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CAMS Certified Anti-Money Laundering Specialist (the 6th edition) Questions and Answers

Questions 4

An anti-money laundering analyst is reviewing a new customer list to confirm potentially high risk customers have been identified and subject to enhanced due diligence.

Which new customer warrants enhanced due diligence?

Options:

A.

A non-profit hospital

B.

A fundraising organization

C.

An employee benefit plan trust

D.

A medical practice limited partnership

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Questions 5

What should senior management do in order to promote a culture of anti-money laundering compliance?

Options:

A.

They should include compliance with AML procedures as condition of employment

B.

They should attend all training sessions with front-line employment

C.

They should have close ties with the independent auditors of the AML program

D.

They should base employee compensation on the amount of suspicious activity they detect

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Questions 6

What is a tool governments and multi-national bodies can use to prevent the proliferation of weapons of mass destruction?

Options:

A.

Economic Sanctions

B.

Commission Rogatoire

C.

Account Monitoring Order

D.

Mutual Legal Assistance Treaties

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Questions 7

Which action should an FIU consider taking when it has information that might be useful to another FIU?

Options:

A.

In accordance with Wolfsberg guidelines, submit the information to the other FIU in written form

B.

Supply the information to the other FIU spontaneously as soon as the relevance of sharing the information is identified

C.

Take no action until contacted by the other FIU

D.

Request approval from the Egmont Group prior to sharing the information with the other FIU

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Questions 8

When an institution files an STR with regard to a particular account, what steps should the institution take visa account?

Options:

A.

The institution should close the account due to the obvious risk it represents

B.

The institution should keep the account open due to the need to continue to monitor the account

C.

The institution should consult its counsel and AML compliance officer and determine whether closing the account is in accord with the institution’s procedures

D.

The institution should not close the account due to the risk of tipping off the customer and upsetting the criminal investigation

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Questions 9

How should a compliance officer respond to law enforcement agencies' request for information on a customer undergoing an investigation?

Options:

A.

Collaborate with the financial institution's (FI's) designated department to determine the appropriate course of action to comply with the request.

B.

Gather all requested documentation and send via secure email to the requesting authority.

C.

Share details of the investigation with respective colleagues who deal with this customer type on a daily basis.

D.

Freeze account assets and advise the customer that assets will not be released until the investigation has been completed

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Questions 10

Which two actions should Financial Intelligence Units (FIUs) take when submitting a request to another FIU? (Choose two.)

Options:

A.

Send the same request to all FIUs

B.

Disclose the reason and purpose for the request

C.

Provide feedback on how the information was used

D.

Make best efforts to provide complete and factual information

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Questions 11

How can violations of anti-money laundering laws be a risk to individuals?

Options:

A.

Violations can result in civil and criminal fines and penalties against the individuals.

B.

Violations can result in additional legislation that the individuals have to comply with.

C.

Violations can result in enforcement actions that damage the reputation of the individual’s employer.

D.

Violations can result in additional and more stringent anti-money laundering training for individuals.

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Questions 12

At a small community bank, the compliance officer identifies unusual activity on a customer, who with his personal and company accounts, is the bank’s largest depositor. The customer’s companies have significant balances on their outstanding loans. The compliance officer notices that there is a lot of unusual movements of money between the customer’s individual and business accounts. After filing a suspicious transaction report (STR), the compliance officer gets a call from law enforcement indicating that they want the bank to keep the account open while they conduct an investigation into the customer.

How should the compliance officer escalate this information to the board of directors?

Options:

A.

By providing a copy of the STR to the board

B.

By informing the regulator to bring it up with their next meeting with the board

C.

By providing a high level summary of the activity and the interactions with law enforcement

D.

By providing a copy of the letter from law enforcement asking the bank to keep the account open.

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Questions 13

Which Trust parties should be identified to determine the true nature of the Trust relationship according to Basel guidelines? (Choose three.)

Options:

A.

Respondents

B.

Payees

C.

Trust Administrators

D.

Trustees

E.

Beneficiaries

F.

Settlors/grantors

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Questions 14

Which are the two most common controls a financial institution (FI) uses to identify suspicious money-laundering activity? (Choose two.)

Options:

A.

Sanctions screening

B.

Adverse media information

C.

Governmental subpoena

D.

Search warrant

E.

Transaction monitoring rules

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Questions 15

A prospective AML officer comes highly recommended by a banks up-stream correspondent institution of similar size and make-up, located in a different city in the same country. The bank is interested in hiring the individual. What should be the next step taken by the Board of Directors?

Options:

A.

Do a thorough background check

B.

Confer with its regulatory agency to determine whether it is appropriate to hire the person

C.

Hire the individual, relying on the recommendation of its correspondent

D.

Hire the individual on a probationary basis so that the institution can determine if the individual is sufficiently experienced and capable

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Questions 16

A local law enforcement officer notifies the bank compliance officer that he is working on an insurance fraud scheme that appears to be running transactions using the account of a bank employee. The law enforcement officer refers to a kiting suspicious transaction report filed by the compliance officer and requests further information.

What action should the compliance officer take?

Options:

A.

Inform the board of directors

B.

Call the employee and demand an explanation

C.

Allow access to the bank's documents immediately

D.

Provide the information to the law enforcement in response to a formal written request

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Questions 17

Which response represents a high-level principle for FATF-Style Regional Bodies (FSRB)?

Options:

A.

Membership, mission, financial procedures, and budget

B.

Dependent with different experiences to strengthen the overall effort

C.

Access to documents and assistance with meetings

D.

Reciprocity for effective participation and recognition of work

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Questions 18

Bank A is located in Country A. A wire transfer from Bank B located in Country B is processes by Bank A, where the funds are being moved to a customer at Bank C located in Country C. The wire transfer is deemed suspicious by Bank A.

Who should Bank A file a suspicious transaction report on?

Options:

A.

The transaction in Country A

B.

Bank B in Country A

C.

The transaction in Country B

D.

Bank C in Country C

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Questions 19

An anti-money laundering specialist working at a bank just received a legal request from a law enforcement agency mandating the release of all financial transaction records relating to an account at the bank. The specialist immediately recognizes the account as one owned by the bank Chief Executive Officers brother. During research to gather the requested documents, the specialist finds several internal memos he had sent to the bank president with concerns regarding possible suspicious activity relating to this account. The specialist recalls the bank president verbally responded to each memo with an explanation of the activity and indicated there was no cause for concern. What should the specialist do with respect to these internal memos?

Options:

A.

Place these memos in his personal files in case they are subsequently requested

B.

Ask the bank president to document his instructions to the specialist

C.

Call the law enforcement agent and suggest he modify the legal request to include these memos

D.

Advise the bank’s senior legal advisor of the situation

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Questions 20

A precious metals dealer opens a new account with a bank. Which requires a referral to AML Investigations for further review?

Options:

A.

International outgoing wires to diamond dealers that are part of the diamond pipeline.

B.

Payments received on the account reference unknown companies in the instructions.

C.

International incoming payments from foreign companies in which the precious metals dealer has an established relationship.

D.

Multiple daily point of sale transactions from third parties that appear to be individuals.

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Questions 21

A financial institution has expanded its scope of services so that it is attracting the business of politically exposed persons (PEPs) who had previously never been part of the customer base.

Which two courses of action should the compliance officer include in the institution’s procedures for considering PEPs as customers? (Choose two.)

Options:

A.

Conduct enhanced ongoing monitoring of the business relationship

B.

Expedite due diligence when a PEP is pre-approved by a member of senior management

C.

Obtain appropriate senior management approval for establishing a business relationship with a PEP from a high risk country

D.

Take adequate measures to establish the source of wealth and source of funds which are involved in the business relationship or occasional transaction

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Questions 22

What does the Egmont Group’s support for its members include?

Options:

A.

Issuing due diligence models for financial institutions

B.

Expanding and systematizing international cooperation in the reciprocal exchange of information

C.

Issuing strategic products for law enforcement agencies and FIUs on topics of international interest

D.

Expanding the ability of FIUs to enforce laws and exchange information globally to combat money laundering and terrorist financing

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Questions 23

What are three potential issues for foreign financial institutions maintaining correspondent accounts with U.S. banks under the Patriot Act? Choose 3 answers

Options:

A.

Cancellation of correspondent banking relationships

B.

Forfeiture of funds in a U.S. interbank account

C.

Prohibition of correspondent accounts for shell banks

D.

U.S. residents maintaining private banking accounts

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Questions 24

The ultimate goal of economic sanctions is to:

Options:

A.

protect the reputation of the country.

B.

prevent terrorists from profiting from trade.

C.

protect national security.

D.

reduce the profits of sanctioned countries.

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Questions 25

What are two aspects of the Wolfsberg Anti-Money Laundering (AML) Principles for Correspondent Banking? (Choose two.)

Options:

A.

At least one person, aside from the person sponsoring the relationship, should approve the correspondent relationship.

B.

Correspondent banking is an inherently high risk business and all correspondent bank relationships should be reviewed on an annual basis.

C.

Factors such as politically exposed person involvement and downstream (nested) correspondents increase the risk inherent in a correspondent relationship.

D.

An Institution may assign a low risk rating to a correspondent bank located in a jurisdiction deemed to have an adequate AML environment (e.g., Financial Action Task Force member country) without needing to consider other factors

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Questions 26

Why do organized crime groups often use front companies? (Choose two).

Options:

A.

Because they are not registered, front companies are not subject to income and other sales taxes.

B.

Because using multiple front companies can make it easier to control an entire sector of the economy.

C.

Because they are generally subject to lighter due diligence requirements by banks and other financial services providers.

D.

Because front companies generally charge higher prices than legitimate companies, so profit margins are higher.

E.

Because they can use the company's bank accounts to comingle deposits with those of legal businesses.

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Questions 27

Which statement is true regarding the FATF standards for SARs/STRs information sharing within a financial group?

Options:

A.

