounts are accounts that allow foreign banks to offer their customers direct access to the U.S. financial system3. Closing these accounts effectively cuts off the designated country from the U.S. financial system and imposes significant costs and burdens on its financial sector. : 1: 311 Actions | U.S. Department of the Treasury 2: Press Releases - U.S. Department of the Treasury 3: Anti-Money Laundering Laws and Regulations USA 2023-2024
CAMS Exam Question 313
Combating the Financing of Terrorism (CFT)] A bank inthe Netherlandshas been requested to share information about aseries of transactions and related customerswith abank in Italy. Both banks are subject toEuropean Union jurisdiction. Which factor is the most important to consider before the Dutch bank shares the requested information with the Italian bank?
Correct Answer: D
Banks within theEUmust comply withAML laws and data privacy regulationsbefore sharing customer data. * Option D (Correct):Information sharing should belimited to what is necessary and proportionate, followingGDPR and AMLDregulations. * Option A (Incorrect):AML laws allowinformation-sharing in certaincross-border investigations. * Option B (Incorrect):Whilelegal review is necessary, aproduction order is not always requiredfor AML-related information sharing. * Option C (Incorrect):Data protection laws (e.g., GDPR) must still be respected, even in financial crime investigations. Reference:EU General Data Protection Regulation (GDPR), 6th Anti-Money Laundering Directive (6AMLD), FATF Recommendation 40 (International Cooperation).
CAMS Exam Question 314
Which approach ensures the successful implementation of a transaction monitoring system?
Correct Answer: B
A transaction monitoring system (TMS) is a tool that helps financial institutions detect and report suspicious activities related to money laundering, terrorist financing, and other financial crimes. A TMS needs to be implemented carefully and effectively to ensure its accuracy, reliability, and compliance with regulatory requirements. One of the best practices for implementing a TMS is to perform systems integration testing (SIT) at key steps of development and user acceptance testing (UAT) prior to going live with the TMS. SIT is a process of verifying that the TMS can interact with other systems and data sources correctly and efficiently. UAT is a process of validating that the TMS meets the functional and operational expectations of the end-users and stakeholders. By conducting SIT and UAT, the financial institution can identify and resolve any issues or defects in the TMS before it is deployed in the production environment. This can help avoid potential problems such as data quality issues, false positives, false negatives, system errors, performance issues, and regulatory breaches. Performing SIT and UAT can also help ensure that the TMS is aligned with the financial institution's risk assessment, policies, procedures, and controls. References: Step 1 - Transaction Monitoring Implementation Best Practices Anti-money laundering transaction monitoring system implementation considerations ACAMS CAMS Certification Study Guide 6th Edition
CAMS Exam Question 315
When theFinancial Action Task Force (FATF)places a jurisdiction on the list of"jurisdictions under increased monitoring", also known as the"grey list", the jurisdiction:
Correct Answer: A
TheFATF Grey Listconsists of jurisdictionsunder increased monitoringdue tostrategic deficiencies in their AML/CFT frameworks. * Option A (Correct):Countries placed on thegrey listhaveidentified weaknessesbutcommit to addressing them within set timeframes. * Option B (Incorrect):High-risk jurisdictions that fail to cooperate are placed on theblacklist, not the grey list. * Option C (Incorrect):While additional reviews may occur,grey-listed countries follow an agreed- upon action plan, not an automatic re-evaluation. * Option D (Incorrect):FATF does not impose financial penalties; instead, itmonitors progress and issues public reports. Reference:FATF Public Statement on Jurisdictions Under Increased Monitoring, FATF Recommendation 35 (Sanctions), FATF Mutual Evaluations.
