AML Certification CAMS Book

Money laundering risks arise whentransaction patternsareinconsistent with a business’s expected activity.

Option D (Correct):Multiple cash deposits in different branchesis a knownstructuring (smurfing) technique, used toevade cash transaction reporting thresholds.

Option A (Incorrect):Depositing intoboth checking and savings accountsisnormal behavior.

Option B (Incorrect):Irregular incoming paymentsmay require further review but arenot inherently suspicious.

Option C (Incorrect):Industry-related expenses (e.g., conference tickets)arenormal business activity.

The first valid step in the Mutual Legal Assistance Treaty (MLAT) international cooperation process is for the central authority of the requesting country to send a letter of request to the central authority of the other country. The letter of request should provide a summary of the facts and information required,the reasons for the request, and any specific legal or procedural requirements that need to be met. (CAMS Manual, 6th Edition, Page 233).

TheUSA PATRIOT Act Section 313 & 319(b)placesstrict requirements on foreign correspondent banking relationshipsto prevent money laundering.

Option A (Correct):Theforeign bank must disclose its ownership structureto identifyultimate beneficial owners (UBOs).

Option C (Correct):Theforeign bank must certify that it maintains a physical presencein a regulated jurisdiction.

Option E (Correct):Theforeign bank must not allow shell banks to use its U.S. correspondent accounts.

Why Other Options Are Incorrect:

Option B (Incorrect):Thecertification does not specifically exclude PEPs, butPEPs require enhanced due diligence (EDD).

Option D (Incorrect):The foreign bankmay operate in multiple jurisdictions, but it must be regulated where it has a presence.

Key Compliance Measures for Correspondent Banking:

Conduct EDD on foreign bank relationships.

Ensure correspondent banks do not facilitate shell banks.

Monitor transactions for money laundering and terrorist financing risks.

According to Section 313 of the USA PATRIOT Act, U.S. financial institutions are prohibited from maintaining correspondent accounts for foreign shell banks, which are banksthat have no physical presence in any country and are not affiliated with a regulated financial group. Therefore, a non-U.S. bank must provide the name and address of all shell banks that it maintains accounts for, if any, to its U.S. correspondent. This is to ensure that the U.S. financial institution does not indirectly provide services to shell banks, which pose a high risk of money laundering and terrorist financing.

According to Section 319 (b) of the USA PATRIOT Act, U.S. financial institutions that provide a correspondent account to a foreign bank must maintain records of the owners of the foreign bank and the name and address of a U.S. person who is authorized to receive service of legal process for records regarding the correspondent account. This is to facilitate the access of U.S. law enforcement authorities to information related to the correspondent account in case of an investigation or a subpoena.

The other two options, B and C, are not required by the USA PATRIOT Act, although they may be part of the due diligence or enhanced due diligence procedures that U.S. financial institutions apply to their foreign correspondent accounts, as per Section 312 of the USA PATRIOT Act.

USA PATRIOT Act

FACT SHEET for Section 312 of the USA PATRIOT Act Final Regulation and Notice of Proposed Rulemaking

US PATRIOT ACT

CAMS Exam: USA PATRIOT Act Requirements for Opening a Correspondent Account