FIs must retain copies of SARs/STRs and supporting documentation for five years from the date of filing the STRs

B.

FIs cannot share customer information at all since it is confidential.

C.

Financial institutions (FIs) should establish sufficient safeguards concerning the confidentiality of information shared for AML purposes.

D.

FIs must require approval from regulators to share SARs/STRs information and supporting documentation.

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Questions 28

Which primary international authoritative body designates sanctions?

Options:

A.

Organization of Economic Co-operation and Development (OECD)

B.

Financial Action Task Force (FATF)

C.

International Monetary Fund (IMF)

D.

United Nations (UN)

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Questions 29

A compliance officer for a casino may suspect money laundering if an individual:

Options:

A.

invokes reporting requirements through a lump sum payment.

B.

refers to casino associates by their first name.

C.

purchases a low volume of chips with cash and turns them in for a casino check.

D.

requests to have winnings transferred to a bank account of a third party.

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Questions 30

Which activity would require an update to the first line training program?

Options:

A.

The implementation of a new system that provides information for monitoring customer accounts.

B.

The expansion to customer segments that will utilize newly established products.

C.

The maintenance of regulatory requirements for onboarding documentation collections of a customer base.

D.

The onboarding of a new customer type which was previously reviewed and risk rated.

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Questions 31

A profitable commercial customer who operates an import-export business has multiple accounts with the same institution at branches m different locations. The customer receives funds from a jurisdiction perceived as highly corrupt according to Transparency International ratings. The customer makes frequent transfers among the accounts and prefers to manage the accounts separately. What should the institution do to mitigate the risk associated with these accounts?

Options:

A.

File a suspicious transaction report

B.

Diminish the importance of the subjective Transparency International rating

C.

Conduct a trade-price manipulation analysis

D.

Develop a system to monitor all the activity

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Questions 32

Which statement identifies one of the duties of a government Financial Intelligence Unit?

Options:

A.

It serves as the central agency for the receipt of disclosures filed by reporting entities.

B.

It administers and enforces economic and trade sanctions based on a government’s foreign policy and national security goals.

C.

It supervises and regulates banking institutions to ensure the safety and soundness of the nation’s banking and financial system.

D.

It prosecutes suspected money launderers and terrorist financiers based on financial institution suspicious transaction report filings.

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Questions 33

What are three indicators of money laundering associated with using electronic funds transfers? Choose 3 answers

Options:

A.

Funds transfers to or from a financial secrecy haven without an apparent business reason

B.

Regular and frequent transfers from the account of a large company said to be payment for goods bought on credit

C.

Funds transfers are received or sent from the same person to or from different accounts

D.

Payment or receipts with no apparent link to legitimate contracts, goods or services

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Questions 34

What is a method of placement that can be used by a money launderer in a deposit taking institution?

Options:

A.

Depositing cash into the money launderer’s account

B.

Sending a large number of funds transfers between accounts

C.

Withdrawing large amounts of cash from the money launderer’s account

D.

Depositing cashier’s checks and money orders into the money launderer’s account

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Questions 35

The board of directors receives notice from the primary regulator of the bank that potentially suspicious activity has been identified and the bank president appears to be involved. The Board asks the compliance officer for advice.

Which action should the compliance officer take when informed?

Options:

A.

Destroy all records relating to the matter

B.

Insist on the president’s immediate resignation

C.

Inform the bank’s legal counsel and follow their instructions

D.

Inform the president of the regulator’s suspicions and ask for his advice

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Questions 36

What is the primary action a financial institution should take before formulating its anti-money laundering program?

Options:

A.

It should perform a comprehensive risk analysis

B.

It should determine how extensive and well-trained the compliance staff is

C.

It should consult with its correspondent banks to determine the nature and extent of their AML programs

D.

It should ensure that its training modules for all employees cover all relevant AML issues

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Questions 37

Which two steps should a financial institution take when it receives a law enforcement request to keep an account open that may be associated with suspicious or criminal activity? (Choose two.)

Options:

A.

File a suspicious transaction report on the account owner(s)

B.

Maintain account records for at least five years after the request expires

C.

Ask for a written request from the law enforcement agency that defines the duration

D.

Stop filing suspicious transaction reports because law enforcement will be monitoring the account

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Questions 38

Which three entities does the Third European Union Money Laundering Directive apply to?

Options:

A.

Financial Institutions

B.

Defense Attorneys

C.

Casinos

D.

Real Estate Agents

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Questions 39

When implementing a risk-based approach related to casinos, which risks are related to the customer as an individual? (Choose two.)

Options:

A.

Transfer between customers

B.

Casual customers

C.

Improper use of third parties as customers

D.

Customer from a high-risk country

E.

Use of casino deposit accounts by the customer

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Questions 40

Which statement best describes a key aspect of the AML Directive of the EU regarding business relationships and transactions with high-risk third countries?

Options:

A.

Obliged entities should voluntarily consider the implementation of increased external audit requirements for branches and subsidiaries located in high-risk countries.

B.

Obliged entities, in accordance with the member state regulations, should determine at a national level the measures that can be used for enhanced due diligence.

C.

Obliged entities should implement additional mitigating measures complementary to the enhanced customer due diligence procedures, in accordance with a risk based approach.

D.

Obliged entities should not take into account specific circumstances when performing enhanced due diligence measures.

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Questions 41

Which is a key goal of EU Directives on money laundering?

Options:

A.

Establish a consistent regulatory environment across the EU to prevent money laundering

B.

Address control of payments in EU countries to reduce money laundering

C.

Allow member states to discuss the draft legislation with the cooperation of the EU Financial Intelligence Units (FIUs)

D.

Build a network of financial institutions (FIs) that work together to prevent money laundering across the EU

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Questions 42

Which three measures are contained in Financial Action Task Force 40 Recommendations for reporting suspicious activity? (Choose three.)

Options:

A.

The activity should be reported promptly to the country’s financial intelligence unit.

B.

The financial institution has been contracted by law enforcement regarding the activity.

C.

The financial institution has grounds to believe the activity is related to terrorist financing.

D.

The financial institution has contacted the account holder to determine the activity of the account.

E.

The financial institution has reasonable grounds to suspect the funds are proceeds of criminal activity.

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Questions 43

What should an effective anti-money laundering training program include?

Options:

A.

Computer-based modules titles differently for each job description in the bank

B.

Random testing of employees to ensure proper understanding of policies

C.

Real-life money laundering examples

D.

Lists of anti-money laundering regulations

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Questions 44

An auction house dealing in fine art and antiques sells a well-known painting at a price of $12 million to an agent bidding for a group of local investors. The same painting sold ten years prior at auction for $5 million. The auction house receives payment for the painting via wire transfer from an account maintained in an offshore jurisdiction by the investor group. No beneficial ownership information is available for the account.

What are the two money laundering red flags? (Choose two.)

Options:

A.

The payment is received via wire transfer.

B.

An agent bids on the painting for a group of investors.

C.

The painting has more than doubled its value in ten years.

D.

Payment is received from an account in an offshore jurisdiction.

E.

Lack of beneficial ownership details for the originating account.

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Questions 45

Which is a key role of FATF-Style Regional Bodies (FSRBs)?

Options:

A.

Support the system of mutual evaluation

B.

Setting regional standards for combatting money laundering

C.

Bring additional terrorist financing laws into action in the region

D.

Enforce the specific FATF laws in the region

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Questions 46

Which three areas do FATF’s 40 recommendations cover? Choose 3 answers

Options:

A.

International Cooperation

B.

Prescriptive sentences for predicate offenses

C.

Financial systems and their regulation

D.

The criminal justice system

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Questions 47

An anti-money laundering specialist at a large institution is responsible for information senior management about the status of the anti-money laundering program across the organization.

Which report is the most useful?

Options:

A.

The total credit exposure for non-cooperative countries and territories

B.

Results of related audits and examinations

C.

Details on inquires received from law enforcement

D.

Notification of management changes in the different major divisions

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Questions 48

Which information must a United States financial institution retain for having foreign correspondent accounts as part of the USA PATRIOT Act record keeping requirements?

Options:

A.

Records identifying the owners of each foreign bank

B.

Section 314(b) information sharing results related to foreign correspondent accounts

C.

Purchase of monetary instruments of $3,000 or more involving foreign correspondent accounts

D.

A suspicious activity report filed and the supporting documentation involving foreign correspondent accounts

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Questions 49

A bank has opened a new account for a well-known attorney to manage client funds. During the first six months, bank staff observe the account receives multiple deposits via wire transfer. They also observe that the attorney withdraws cash, makes payments to various people, and transfers funds to the law firm’s account online.

What is considered a red flag for potential money laundering in this situation?

Options:

A.

Withdrawing cash

B.

Making payment to various people

C.

Receiving multiple deposits via wire transfer

D.

Transferring funds to his law firm’s account online

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Questions 50

In which two ways do Financial Action Task Force-style regional bodies influence anti-money laundering and terrorist financing standards within their respective regions? (Choose two.)

Options:

A.

They issue typologies specific to their geographical region.

B.

They administer mutual evaluations of participating members.

C.

They enforce the laws of the member countries in their geographic region.

D.

They require participating countries to adopt laws in line with their recommendations.

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Questions 51

Based on the USA PATRIOT Act, what action might the US take to demonstrate extraterritorial reach?

Options:

A.

Send requests for information to a non-US based financial institution (FI)

B.

Hand over potential penalties from the US to another government

C.

Freeze U. S. accounts that contain funds from the non-US FI

D.

Initiate a lawsuit in the home country of the non-US FI

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Questions 52

Which statements regarding the USA PATRIOT ACT best describe key aspects that have extraterritorial reach? (Choose three.)

Options:

A.

It allows for the US Attorney General to subpoena records from a foreign bank with US correspondent accounts, including those that are located outside the US.

B.

It allows foreign banks to voluntarily designate a registered agent in the US to accept service of subpoenas.

C.

