An internal review of anti-money laundering training documentation revealed only new agents employed by a financial institution that sells life insurance products were trained. Additionally, it typically took the institution 8 months to begin training for new actuaries. The compliance officer explained training was limited to actuaries because they perform the only high-risk function. The institution relied on e-learning techniques without follow-up assessment. Which of the following issues would the internal review most likely recommend?
Correct Answer: B
The internal review would most likely recommend that the institution provide product-specific anti-money laundering training to all relevant employees, not just actuaries. This is because life insurance products can be used for money laundering purposes, such as purchasing policies with illicit funds, surrendering policies for cash value, or using policies as collateral for loans. Therefore, all employees who are involved in selling, servicing, or processing life insurance products should be aware of the money laundering risks and red flags associated with these products, and how to report any suspicious activity. The institution should also ensure that the training is timely, effective, and tailored to the specific roles and responsibilities of the employees. The other options are not as relevant or appropriate as the correct answer. Option A is too broad, as not all staff need to be trained on anti-money laundering, only those who are relevant to the institution's business activities and exposure to money laundering risks. Option C is too narrow, as it only focuses on actuaries and does not address the need for training other employees who may deal with life insurance products. Option D is not sufficient, as e-learning alone may not be effective in ensuring that employees understand and retain the anti-money laundering content, and the institution should also conduct follow-up assessments to measure the impact and outcomes of the training. : ACAMS Study Guide for the CAMS Certification Examination - 6th Edition, Chapter 3: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), page 57. ACAMS CAMS Certification Video Training Course, Module 3: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), Lesson 3.5: Training and Testing. Best Practices for Anti-Money Laundering Compliance - DIRO Original, Section 3: Adequate Training.
CAMS Exam Question 347
Combating the Financing of Terrorism (CFT)] A comprehensive set of risk-based guidelines for maintaining business relationships is being developed. Which situation indicates that the institution should terminate the relationship with a client?
Correct Answer: D
According to the risk-based approach, financial institutions should apply enhanced due diligence and ongoing monitoring to higher-risk clients, and take appropriate measures to mitigate the risks of money laundering and terrorist financing. If the client exceeds the criteria of an acceptable risk model created by the institution, the institution shouldcommunicate the issues to the client and request remedial actions, such as providing additional information, documentation, or evidence of compliance. If the client does not cooperate or comply with the institution's requirements, the institution should consider terminating the relationship with the client, as the risk may outweigh the benefits of continuing the business relationship. : ACAMS CAMS Certification Package - 6th Edition, Chapter 2: Risk Assessments, pp. 51-521 ACAMS CAMS Certification Package - 6th Edition, Chapter 4: Customer Due Diligence, pp. 97-981 ACAMS CAMS Certification Video Training Course, Module 2: Risk Assessments, Lesson 2.3: Risk-Based Approach2 ACAMS CAMS Certification Video Training Course, Module 4: Customer Due Diligence, Lesson 4.3: Enhanced Due Diligence Reference: http://www.fatf-gafi.org/media/fatf/documents/reports/Risk-Based-Approach-Banking-Sector.pdf
CAMS Exam Question 348
The new compliance officer has reviewed the bank's anti-money laundering training program. The program consists of online training for all new employees within 30 days of hire date and annual refresher training to all employees. In addition, there is specialized training for areas that deal with higher risk products and customers. Over the last year, there have been no regulatory changes and no new products or services have been introduced. The compliance officer wants to propose to the board of directors that the annual refresher training is still current and can be delivered unchanged to all employees. Which two critical pieces of information could be missed by taking this approach? (Choose two.)
Correct Answer: A,D
By delivering the same annual refresher training to all employees, the compliance officer could miss the opportunity to update the staff on any new trends, developments, or risks that have emerged in the anti-money laundering field. For example, new typologies, indicators, technologies, or best practices could be relevant for the staff to be aware of and apply in their daily work. Moreover, the compliance officer could also miss the chance to share any links to enforcement actions identifying violations in other financial institutions that could serve as lessons learned or case studies for the staff to avoid similar mistakes or gaps in their compliance program. : ACAMS CAMS Certification Video Training Course, Module 5: Risk Management, Lesson 5.4: Training1 ACAMS CAMS Certification Study Guide, 6th Edition, Chapter 5: Risk Management, Section 5.4: Training2
CAMS Exam Question 349
Combating the Financing of Terrorism (CFT)] According to the Financial Action Task Force 40 Recommendations, to fulfill identification requirements concerning legal entities, financial institutions should take measures to verify
Correct Answer: C
According to the Financial Action Task Force (FATF) 40 Recommendations, Recommendation 10 requires financial institutions to identify and verify the identity of their customers, including legal persons and arrangements, using reliable and independent sources. This includes verifying the legal existence and structure of the legal entity, such as by obtaining a certificate of incorporation, a partnership agreement, or a trust deed. Additionally, financial institutions should identify and verify the identity of the beneficial owners of the legal entity, such as by obtaining information on the natural persons who ultimately own or control the entity, or who exercise effective control over the entity. The other options are not consistent with the FATF 40 Recommendations. Verifying the financial status of the legal entity, or the entity's other banking relations, is not a requirement for identification purposes, although it may be relevant for risk assessment or due diligence purposes. Verifying a person purporting to act on behalf of the legal entity is also not sufficient, as the person may not be authorized or may not disclose the true identity or beneficial ownership of the entity. Verifying funds or trusts maintained by terrorists is not a specific identification requirement, but rather a general obligation to comply with targeted financial sanctions and freeze the assets of designated persons or entities. : FATF 40 Recommendations, Recommendation 10, Interpretive Note to Recommendation 10, pages 14-18. ACAMS CAMS Certification Study Guide, 6th Edition, Chapter 3, Section 3.2.1, page 77.
CAMS Exam Question 350
Combating the Financing of Terrorism (CFT)] As a result of an audit, a policy exception was identified that had been approved by the compliance officer. The auditor determined that the policy exception is a violation of a regulatory requirement. What should the auditor do?
Correct Answer: B
The auditor should include the regulatory violation in the audit report and report it to the board of directors. This is because the auditor has the responsibility to report any findings of non-compliance or material weaknesses in the institution's internal controls, policies, and procedures. The auditor should also provide recommendations for corrective actions and follow-up on their implementation. The board of directors has the ultimate oversight and accountability for the institution's compliance program and should be informed of any significant issues or risks that may affect the institution's reputation, operations, or regulatory status12. : 1: CAMS Certification Package - 6th Edition | ACAMS, Chapter 6: Developing an Effective Anti-Money Laundering Program, p. 125-126 2: The Wolfsberg Group, The Wolfsberg Anti-Money Laundering Principles for Correspondent Banking, October 2014, p. 7, https://www.wolfsberg-principles.com/sites/default/files/wb /pdfs/Wolfsberg-Correspondent-Banking-Principles-2014.pdf