It allows the Secretary of the Treasury to order a US financial institution (FI) to close a correspondent account when a subpoena has not been responded by a foreign bank in a timely manner.

D.

It obliges the government to trace the origin of the funds when a seizure of assets occurs in a correspondent account that has been opened and maintained for a foreign bank in the US.

E.

It excludes as foreign FIs businesses that would be considered broker-dealers, money transmitters, and currency exchangers.

F.

It allows federal banking supervisors to require records of the identity of the owners of a foreign bank from a Fl operating in the US.

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Questions 53

A branch manager for a small community bank has a new customer who deposits for EUR 50,000 checks into one account. Shortly thereafter, the customer goes to another branch and asks to transfer all but EUR 1,500 to three accounts in different foreign jurisdictions.

Which suspicious activity should be the focus of the suspicious transaction report?

Options:

A.

The customer opened the account with four large checks

B.

The customer goes to a different branch to make this transaction

C.

The customer transfers almost all of the funds out of the account

D.

The customer asks to transfer funds to accounts in three different foreign jurisdictions

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Questions 54

What are two risks to institutions for violating anti-money laundering laws as demonstrated by the 2012 HSBC

settlement with United States authorities? (Choose two.)

Options:

A.

Forfeiture of assets

B.

Civil money penalties

C.

Loss of bank charter/license

D.

Imprisonment of bank employees

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Questions 55

What are two sources for maintaining up-to-date sanctions information? (Choose two.)

Options:

A.

U.S. Federal Bureau of Investigation’s National Security Letters

B.

U.S. Department of the Treasury Office of Foreign Assets Control

C.

U.S. Department of the Treasury – Section 311 – Special Measures

D.

Financial Action Task Force’s list of High Risk and Non-Cooperative Jurisdictions

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Questions 56

Financial Action Task Force (FATF)-style regional bodies are created and obliged to understand the inherent

money laundering and terrorist financing risks in the region of the world they serve.

What is one of the methods they use to understand these risks?

Options:

A.

They require member countries to develop statistical metrics over money laundering and terrorist financing

crimes

B.

They require participating financial institutions of their members to file suspicious transaction reports to the

regional body

C.

They conduct global research on money laundering and terrorist financing trends and report their findings

in their own typologies report

D.

They conduct regional-level research and analysis of the money laundering and terrorist financing methods

and trends using standards and templates used for FATF typologies reports

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Questions 57

Historically, a tour guide has made monthly cash deposits averaging $10,000. Over the past three months, the

monthly deposits have averaged $100,000. When the financial institution QUESTION NO:s the increased deposits,

the tour guide explains that there have been numerous conventions in town so business has increased

substantially.

Which further action(s) should the financial institution take?

Options:

A.

Immediately terminate the relationship

B.

Schedule a periodic review of activity

C.

Perform further investigation, it appropriate report the activity to the authorities and consider terminating

the relationship

D.

Perform further investigation, if appropriate report the activity to the authorities and place a limit on future

transactions

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Questions 58

Which of the following customers require the most enhanced due diligence?

Options:

A.

A resident of a non-cooperative jurisdiction.

B.

An international business corporation.

C.

A politically exposed person.

D.

An established customer.

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Questions 59

Which element is generally required of all anti-money laundering programs?

Options:

A.

A computer-based suspicious activity monitoring system

B.

A qualified compliance officer to manage the program

C.

Annual in-person AML training for all employees

D.

An enhanced due diligence program for all new customers

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Questions 60

The Wolfsberg Anti-Money Laundering Principles for Private Banking require new clients to be approved by

whom?

Options:

A.

The board of directors

B.

Only the private banker

C.

The private banker’s supervisor

D.

At least one person other than the private banker

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Questions 61

Which practices are dealers in antiques, precious metals, precious stones, jewelry, and art advised to follow to reduce the element of money laundering risk? Choose 3 answers

Options:

A.

Insist on all vendors signing a declaration that the item placed by them for sale was not stolen or acquired through illegitimate means

B.

Verify the identities of all new vendors and customers and conduct due diligence on them

C.

Avoid accepting cash payment from the buyers

D.

Insist all vendors submit an appropriate license issued by enforcement agencies authorizing the sale

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Questions 62

Which three circumstances are indicators for defining a customer as required additional diligence according to the Wolfsberg Principles on Private Banking? Choose 3 answers

Options:

A.

Persons residing in a having funds from countries with inadequate AML standards

B.

Persons engaged in business activities known to be susceptible to money laundering

C.

Persons who receive funds from a correspondent banking relationship

D.

Persons determined to be Politically Exposed Persons (PEPs)

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Questions 63

The compliance officer for a private bank has been tasked with writing a policy on how the bank will deal with

intermediaries.

Which two aspects should be included in the policy in respect of intermediaries to align it with the Wolfsberg

Anti-Money Laundering Principles for Private Banking? (Choose two.)

Options:

A.

When an intermediary introduces clients to the bank, it is not necessary for the bank to perform due

diligence on the intermediary’s clients.

B.

Where an intermediary introduces clients to the bank, the bank must obtain the same type of information

with respect to an introduced client that would otherwise be obtained by the bank, absent the involvement

of the intermediary.

C.

Where an intermediary manages assets on behalf of a number of clients and is the account holder with the

bank, but that intermediary does not conduct the same level of due diligence as the bank, it is necessary

for the bank to undertake due diligence on the intermediary’s clients.

D.

Where an intermediary manages assets on behalf of a number of clients and arranges for the opening of

accounts for its clients with the bank, and that intermediary is a financial institution subject to similar

regulations, it is necessary for the bank to perform due diligence on the intermediary’s clients.

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Questions 64

A politically exposed person (PEP) maintains an account at a bank. Last month a money laundering analyst filed a suspicious transaction report about unusual wire deposits originated by unknown individuals in the home country of the official.

To whom should this situation be escalated?

Options:

A.

The board of directors

B.

The line of business executive

C.

The bank’s anti-money laundering officer

D.

The Financial Action Task Force’s PEP Hotline

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Questions 65

Who has the ultimate responsibility within a bank for ensuring that the bank has a comprehensive and

effective Bank Secrecy Act / anti-money laundering (BSA/AML) program and oversight framework that is

reasonably designed to ensure compliance with applicable regulations?

Options:

A.

Senior management

B.

Board of directors

C.

Business line managers

D.

BSA/AML compliance officer

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Questions 66

A government has instituted a new anti-money laundering laws which require all financial institutions to obtain certain information from its customers.

Which step should an institution located in this jurisdiction take to ensure compliance?

Options:

A.

Change procedures to require that the necessary information is obtained

B.

Change procedures and systems as necessary and provide employee training

C.

Send a notice to customers asking them to provide the necessary information

D.

Change systems to ensure the required information is automatically obtained from all customers

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Questions 67

A recent anti-money laundering audit revealed several regulatory reporting violations and lapses with the

organization’s anti-money laundering policy. As a result, the compliance officer has created a follow-up matrix

to document progress in correcting the identified deficiencies.

To whom should the compliance officer provide regular updates of corrective action to help ensure the

appropriate oversight?

Options:

A.

Audit management

B.

Human Resources

C.

Business line managers

D.

Designated board committee

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Questions 68

An anti-money laundering expert is hired by a new Internet bank to assess the money laundering threat to the bank. Because it is an o line bank the most important recommendation for the expert to make is that the bank

Options:

A.

limit the amount which can be processed per transaction.

B.

ensure that prospective new customers can be properly identified.

C.

set up automated programs to analyze transaction for money laundering activity.

D.

ensure that a firewall is set up to protect the transactions.

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Questions 69

A bank account is established for a new business customer. The business was established five years ago with an address in another state. The business website contains few details other than stating it is a real estate business.

One principal has an international telephone number and appears to be living in another country. The other principal works out of a recreational vehicle.

What warrants enhanced due diligence in this scenario?

Options:

A.

Shell company

B.

Human trafficker

C.

Politically exposed person

D.

Money laundering through real estate

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Questions 70

Which statement about a multinational institution’s ability to fully investigate unusual activity in all its foreign operations is correct?

Options:

A.

Local privacy and data protection laws may prevent an affiliate from sharing information.

B.

Certain account documents may be stored only in local language which will prohibit a global assessment.

C.

The institution should consult with the customer and request permission to conduct a full investigation into all the accounts.

D.

Enterprise-wide compliance oversight rules issued in the global institution’s headquarters country will override any local limitations in other countries.

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Questions 71

Bank A is located in Country A. A wire transfer from Bank B located in Country B is processes by Bank A,where the funds are being moved to a customer at Bank C located in Country C. The wire transfer isdeemed suspicious by Bank A.

Options:

A.

The transaction in Country A.

B.

Bank B in Country A.

C.

The transaction in Country B.

D.

Bank C in Country C.

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Questions 72

A European Union (EU) bank has a correspondent banking relationship with a U.S. bank. Under USA PATRIOT Act Section 311, the U.S. government has enacted special measures against a designated entity that has a payable-through account with the EU bank. Which of the following actions might the U.S. bank be required to take regarding the EU bank's services for the designated entity?

Options:

A.

Ensure the designated entity's confidential information is not shared with other entities.

B.

Obtain additional information about customers permitted to use this account.

C.

Verify that the EU bank serves the designated entity.

D.

Perform enhanced due diligence on the EU bank.

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Questions 73

A close relative of a privately-owned bank's senior manager requests to open an account. Because of this relationship, the staff expedites the opening of the account without following established account-opening procedures. Applying the Basel Committee on Banking Supervision principles, which of the following poses the highest operational risk?

Options:

A.

Failure to conduct proper due diligence.

B.

The possibility of lawsuits that adversely affect the operations of a bank.

C.

The bank's exposure to politically exposed persons.

D.

Not having appropriate information to share with Financial Intelligence Units.

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Questions 74

Trusts established in certain offshore jurisdictions make good vehicles to lay under money for which ofthe following reasons?

Options:

A.

Names of the settlor and beneficiaries are into publicly available.

B.

Trusts are typically set up to minimize taxes.

C.

Offshore jurisdictions are unfamiliar with trust.

D.

Trusts may hold assets of significant size.

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Questions 75

A division anti-money laundering officer for a financial institution has been conducting a monthly self-assessment.

The officer reviews the accounts opened for compliance with a long standing Know Your Customer policy.

The self-assessment for the latest month shows a significant increase in compliance deficiencies for the first time in more than a year.

Which of the following is the next course of action for the anti-money laundering officer to take?

Options:

A.

Inform the Board promptly of the Know Your Customer policy trend over the last 6 months.

B.

Determine if there is a readily identifiable cause for the deficiencies.

C.

Implement a revision to the account-opening training program.

D.

Revise the policy to simplify Know Your Customer compliance before the report is issued.

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Questions 76

A bank is preparing for its anti-money laundering independent review, which is performed every two years

under the direction of the compliance officer. The bank’s corporate audit department will conduct the review.

The compliance officer will review the final report before it is released to the Board of Directors.

What is the issue with this situation?

Options:

A.

Independent reviews must be performed annually

B.

The review must be performed by a group outside of the bank

C.

The final report must be presented directly to the board of directors

D.

There is a conflict of interest with the management of the review process

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Questions 77

Which method is used to launder money in casinos?

Options:

A.

Purchase chips with cash and play at a table

B.

Purchase chips with cash and redeem for cash

C.

Purchase chips with cash and redeem for a check

D.

Purchase chips with cash and sell to another person for cash

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Questions 78

Law enforcement submitted a request to a bank for information regarding one of its customers.

How should the bank respond according to Financial Action Task Force Guidance?

Options:

A.

Provide all information requested to support the investigation

B.

Ensure that the request will not violate any local privacy regulations or legislation

C.

Ensure the information is necessary to the investigation before responding to the request

D.

Contact the customer informing the person of the investigation to ensure the bank provides correct

information

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Questions 79

Upon filing a suspicious transaction report, which of th€ following elements should be the highest anti-money laundering priority in making the decision to keep the account open?

Options:

A.

Financial impact on the institution if the account is closed.

B.

Procedures to ascertain the potential risk to the organization.

C.

Additional Administrative costs of monitoring the account.

D.

Total number of accounts the institution closed in the last month.

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Questions 80

A popular restaurant in town has begun depositing less cash than it has in prior years. In a review of the

customer’s accounts, you notice that credit card receipts have increased with no .

The account officer discovers that the restaurant has installed a privately-owned automated teller machine

(ATM) onsite and has begun construction on a patio dining area.

Which red flag should trigger additional investigation?

Options:

A.

Privately-owned ATM

B.

Lower cash deposits

C.

Increased credit card receipts

D.

Construction of the new patio dining area

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Questions 81

A client opens a bank account for a multi-level marketing company. The debits and credits of the account are

numerous and very involved. Further, there are a lot of international transactions. Also, funds are being tunneled from the company to the client’s personal account in another jurisdiction.

Which two steps should law enforcement take in investigating this matter? (Choose two.)

Options:

A.

Determine who are the signatories on the account

B.

Ask the bank for the history of this multi-level marketing company

C.

Examine the flow of money from the company to the individual in an effort to determine if it is legitimate

D.

Examine possible Suspicious Activity Report information received from the local Financial Intelligence

Units

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Questions 82

Which of the following is the best action to take regarding a particular account once suspicious activity is reported by the institution?

Options:

A.

Notify the client that the transaction has been reported.

B.

Freeze the funds pending notification from the competent authority.

C.

Secure all supporting documentation.

D.

Immediately close the account.

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Questions 83

What types of things should an institution incorporate in it AML policies and procedures? Choose 3 answers

Options:

A.

On-going training, as well as initial training of new employees

B.

Periodic audits, to be performed by independent staff at least once a year

C.

Ability to incorporate relevant legislative and regulatory AML changes

D.

Review of the AML policy by the Board of Directors

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Questions 84

What does designing a country as being of “prime money laundering concern” allow the U.S. government to do?

Options:

A.

Obtain transactional information from U.S.-owned subsidiary banks located outside the U.S.

B.

Close some or all correspondent or payable-through accounts

C.

Ensure the inclusion of that country onto FATF’s Non-Cooperative Country and Territory list

D.

Ensure the inclusion of that country into the office of Foreign Asset Control country sanctions programs

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Questions 85

The branch manager calls the compliance officer and informs her that a law enforcement officer has just left

the branch and was asking a lot of QUESTION NO:s and left a business card.

What should the compliance officer do?

Options:

A.

File a suspicious transaction report

B.

Follow up to verify that the officer received all necessary information

C.

Verify that the reported officer was an actual authorized representative

D.

Require the branch manager to write a detailed memo about the request

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Questions 86

An employee hears a colleague on the telephone with a customer giving advice on how to ensure that a

suspicious transaction report will not be filed as a result of a future transaction.

What action should the employee take?

Options:

A.

Report the conversation to the local police

B.

Report the conversation to the compliance officer

C.

Tell the colleague that it is against policy to give such advice

D.

Ignore the situation because the colleague is the relationship manager for that customer

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Questions 87

Which three elements should be considered in an institution’s enhanced due diligence process to assure itself that it has secured sufficient understanding of its higher risk respondent bank customers according to the Wolfsberg Principles on Correspondent Banking?

Options:

A.

The quality of the respondent’s AML and client identification controls

B.

A risk-based determination as to whether or not the respondent is a shell bank

C.

Whether a Politically Exposed Person (PEP) has an interest or management role in the respondent

D.

The sources of wealth for all significant ownership interests

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Questions 88

A high-volume dealer of precious metals and stones in a high-risk jurisdiction is approached by a new customer interested in selling gold worth $200,000. The customer was referred by a longtime family friend of the dealer and provides no indication of background or business purpose for the sale. The dealer agrees to make the purchase based solely on the reference.

What is the money laundering red flag?

Options:

A.

The customer was referred by a longtime friend of the dealer

B.

The precious metals dealer is operating in a high-risk jurisdiction

C.

A new customer is selling gold worth $200,000 to a high volume dealer

D.

The customer provides no background information or business purpose for the transaction

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Questions 89

A customer comes into a financial institution and deposits a large amount of cash. He has never done that before. When asked about the deposit, he indicates he recently sold a used car and received cash.

He does not trust forms of payment and is wary of counterfeit money orders. What should the bank do?

Options:

A.

The bank has received a plausible explanation, so it should do nothing

B.

While the explanation appears plausible, the institution should, for a period of time, monitor the account for cash transactions and suspicious activity

C.

While the explanation may be plausible, the institute should nonetheless file a Suspicious Transaction Report to protect itself

D.

The institution should close the account before another issues arise

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Questions 90

Which requirement is included in the Fourth European Union Directive on money laundering?

Options:

A.

It requires obliged entities to consider politically exposed persons as high risk for life

B.

It requires obliged entities to conduct enhanced due diligence on all prepaid card holders

C.

It requires member countries to maintain registries of the beneficial owners of legal entities

D.

It requires member states to enact economic sanctions against countries that do not cooperate with

Financial Action Task Force recommendations

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Questions 91

A bank located in Arizona is considering a loan application for a new client. The collateral for the loan is a

property in Florida.

The loan will be in the name of a limited company (LLC) whose ownership is not disclosed to the bank. The

LLC was established by a New York-based attorney.

The loan will be repaid by the LLC in monthly wire transfers of $9,000 which is more than the required monthly

payment.

Which aspect indicates potential for money laundering?

Options:

A.

The LLC’s ownership is not disclosed to the bank

B.

The collateral, a property in Florida, is not located in Arizona

C.

The repayment in the amount of $9,000 indicates potential structuring

D.

The attorney associated with the account is outside the bank’s lending area

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Questions 92

What is an example of the integration stage of money laundering involving a bank or another deposit-taking institution?

Options:

A.

Depositing illicit funds into an account set up for a front company

B.

Directing third parties to exchange illicit cash for negotiable instruments

C.

Wiring illicit funds from an account at one bank to an account at another bank

D.

Using illicit funds that had previously been deposited to purchase a luxury vehicle

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Questions 93

A foreign politically exposed person (PEP) requests to add a beneficiary to a file insurance policy.

How should the request be processed to mitigate risk?

Options:

A.

Perform due diligence on the beneficiary

B.

Determine the source of wealth and source of funds

C.

Decline the request if the beneficiary is a foreign PEP

D.

Decline the request to add a beneficiary due to increased risk

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Questions 94

According to the European Union Money Laundering Directives, "knowledge, intent or purpose"' required as an element for money laundering may be inferred from

Options:

A.

Objective factual circumstances.

B.

Subjective factual circumstances.

C.

Objective non-factual circumstances.

D.

Subjective non-factual circumstances.

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Questions 95

The anti-money laundering specialist of a small bank has identified suspicious activity at a branch located in an area of town where drug dealers are known to operate. An investigation of this activity discloses that the suspicious transactions occurred within the last 3 months and were processed by the same teller (cashier). The teller (cashier) did not file an internal report of unusual activity on these transactions. When checking personnel files, the specialist finds that the teller (cashier) has been a trusted employee for over 15 years, has an impeccable work record, and has participated in several anti-money laundering training sessions. The specialist recently became aware that the employee's daughter has contracted a rare disease and is undergoing a very expensive treatment program. Regarding the teller's (cashier's) failure to report the unusual activity to the institution, the specialist should recommend

Options:

A.

Continuing to monitor the accounts.

B.

Refreshing anti-money laundering training for the teller (cashier).

C.

Directing the teller (cashier) to file a suspicious transaction report.

D.

Suspending the teller's (cashier's) employment.

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Questions 96

Which action should countries take related to the financing of terrorist acts in accordance with the Financial

Action Task Force 40 Recommendations?

Options:

A.

Oppose

B.

Sanction

C.

Prosecute

D.

Criminalize

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Questions 97

What is the goal of the Egmont Group in providing a forum for Financial Intelligence Units (FIUs) around the

world?

Options:

A.

To improve international laws to combat money laundering and the financing of terrorism and foster the

implementation of domestic programs.

B.

To provide a forum for FIUs to improve cooperation in the fight against money laundering and the financing

of terrorism and to foster the implementation of domestic programs in this field.

C.

To improve communication with law enforcement in the fight against money laundering and the financing of

terrorism and to foster the implementation of domestic programs in this field.

D.

To improve cooperation with state and federal governments in the fight against money laundering and the

financing of terrorism and to foster the implementation of domestic programs in this field.

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Questions 98

How can a financial institution verify the nature and purpose of a business and its legitimacy?

Options:

A.

By reviewing a copy of the corporation’s latest audited reports and accounts

B.

By undertaking a company search or other commercial inquires to see that the institution has not been, or is not in the process of being dissolved of terminated

C.

By reviewing the company’s website

D.

By using an independent information verification process, such as by accessing public and private databases

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Questions 99

Outgoing foreign transactions of similar amounts trigger a monitoring alert for a customer's accounts. During the evaluation of the accounts, the bank discovers the wire transfers were very small amounts and occurred within the last 3 months following a long period of inactivity. The wire transfers appear to originate from legal sources. To assess the potential of terrorist financing, the institution must ensure the

Options:

A.

account holder presents proof the funds are legal.

B.

beneficiaries of transfers are not on a terrorist watch list.

C.

beneficiaries of transfers are not included on the Transparency International List.

D.

account holder does not reside in a country included on the U.S. State Department State Sponsors of Terrorism List.

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Questions 100

A bank employee reviews wire transactions looking for indications of wire stripping.

Which two actions should the employee take to complete appropriate bank procedures? (Choose two.)

Options:

A.

Compare the wire transaction as it enters and after it leaves the bank

B.

Check for suspicious phrases usually used to conceal originator or beneficiary identity

C.

Identify large incoming wire transactions received on behalf of a foreign client with no explicit reason

D.

Identify wire transaction activity to or from a financial institution located in a higher risk jurisdiction

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Questions 101

Which two factors should increase the risk of a correspondent bank customer and require additional due

diligence according to the Wolfsberg Anti-Money Laundering Principles for Correspondent Banking? (Choose

two.)

Options:

A.

The customer is located in a Financial Action Task Force member country and provides services primarily

to a local individual customer.

B.

The customer is located in a Financial Action Task Force member country and the bank’s head of

information security is a politically exposed person.

C.

The customer is located in a Financial Action Task Force member country and provides services to other

correspondent banks in neighboring countries.

D.

The customer is located in a non-Financial Action Task Force member country and services mostly

commercial customers who engage in international trade.

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Questions 102

Which method is used to launder money via wire remittances sent through a bureau de change or money

services business?

Options:

A.

A customer in country A makes a weekly small wire transfer to the bank account of an individual in country

B.

C.

A customer in country A makes frequent wire transfers to a single customer in country B that are slightly

under the legal reporting threshold.

D.

A large number of wire transfers are sent from a large number of senders in country A to a large number of

recipients in country B during the period of December 1 to December 15.

E.

A customer in country A receives four small wire transfers from four different individuals located in country

B on December 21. The aggregate of the wire transfers falls below the legal reporting threshold.

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Questions 103

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.)

Options:

A.

The bank allows cash deposits

B.

The client resides in a high-risk jurisdiction

C.

Wire transfers are to high-risk jurisdiction

D.

Large cash deposits are from a high-risk jurisdiction

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Questions 104

Which three methods are commonly used by an accountant to launder money? (Choose three.)

Options:

A.

Representing a client court

B.

Understanding income to take a tax loss

C.

Overstating income to hide excess cash

D.

Acting as a conduit for transferring cash between accounts

E.

Acting as a designee for someone who wishes to hide their identity

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Questions 105

An anti-money laundering specialist has been asked to establish a compliance program to detect and prevent money laundering and terrorist financing. Which of the following should the anti-money laundering specialist consider in developing the program?

1. Funds for money laundering and terrorist financing are derived from illegal sources.

2. Related practices are used to conceal the nature of the funds.

3. The source and disposition of funds are similar.

4. Similar techniques are used to move funds.

Options:

A.

1 and 2 only

B.

1 and 3 only

C.

2 and 4 only

D.

3 and 4 only

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Questions 106

What is true regarding disclosure to a law enforcement agency by a financial institution of the supporting

documentation for a suspicious transaction report?

Options:

A.

Documentation must be provided as quickly as possible using email

B.

The financial institution may notify the account holder of the request

C.

Confirm that the request originated from a representative of the law enforcement agency

D.

A copy of all the documentation released must also be provided to the account holder’s attorney

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Questions 107

When an institution receives a document request from law enforcement with regard to an STR that the institution has filed, what should institution do?

Options:

A.

It should turn over the documents that were previously collected to support the STR

B.

It should request a written subpoena or court order before turning over any documents

C.

It should have its outside counsel review the request and the documents before doing anything

D.

It should politely decline to provide the requested documents until the law enforcement agency can explain the nature and purpose of its inquiry

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Questions 108

A compliance officer identifies a potentially significant risk in a popular financial product. Further investigation

reveals there is no mitigating control.

Which course of action should the compliance officer take?

Options:

A.

Launch a long-term project to remediate the control deficiency

B.

Note the risk and address it during the next round of policy and procedure review

C.

Immediately cease providing the product and only offer it after effective permanent mitigation is implemented

D.

Implement a temporary mitigation that enables effective management of the risk until a permanent plan can be developed

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Questions 109

Which three procedures should a compliance officer looking to revise an institution’s CTF efforts include in accordance with the Wolfsberg Group’s Statement on the Suppression of the Financing of Terrorism?

Options:

A.

Consulting applicable lists and taking appropriate actions to determine if customers appear on such lists

B.

Reporting matches from lists of known or suspected terrorists to relevant authorities

C.

Maintaining customer information to facilitate timely retrieval of such information

D.

Reviewing only original identification documents when verifying customers

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Questions 110

What do Financial Action Task Force (FATF)-style regional bodies do for their members to help combat money

laundering and terrorist financing?

Options:

A.

They provide technical assistance to members in implementing FATF recommendations

B.

They assist member countries in penalizing entities that violate FATF standards and recommendations

C.

They work with members on areas of concern outside of anti-money laundering and terrorist financing

D.

They supervise member country financial institutions relating to anti-money laundering and terrorist

financing

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Questions 111

Which two statements are true regarding the European Union Money Laundering Directives? (Choose two.)

Options:

A.

They apply to member states of the European Union

B.

They require member states to enact laws and/or regulations to comply with the directives

C.

They set forth non-binding best practices for financial institutions within the member states

D.

They have extraterritorial impact and apply to states that have diplomatic relations with member states

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Questions 112

According to the Financial Action Task Force 40 Recommendations, simplified customer due diligence or reduced measures could be acceptable for which of the following types of products or transactions?

1. Life insurance policies where the annual premium is no more than USD/EUR 1,000 or a single premium of no more than USD/EUR 2,500.

2. Insurance policies for pension schemes if there is no surrender clause and the policy cannot be used as collateral.

3. A ptfiisiui i Ll idL pr uviJcfb lelir emei it bei lefils Lu employees.

4. Trusts where the settlor, trustee and beneficiaries are identified and the shares are in bearer form.

Options:

A.

1, 2, and 3 only

B.

1, 2, and 4 only

C.

1, 3, and 4 only

D.

2, 3, and 4 only

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Questions 113

The compliance officer at a crowd funding website is in charge of monitoring new crowd funding projects.

Recently, the number of crowd funding projects has significantly increased.

Which red flag indicates the highest anti-money laundering risk?

Options:

A.

Those with the largest number of donors

B.

Projects that get funding within days of their start

C.

Projects with the highest monetary success threshold

D.

Projects that start and close and are fully funded within a very short period

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Questions 114

A United States (U.S.) bank was recently alerted by law enforcement of an increase in sale of large denomination U.S. bank notes to casas de cambio. They suspect that a Mexican syndicate is operating a money laundering scheme in the bank’s jurisdiction.

Which two steps should be taken to trace funds through the bank to assist law enforcement in their investigation? (Choose two.)

Options:

A.

Identify the money laundering scheme and submit a suspicious transaction report

B.

Identify if there is a decrease in the sale of large denomination U.S. bank notes to casas de cambio by the

bank

C.

Identify deposits by casas de cambio that include third-party items including sequentially numbered

monetary instruments

D.

Identify multiple wire transfers initiated by casas de cambio to jurisdictions outside of Mexico that bear no

apparent business relationship with that casa de cambio

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Questions 115

Following a recent exercise which explained how a correspondent banking operation could be used by money launderers, an anti-money laundering specialist decided to re-write the due diligence procedures for entering into agreements with foreign financial institutions. Which of the following information should be included to establish a rigorous "Know Your Respondent" procedure?

1.Respondent's management, nature of license, and major business activity.

2. Computer equipment and software capability.

3. The quality of supervision in the home country.

4. Respondent's location, in particular the existence of a real physical presence.

Options:

A.

1, 2, and 3 only

B.

1, 2, and 4 only

C.

1, 3, and 4 only

D.

2, 3, and 4 only

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Questions 116

On who does the ultimate responsibility for an institution’s anti-money laundering program rest?

Options:

A.

The designated AML Compliance Officer

B.

The institution’s Board of Directors

C.

All employees with customer contact

D.

The government regulator examining the AML program

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Questions 117

A suspicious transaction report filed on a car dealer structuring deposits initiates a criminal investigation. The dealer changes branches and begins placing transactions with a frontline employee to whom the dealer has given numerous gifts.

This employee handles all of the dealer's structured deposits and does not report the suspicious activity internally.

The competent authority has advised the anti-money laundering specialist to avoid tipping off the employee until the investigation is finalized.

What action should the specialist take next?

Options:

A.

Recommend the immediate termination of the employee.

B.

Advise that the dealer's accounts should be closed.

C.

Consult with senior management and the legal advisor.

D.

Inform the institution's regulatory agency of the situation.

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Questions 118

After evaluating recent changes to international standards, an anti-money laundering specialist should consider enhanced due diligence on accounts held by

1. lawyers.

2. foreign exchange dealers.

3. retail account holders.

4. precious metal dealers.

Options:

A.

1, 2, and 3 only

B.

1, 2, and 4 only

C.

1, 3, and 4 only

D.

2, 3, and 4 only

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Questions 119

Which three statements are true about on-line banking offering a significant money laundering risk to a financial institution?

Options:

A.

The nature of on-line banking can make it difficult to establish who is controlling the account

B.

The ease of access through the internet enables cross border movement of funds

C.

Due to client confidentiality, information collected on-line cannot be shared with law enforcement agencies on mere suspicion

D.

The speed of electronic transaction enables execution of multiple complex transactions within short time frame

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Questions 120

A customer runs an export business for agricultural products. There has been steady growth over the years from sales to the Caribbean region. A sudden increase is noted in this customer's account balances during the last month.

On what grounds should an anti-money laundering specialist prepare a suspicious transaction report?

Options:

A.

The increased activity is due to money order deposits.

B.

Wire transfers are coming from a Financial Action Task Force member country.

C.

The client changed his address without advising the institution.

D.

Travelers checks (cheques) were purchased for trips to a Non-Cooperative Countries and Territories.

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Questions 121

One of the red flags of microstructuring is:

Options:

A.

depositing sequentially numbered checks.

B.

check deposits followed by ATM withdrawals using debt card in retail store.

C.

single activity in an account immediately following the opening of the account.

D.

frequent visits to make cash deposits of nominal amounts.

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Questions 122

Sanctions screening requirements include that a financial institution should:

Options:

A.

report an individual whose name appears on a sanctions list to the police.

B.

immediately freeze the bank account of an individual that appears on a sanctions list.

C.

compare customer and transaction records against periodically updated sanctions lists provided by governmental bodies.

D.

immediately close the bank account of an entity who appears on a sanctions list.

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Questions 123

Based on the AML principles outlined by the Wolfsberg Group, what do private and correspondent banks have in common when monitoring for terrorist financing?

Options:

A.

Numbered or alternate name accounts will only be accepted if the bank has established the identity of the client and beneficial owner.

B.

Account and transactional activity are monitored after the proper identification and verification of customers.

C.

Cash access from a pre-paid card increases the potential that the card will be used for money laundering purposes.

D.

Transaction monitoring examines the relationship between due diligence information and account closings.

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Questions 124

Which regulation regarding data privacy has to be considered while carrying out a financial crime investigation?

Options:

A.

General Data Protection Regulation

B.

European Enforcement Order

C.

Securities Financing Transactions Regulation

D.

Rome II Regulation

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Questions 125

A new business opened an account at a bank. After a month of activity, the account is referred to AML Investigations for potential human trafficking activity. Which red flags most likely triggered the referral? (Select Two.)

Options:

A.

Trade in large volumes conducted with countries that are part of the diamond pipeline

B.

Several cash deposits along the country's border that are quickly withdrawn by third parties _ Multiple purchases of virtual currency at or just below the reporting threshold

C.

Several lodging and food payments made on the same day at unusual hours for a business

D.

Conducting the businesses transactions online without visiting a branch

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Questions 126

Which is a key characteristic of the Financial Action Task Force (FATF) Regional Style Bodies for combatting money laundering/terrorist financing?

Options:

A.

Instructing each member country to place FATF recommendations into law

B.

Implementing regional mutual evaluation procedures

C.

Emphasizing regional co-operation between member countries

D.

Enabling FATF standards to be specific to each region

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Questions 127

Money laundering can cause which consequences for a financial institution? (Select Two.)

Options:

A.

Increases in corporate taxes

B.

Increases in investigation costs and fines

C.

Reduction in number of employees

D.

Reduction or loss of profitable business

E.

Increases in correspondent banking facilities

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Questions 128

A compliance officer is reviewing transactions related to a company suspected of being involved in wildlife trafficking. Which of activities below are common in wildlife trafficking schemes? (Select Two.)

Options:

A.

Large dollar wire transfers between wildlife farms and firms operating in inconsistent lines of business

B.

Exchanging fiat currency to cryptocurrency to accomplish payment to the wildlife farm

C.

Activity involving politically exposed persons with environmental, game, or forestry oversight

D.

Payment of transportation charges using a fraudulent financial instrument

E.

Customer requests payment of proceeds to an unrelated third party

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Questions 129

How should law enforcement obtain documentation from an institution when suspicious activity was identified? (Choose two.)

Options:

A.

Request copies of the relevant documents from the accountable institution.

B.

Pay an employee of the accountable institution to make copies of the documents.

C.

Request a Financial Intelligence Unit (FIU) share copies of suspicious transaction reports.

D.

Request the documents from the FIU.

E.

Acquire a search warrant to obtain the documents.

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Questions 130

Which are essential elements of a KYC program identified by the Base1 Committee on Banking Supervision? (Select Two.)

Options:

A.

Internal control

B.

Customer acceptance policy

C.

Code of conduct

D.

Risk appetite

E.

Risk management

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Questions 131

A financial institution accepts new on-line customers. After customers have provided acceptable identification, the institution should next

Options:

A.

Confirm the validity of the customer information.

B.

Obtain an electronic picture of each customer.

C.

Closely monitor the account for 30 days.

D.

Establish the account based on the information provided.

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Questions 132

A financial institution is reorganizing and the anti-money laundering officer is now required to report to the Sales Director. Which of the following statements about this situation is most correct?

Options:

A.

The reorganization will ensure communication of anti-money laundering issues to the board.

B.

The reorganization will enhance the compliance framework.

C.

The anti-money laundering officer should be elevated to a position on the Board.

D.

The anti-money laundering officer should be independent of business functions.

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Questions 133

The Head of Compliance was informed by external auditors of a finding that indicates an element of AML policy failed to comply with the regulatory requirement. Which action should the Head of Compliance take next?

Options:

A.

Make necessary updates to AML policy documents.

B.

Inform the compliance team about the finding.

C.

Agree immediately and provide corrective actions.

D.

Submit a corrective action plan with a target timeline.

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Questions 134

The most effective tool used to detect structured transactions is

Options:

A.

Verification of the source of funds.

B.

A comprehensive account-opening procedure.

C.

An employee training program to detect suspicious transactions.

D.

A software program that can link apparently unrelated transactions.

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Questions 135

One area of responsibility for the Board of Directors when implementing a successful AML program is to:

Options:

A.

ensure the appointment of a qualified chief AML officer.

B.

create a culture of compliance based on the profit expectation.

C.

manage the day-to-day processes of the compliance program.

D.

hire a third-party firm to be responsible for the AML compliance.

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Questions 136

A financial institution (FI) is fined for failure to implement an effective AML program. Which consequences could the regulator impose on the bank's Chief AML Officer? (Select Three.)

Options:

A.

Loss of professional accounting and legal designations

B.

Civil and criminal prosecution, fines, and imprisonment

C.

Ban from employment in the financial services industry

D.

Recommend termination of employment from the FI

E.

Add to the Office of Foreign Assets Control Specially Designated Nationals and Blocked Persons List

F.

Prohibition from dealing with goods on the Wassenaar List

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Questions 137

Which are red flags indicating potential engagement of a bank employee in money laundering? (Select Two.)

Options:

A.

Lavish lifestyle that cannot be supported by an employee's salary

B.

Reluctance to take a vacation when the employee has sufficient leave

C.

Failure to meet business goals for more than one period

D.

Providing longer than usual services for a certain customer

E.

Maintaining friendships with customers and going to restaurants, games, and other events

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Questions 138

According to the Basel Committee on Banking Supervision, banks should deal with high-risk customers by:

Options:

A.

maintaining segregated records to enable easy inspection by law enforcement in case of a subpoena.

B.

assigning those customers to specified private bankers for better monitoring of their offshore transactions.

C.

performing enhanced due diligence including enhanced ongoing monitoring of the account activity.

D.

seeking approval from the board of directors before establishing the relationship.

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Questions 139

According to the Financial Action Task Force, financial institutions should be required to implement:

Options:

A.

special procedures for encryption of information to be exchanged with affiliates and branches.

B.

independent AML programs to ensure privacy and safeguard confidential information.

C.

a process to designate an officer at a senior level who ensures a safe exchange of information for AML and terrorism financing purposes.

D.

group-wide programs, including policies and procedures regarding AML compliance.

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Questions 140

Which of the following should an anti-money laundering specialist consider the most serious deficiency when detected during a regulatory audit of the anti-money laundering program?

Options:

A.

The compliance officer fails to have on-going meetings with upper management to keep them apprised of current money laundering trends.

B.

The company's anti-money laundering manual has not been updated to reflect a recent internal control enhancement.

C.

The company has failed to download the most recent regulation from the Financial Intelligence Unit web site.

D.

The company has not implemented an anti-money laundering training program.

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Questions 141

What reputational risk consequence could a financial entity face for violating AML laws?

Options:

A.

Seizure of assets

B.

Monetary penalties

C.

Increased audit costs to monitor behavior

D.

Loss of high-profile customers

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Questions 142

The owner of a local retail store makes multiple deposits daily at a bank. When the owner makes these deposits, it is noted that he goes to different tellers (cashiers). The deposits consist of cash in amounts less than the currency reporting threshold. Which of the following best describes this activity?

Options:

A.

layering

B.

structuring

C.

integration

D.

commingling

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Questions 143

A financial institution in a jurisdiction with currency reporting thresholds is undergoing a branch office compliance review. A large number of currency transactions in amounts exceeding a reporting threshold were discovered without a currency transaction report (CTR) being filed. The transactions were handled by the same teller (cashier). This teller (cashier) was recently hired and had not received anti-money laundering training yet. The branch manager received daily exception reports of all large currency transactions as well as a report of all CTR filings. Which of the following should the compliance officer recommend as the initial action?

Options:

A.

Terminate the teller's (cashier's) employment prior to the expiration of the probation peri-od.

B.

An audit should be conducted for cash transactions since the last compliance review.

C.

The branch manager should be formally reprimanded for failing to ensure proper instruc-tion was given.

D.

The teller's (cashier's) employment should be suspended with pay pending appropriate training.

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Questions 144

A financial institution's (Fl's) policy is to apply enhanced due diligence (EDD) for every new client to ensure the effectiveness of the program. How should a consultant advise the Fl's management team?

Options:

A.

Suggest the management team select the clients that are chosen for EDD.

B.

Suggest the management team ask the regulator for advice on EDD measures.

C.

Suggest EDD for 50% of the clients is appropriate.

D.

Suggest the FI needs to implement a risk-based approach for EDD.

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Questions 145

An anti-money laundering specialist has just developed and implemented an anti-money laundering program. Which of the following is the best resource to evaluate the effectiveness of the program?

Options:

A.

the regulatory authorities

B.

a member of senior management

C.

the anti-money laundering specialist

D.

a qualified independent party/auditor

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Questions 146

Which activities could be considered a potential spear phishing scam? (Select Three.)

Options:

A.

An employee receives a phone call requesting that money be sent to assist someone in trouble.

B.

A courier delivers a duplicate invoice to a business that contains updated payment details of an existing supplier.

C.

Payroll receives an external email from an employee looking to update their bank account information.

D.

A business sends its employees an email warning that email passwords must be changed to prevent cyber-fraud.

E.

An employee receives an email that asks to download an attachment, but the attachment is a malware.

F.

Members of a religious organization receive a donation request by email claiming to be from their leader.

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Questions 147

A law enforcement agency is conducting an investigation of a financial institution (Fl). How should the Fl respond to the law enforcement agency's requests?

Options:

A.

Disregard requests when there is a justifiable reason for doing so.

B.

Share information about the investigation with analysts so they are aware.

C.

Delay responses by informing senior management of requests.

D.

Address all requests completely and in a timely manner.

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Questions 148

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?

Options:

A.

All staff, apart from the Board of Directors, must be trained.

B.

Pro duct-specific anti-money laundering training should be provided company-wide.

C.

The institution must provide anti-money laundering training to actuaries within 6 months.

D.

Continue using e-learning to emphasize anti-money laundering content during training.

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Questions 149

Once a financial institution has reported suspicious transactions on a valued customer, it should cooperate with competent authorities by

Options:

A.

Maintaining adequate written documentation of all individuals and transactions reported.

B.

Hinting to the customer that she should come in and explain her behavior.

C.

Submitting information upon receiving a legal request from parties involved in a civil law-suit.

D.

Providing the supporting documentation to competent authorities upon request.

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Questions 150

Which of the following poses the greatest money laundering risk for a financial institution offering on-line services to customers?

Options:

A.

There is greater difficulty in matching the customer with the provided identification doc-umentation.

B.

There is no human scrutinizing the customer's transactions, thus increasing the potential for large transactions.

C.

Institutions offering on-line services have no possibility to properly verify the identity of their customers.

D.

Customers can directly access their accounts without being detected.

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Questions 151

Which principles of the Egmont Group of Financial Intelligence Units (Fills) are aimed at maximizing cooperation between FlUs to more effectively combat money laundering? (Select Two.)

Options:

A.

Eliminating spontaneous information sharing between FlUs to reduce the burden of excess investigative work.

B.

Information exchange should take place informally, without too many formal prerequisites.

C.

FIU cooperation should always be channeled through designated intermediaries.

D.

Formal Egmont Group membership requirements ensure a high commitment of the eligible FlUs.

E.

It is within an FlU's authority to sign Memorandums of Understanding independently.

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Questions 152

A customer's registered business activity is a domestic carpet cleaning company. Besides domestic receipts, there are incoming weekly transactions from an international reputable

auction house starting at 15,000 USD and averaging 30,000 USD. The matching cash outgoings amount to 90% of the incoming deposits to non-related individuals. Which is most

concerning for potential money laundering?

Options:

A.

The customer is paying 90% of the incoming proceeds to non-related individuals in cash.

B.

The customer is a domestic carpet cleaning company.

C.

The customer's international incomings are from an international reputable antique auction house.

D.

The customer's initial international receipt has increased from 15,000 USD to an average of 30,000 USD per transaction per week.

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Questions 153

Which information should be gathered as part of enhanced due diligence (EDD) for a high-risk customer?

Options:

A.

Explanations for changes in marital status

B.

Details on individuals with control over the account

C.

Plans for traveling in business trips

D.

Personal references

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Questions 154

Which is a FATF characteristic used to assess a country's effectiveness of its AML regime?

Options:

A.

Funds supporting and proceeding from crime or terrorism are prevented from entering the financial sector.

B.

Legal persons are prevented from misuse for money laundering or terrorist financing.

C.

Supervisors appropriately supervise, monitor, and regulate financial institutions (Fls).

D.

FIs adequately apply preventive measures.

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Questions 155

The training department is conducting awareness training for unusual customer identification scenarios. Which two indicators should be included? (Select Two.)

Options:

A.

The customer opens the account in the name of a family member who begins making large deposits.

B.

The customer's name and home address cannot be verified

C.

The customer's internet protocol address does not match the identifying information provided during online registration.

D.

The customer requests payment of proceeds to an unrelated third party.

E.

The customer frequently exchanges small bills for large bills.

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Questions 156

What action does the USA PATRIOT Act allow the US government to take regarding financial institutions (Fls) that are based outside of the US?

Options:

A.

Allow all US regulators to place a non-US FI on the Specially Designated Nationals and Blocked Persons List.

B.

Subpoena documents from Fls that have no presence in the US.

C.

Revoke the banking licenses of non-US Fls in countries outside the US.

D.

Sanction a country when an individual FI does not comply with US law.

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Questions 157

Under the Wolfsberg Correspondent Banking Principles, which action is considered an enhanced due diligence obligation to correspondent banking clients that present greater risks?

Options:

A.

Conducting reviews on all high-risk relationships

B.

An evaluation done by the compliance officer in charge of the account

C.

Approval of a high-risk relationship by a senior management committee

D.

Ongoing monitoring of clients located in tax haven countries

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Questions 158

Which activities conducted by a lawyer could be a red flag for money laundering? (Select Two.)

Options:

A.

The lawyer does not have experience in providing the particular services requested.

B.

The lawyer worked unusual hours to perform case duties.

C.

The lawyer was paid substantially higher than usual fees.

D.

The lawyer does not document case notes for the services provided.

E.

The lawyer spent two days working a case.

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Questions 159

A foreign bank maintains a correspondent account in the US. According to an investigation carried out by US authorities, the specific correspondent account seems to have facilitated a transaction involving tainted funds. Which allows the US authorities to seize the funds of the foreign bank held with the US bank?

Options:

A.

The Financial Crimes Enforcement Network Customer Due Diligence Final Rule

B.

The 6th EU AML Directive

C.

Regulations of the Office of Foreign Assets Control, US Department of Treasury

D.

The USA PATRIOT Act

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Questions 160

What are the three basic functions of a national financial intelligence unit?

Options:

A.

Compile, assess, monitor

B.

Train, share, collect

C.

Investigate, report, record

D.

Receive, analysis, disseminate

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Questions 161

Which is a characteristic of the Financial Action Task Force (FATF) 40 recommendations?

Options:

A.

They enable FATF's active engagement in law enforcement matters, investigations, or prosecutions.

B.

They are automatically transposed into local law across the EU member states and the US.

C.

They provide a list of mandatory requirements for an effective AML regulatory framework.

D.

They comprise global standards for countering money laundering, recognized by government bodies across the world.

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Questions 162

An existing customer has changed its business scope and jurisdictions it deals with. Which are the steps the bank needs to take to manage sanctions compliance risk for this customer?

Options:

A.

Collect further customer reference data and determine what must be screened and at which frequency.

B.

Conduct further sanctions screening on the customer's directors and ultimate beneficial owners.

C.

Deploy an independent risk-based test to ensure the screening on this customer is effective.

D.

Perform politically exposed person and negative media screenings.

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Questions 163

Which key factor would result in the decision for a financial institution (FI) to exit a client relationship?

Options:

A.

After assessing all risk factors the level of residual client risk exceeds the FI's risk appetite.

B.

The client is a registered charity known to remit funds to high risk geographies where there is limited due diligence information available.

C.

Closing the client accounts will help reduce the number of transaction monitoring alerts.

D.

Client transactions generate ongoing transaction monitoring alerts that did not result in any SAR/STR filings.

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Questions 164

Which type of formal agreement occurs between countries that wish to aid each other in the investigation and enforcement of criminal laws?

Options:

A.

Joint Comprehensive Peace Agreement

B.

Mutual Legal Assistance Treaty

C.

Foreign Information Exchange

D.

Inter-country Agreement to Combat Trafficking

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Questions 165

Which are social/economic consequences of money laundering? (Choose two.)

Options:

A.

Civil war

B.

Weakening financial institutions

C.

Increase in corruption and organized crime

D.

Increase in tax revenue

E.

Weakening of the country's infrastructure

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Questions 166

Which factors should lead to a reassessment of the current AML program? (Select Two.)

Options:

A.

Expansion of business to new territories

B.

Appointment of a new Chief Financial Officer

C.

Change of company name

D.

Change of internal audit team members

E.

New product offering

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Questions 167

An EU Trust and Company Service Provider (TCSP) analyst notices some unusual activity while looking through a customer's financial statements and detailed general ledger. The customer is in the business of importing and exporting machineries. Which transaction indicator warrants further escalation to the compliance officer?

Options:

A.

Inter-company loans from the holding company to the subsidiary company to finance the shipment of machinery.

B.

The payment of virtual offices services overseas.

C.

The payment of consultancy fees to unrelated companies and service providers established in a foreign jurisdiction.

D.

The payment of company secretarial retainer fees to a foreign company in a tax efficient jurisdiction.

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Questions 168

What correspondent banking risk factor increases the risk for a Correspondent Bank?

Options:

A.

Multi-national financial institution with global operations

B.

Offers international funds transfer to customers

C.

Major service provider to money service businesses

D.

Limited product offering to customers in high-risk jurisdictions

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Questions 169

Law enforcement is conducting an investigation of a financial institution (FI) and has submitted an overly broad and unduly intrusive request. Which is a Fl's most appropriate response?

Options:

A.

Ignore the request due to the unacceptable volume of information contained within.

B.

Contest the request with the company's board of directors and key senior management.

C.

Delay a response until all documents can be gathered regardless of the duration.

D.

Narrow the request through a prompt response to the law enforcement agency.

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Questions 170

The AML investigator is reviewing the transaction monitoring alerts and the customer's historical profile for the past two years. A review of the negative news search from a blog indicates

that the customer was previously part of a terrorist group. Which activities warrant further escalation? (Select Two.)

Options:

A.

The customer remitted monies in several transactions to the account of a recognized charity non-profit organization.

B.

The customer has bought and sold several real estate properties over the last year.

C.

The credit transactions in the account relate mostly to salary and rental income from property.

D.

The account received a large cash deposit followed by systematic automated teller machine (ATM) withdrawals until the balance was nominal.

E.

The customer conducts multiple cash transactions on a regular basis which do not match the customer's occupation.

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Questions 171

A country that does not have strong predicate offenses and is lax in prosecuting AML cases could suffer which social/economic consequence?

Options:

A.

US sanctions

B.

Increased organized crime and corruption

C.

Reputation risk for the port

D.

Loss of tax revenue

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Questions 172

A compliance analyst has recently investigated an account where money was deposited in amounts below the reporting limit and almost entirely withdrawn in a foreign country. Which type of money laundering is the compliance analyst potentially identifying?

Options:

A.

Trade-based

B.

Check Kiting

C.

Structuring

D.

Microstructuring

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Questions 173

Which is a key aspect of the first EU Directive on Money Laundering?

Options:

A.

IT expanded the definition of criminal activity to all serious crimes.

B.

It defined money laundering as a separate crime.

C.

It established drug trafficking as a predicate offense of money laundering.

D.

It extended the scope beyond drug-related crimes.

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Questions 174

Who bears the ultimate responsibility for approving a financial institution's relationship with a politically exposed person?

Options:

A.

Relationship manager

B.

Enhanced due diligence compliance officer

C.

OKYC analyst

D.

Senior management

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Questions 175

Which activity is most likely to facilitate money laundering through on-line banking systems with inadequate controls?

Options:

A.

Conducting a large volume of transactions

B.

Providing continuous worldwide access

C.

Conducting anonymous transactions

D.

Conducting large value transactions

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Questions 176

A compliance analyst is reviewing the account activity of a customer that they suspect may be indicative of money laundering activity. Which is difficult to determine solely from the customer's account activity and KYC file?

Options:

A.

If the activity is materially different from related businesses

B.

If the account has multiple transfers to the same, related businesses

C.

If there is negative media associated with counterparties

D.

If the account is mostly dormant or has little activity

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Questions 177

A long-term client of an insurance company makes changes to a policy that require payment of an additional lump sum. The amount payable is high, though within the client's means based on the KYC information collected. The payment is made via a company in another jurisdiction that is known to have lax AML controls. Which indicator of suspicious activity is present?

Options:

A.

The payment was made via a company that appears to be owned and controlled by the client being insured.

B.

The payment was made via a company in a jurisdiction known to have lax AML controls.

C.

A long-term client wants a change to a policy that is already in force.

D.

The additional premium payable appears to be within the client's means based on the KYC information collected.

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Questions 178

A bank receives a request for a subpoena (or a client who has been the subject of monitoring for several months. The bank wishes to close the account in order to mitigate any additional risk. However, the government requires that the account remain open. What document must be provided to the bank to keep the account open?

Options:

A.

An email agreement between the government and the financial institution to keep the account open

B.

A request in writing under proper letterhead and authority from the government

C.

An order to keep the account open but with the funds frozen

D.

An authorization from the board of directors

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Questions 179

Which type of sanctions are likely to be used first in order to avoid escalating violent conflicts and/or proliferation of weapons?

Options:

A.

Asset freeze

B.

Financial prohibitions

C.

Export and import restrictions

D.

Arms and related materials embargo

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Questions 180

Which product type is subject to US extra jurisdictional reach over non-US banks and non-US persons under the USA PATRIOT Act?

Options:

A.

Correspondent banking

B.

Commercial lending

C.

Trade finance

D.

Private banking

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Questions 181

A non-US bank is implementing a sanctions compliance program. Which extraterritorial reach of Office of Foreign Assets Control (OFAC) regulations would matter the most to the foreign bank?

Options:

A.

OFAC administers sanctions based on criminal investigations against targeted foreign individuals.

B.

OFAC sanctions programs prohibit transactions and require the blocking of assets of foreign individuals that appear in negative media sources.

C.

OFAC acts only under presidential wartime emergency powers, against countries and foreign individuals considered enemies of the US.

D.

OFAC has the power to impose significant penalties on foreign individuals who are found to be in violation of the blocking orders.

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Questions 182

A retail bank prepares a yearly AML risk assessment. Which inherent risk factor is likely the most relevant?

Options:

A.

The provision of remote check deposit services

B.

The provision of cash services

C.

The provision of payable through accounts

D.

The provision of brokerage services

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Questions 183

Which is an extraterritorial function of Office of Foreign Assets Control sanctions?

Options:

A.

Interrupting the Ell's economic and financial relations with third countries

B.

Implementing targeted measures such as arms embargoes, travel bans, and financial or commodity restrictions

C.

Prohibiting transactions and requiring the blocking of assets of designated persons and organizations

D.

Requiring all appropriate elements of the financial services industry to report potential money laundering

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Questions 184

Typical events to identify and investigate potential AML activities include: (Select Three.)

Options:

A.

blocked transactions involving individuals included in the Office of Foreign Assets Control Specially Designated Nationals and Blocked Persons List.

B.

internal tips from employees of the bank about potential suspicious activity.

C.

alerts triggered by the automated AML monitoring system.

D.

subpoenas requesting information for civil cases.

E.

requests from law enforcement agencies.

F.

accounts going to dormant status.

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Questions 185

One key aspect of promoting an enterprise-wide compliance culture within a financial institution (FI) is that the:

Options:

A.

first line of defense should establish its own policies independently.

B.

revenue generating business sectors should have precedence over compliance.

C.

relevant information should be shared throughout the organization.

D.

cost of compliance should increase proportionately to revenues.

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Questions 186

When should a financial institution (FI) exit a relationship? (Choose two.)

Options:

A.

The reputational risk to the FI posed by closing the account

B.

The request from law enforcement to close the account

C.

The FI's requirements for opening an account

D.

The suspicious conduct of the account holder

E.

The FI's stated policies and procedures for closing an account

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Questions 187

Pursuant to the Third European Union Money Laundering Directive, how long after being out of prominent office should a person NOT be considered to be a

Politically Exposed Person (PEP)?

Options:

A.

1 year

B.

2 years

C.

3 years

D.

4 years

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Questions 188

A remittance company received a money order from a senior political figure m the Philippines to transfer a large sum of money to a charity group in the Philippines. A review of the charity group revealed a director having dose ties with a known terrorist group primarily financed through kidnapping and extortion.

What is a key risk indicator associated with terrorism financing?

Options:

A.

The sender is a Political Exposed Person (PEP) and should be subject to enhanced due diligence

B.

A large sum sent by money order to a charity

C.

There is no risk relating of terrorism financing when the charity group is operating legitimately in that country

D.

There is a link between the charity group and a known terrorist group

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Questions 189

Which method to finance terrorism involves falsifying transaction-related documents?

Options:

A.

Bribery

B.

Black market peso exchange

C.

Trade-based money laundering

D.

Informal value transfer system

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Questions 190

When providing reporting of STRs to the board, which of the following should be provided?

Options:

A.

A numerical summary of all the STRs

B.

A numerical summary of all the STRs and a summary of key STRs, including PEPs, key employees

C.

A summary of all key STRs, including PEPs and key employees

D.

All the STRs filed with the national FIU

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Questions 191

Which action should financial institutions with cross border correspondent banking activity be required to perform according to the Financial Action Task Force 40 Recommendations?

Options:

A.

Gather a list of their politically exposed customers

B.

Identify natural persons who own or control more than 5%

C.

Obtain senior management approval before establishing the relationship

D.

Obtain a third party independent review of the respondent’s anti-money laundering program

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Questions 192

Which step should be taken to understand the types of financial institutions to whom the services are being offered when a correspondent bank permits “nested” relationships according to the Wolfsberg Group?

Options:

A.

Review peer-group clients by risk category

B.

Understand the type and volume of accounts serviced

C.

Evaluate the distribution of downstream correspondents and identify any direct or indirect issues

D.

Obtain independent audits or examination reports for “nested” relationships to determine risk levels

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Questions 193

What poses the greatest money laundering risk for a financial institution offering on-line services to customers?

Options:

A.

There is a greater difficulty in matching the customer with the provided identification documentation

B.

There is a lack of human review of the customer’s transactions

C.

Institutions offering on-line services have no possibility to properly verify the identity of their customers

D.

Customers have direct access to their accounts without being detected

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Exam Code: CAMS
Exam Name: Certified Anti-Money Laundering Specialist (the 6th edition)
Last Update: Dec 1, 2024
Questions: 645

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